Kohli Intercontinental, New Delhi V. ACIT, New Delhi

ITA 6050/DEL/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4420 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 28-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAINA SOIN KAPIL
• Assessee Lawyers: G C GAUTAM
• Keywords: Principle of natural justice; Question of law; Initiation of penalty proceedings
• Section: 271(1)(c); 201; 274

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K.N.CHARY, JUDICIAL MEMBER ITA NO. 6050/DEL/2016 (ASSESSMENT YEAR: 2006 - 07 ) KOHLI INTERCONTINENTAL, A - 64, SHIVALIK MALVIYA NAGAR, NEW DELHI PAN: AAAFK5195J VS. ACIT, CIRCLE - 23(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G. C. GAUTAM, CA REVENUE BY: SMT NAINA SOIN KAPIL, SR. DR DATE OF HEARING 28/08 / 201 9 DATE OF PRONOUNCEMENT 2 7 / 11 / 2019 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - 11, NEW DELHI DATED 16.09.2016 FOR THE ASSESSMENT YEAR 2006 - 07 WHEREIN THE PENALTY U/S 271(1) ( C ) OF THE ACT LEVIED BY THE LD. INCOME TAX OFFICER, WARD 23 (4), NEW DELHI AMOUNTING TO RS. 2 52230/ IS CONFIRMED BY THE LEARNED CIT (A) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED ASSESSING OFFICER HAS WRONGLY IMPOSED THE PENALTY ON THE BASIS OF WRONG ADDITION OF RS. 8,30,762 ,U/S 10BA, WHICH IS NOT THE EXPENDITURE BUT A STATUTORY ALLOWANCE ELIGIBLE FOR EXPORT OF HANDMADE HANDICRAFTS. THERE IS NO CONCEALMENT OF ANY WRONG PARTICULARS. 2. THE LEARNED ASSESSING OFFICER HAS WRO NGLY IMPOSED THE PENALTY OF RS. 2,52,230 ON THE BASIS OF WRONG ADDITIONS WHERE THE ASSESSEE CLAIMED ELIGIBLE DEDUCTIONS ALLOWABLE U/S 10BA OF I.T.ACT, 1961. 3. THE LEARNED ASSESSING OFFICER HAS WRONGLY IMPOSED THE PENALTY ON THE GROUND THAT NEITHER THE ASSESSEE NOR THE REPRESENTATIVE OF THE ASSESSEE APPEARS OR FILED ANY DOCUMENT AGAINST THE NOTICE. BUT ON 25.03.2014 MR. V.C. GAUTAM C.A. APPEARED AND FILED WRITTEN EXPLANATION WHICH WAS GIVEN TO THE A.O. PERSONALLY. THE A.O. HAS ALSO GIVEN SOME NOTING ON T HE WRITTEN EXPLANATION. THIS IS ABSOLUTELY WRONG THAT NONE APPEARED ON 25.03.2014. KOHLI INTERCONTINENTAL VS ACIT ITA NO. 6050/DEL/2016 (ASSESSMENT YEAR: 2006 - 07) PAGE | 2 4. THE LEARNED ASSESSING OFFICER WRONGLY WRITTEN THE NAME OF ASSESSEE AS KOHLI INTERNATIONAL INSTEAD OF CORRECT NAME AS KOHLI INTER CONTINENTAL. 3. BRIEF FACTS OF THE CASE SHO WS THAT ASSESSEE IS A COMPANY WHO FILED ITS RETURN OF INCOME ON 31/10/2006 DECLARING AN INCOME OF RS. 2492285/ ASSESSMENT U/S 143 (3) OF THE INCOME TAX ACT WAS PASSED ON 15/12/2008 WHEREIN THE DEDUCTION UNDER SECTION 10BA WAS DISALLOWED OF RS. 830762/ - . THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 5150310/ - . ON THE ABOVE ADDITION THE PENALTY WERE INITIATED U/S 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT (A) WHO VIDE ORDER DATED 16.09.2016 CONFIRMED THE ABOVE ADDITION. CONSEQUENTLY , THE LEARNED ASSESSING OFFICER ISSUED PENALTY NOTICES . FURTHER, IN RESPONSE TO THE PENALTY NOTICE THE ASSESSEE SUBMITTED THAT ASSESSEE IS A TRADER OF HANDICRAFTS WHO IS BUYING THE WOODEN HAN DICRAFT FROM SUPPORTING MANUFACTURERS. THE SUPPORTING MANUFACTURERS ARE GENERALLY PROCESSING THE ARTICLES BY USING W OOD AS A BASIC RAW MATERIAL. THE SUPPLIERS ARE SELLING THEIR PRODUCTS TO THE ASSESSEE ON THE BASIS OF SPECIFIC ORDER REQUIREMENT OF THE FOR EIGN BUYERS. THERE IS NO SPECIFIC RESTRICTION TO THE TRADER , WHO HAS JUST OUTSOURCED HIS BUSINESS TO THE OUTSIDER TO REDUCE THE COST OF MANUFACTURING THE ARTICLES AS REQUIRED BY THE FOREIGN BUYER. THEREFORE , IT WAS STATED THAT PROVISION OF SECTION 10AB S AYS THAT THE ELIGIBLE ASSESSEE WHO BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR PROVIDE ANY SERVICES ON OR AFTER 0 1/ 0 4/2005 IS ELIGIBLE FOR THE DEDUCTION . IT WAS FURTHER STATED THAT THERE IS NO RESTRICTION TO THE TRADERS AS PER THAT SECTION AND E LIGIBLE ARTICLE DOES NOT REQUIRE ANY MACHINERY AS THE SAME ARE HANDMADE WHICH ARE OF ARTISTIC VALUE. THE ASSESSEE IS NOT HAVING ANY WORKER. THE LEARNED ASSESSING OFFICER NOTED THAT ASSESSEE HAS ACCEPTED THE FACT THAT THERE IS NO MANUFACTURE OR PRODUCTION , ASSESSEE IS JUST A TRADER AND ALSO NOT HAVING ANY WORKER AND THEREFORE THE CLAIM OF EXEMPTIONS UNDER SECTION 10BA WAS DISALLOWED WHICH WAS CONFIRMED BY THE LEARNED CIT (A) . ON THIS THE PENALTY WAS LEVIED. IN THE PENALTY PROCEEDINGS THE ASSESSEE ALSO REITERATED THE SUBMISSIONS MADE BEFORE THE KOHLI INTERCONTINENTAL VS ACIT ITA NO. 6050/DEL/2016 (ASSESSMENT YEAR: 2006 - 07) PAGE | 3 LEARNED ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND STATED THAT THE CLAIM MADE BY THE ASSESSEE HAS BEEN REJECTED HOWEVER IT WAS NOT FOUND FALSE. T HE LEARNED ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND THE LEVIED THE PENALTY U/S 271(1)( C ) OF THE ACT OF RS. 2 52230/ - HOLDING THAT ASSESSEE HAS FILED INACCURATE PARTICULARS OF ITS INCOME TO THE EXTENT OF RS. 830762/ - I.E. THE AMOUNT OF DEDUCTION CLAIMED UNDER SECTION 10BA OF THE INCOME TAX ACT . THE LEARNED ASSESSING OFFICER FURTHER NOTED THAT IF THERE IS A LOSS OF REVENUE, THE LEVY OF PENALTY IS JUSTIFIED AND GENUINE ENTRY OR WI L LFUL CONCEALMENT IS TO BE PROVED OR LOSS OF REVENUE AS DISA LLOWANCE HAS BEEN CONFIRMED BY THE LEARNED CIT (A). CONSEQUENTLY , THE ORDER U/S 271(1)( C ) OF THE ACT WAS PASSED ON 31/ 0 3/2014 LEVYING THE ABOVE PENALTY OF RS. 2 52230/ - . 4. ASSESSEE AGGRIEVED WITH THE ORDER OF THE LEARNED ASSESSING OFFICER PREFERRED THE APPEAL BEFORE THE LEARNED CIT (A) WHO ALSO CONFIRMED THE PENALTY AS PER ORDER DATED 16/ 0 9/2016 AND THEREFORE ASSESSEE AGGRIEVED WITH THAT ORDER HAS PREFERRED THIS APPEAL BEFORE US. 5. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS MADE THE CLAI M BEFORE THE LEARNED ASSESSING OFFICER FOR DEDUCTION U/S 10BA OF THE INCOME TAX ACT . THE ABOVE CLAIM WAS DENIED TO THE ASSESSEE , NO DOUBT , SAME HAS BEEN CONFIRMED BY THE COMMISSIONER OF INCOME TAX(APPEALS) . HOWEVER , THE ASSESSEE HAS COMPLETELY PRODUCED THE INFORMATION IN THE COMPUTATION OF THE TOTAL INCOME AND NO INACCURATE PARTICULARS WERE FILED BY THE ASSESSEE. NONE OF THE PARTICULARS FILED BY THE ASSESSEE WERE FOUND TO BE WRONG. HE THEREFORE STATED THAT WHEN THER E IS A MERE DENIAL OF DEDUCTION, THE PENALTY ON THE SAME CANNOT BE LEVIED. HE FURTHER REFERRED TO THE FACT THAT THE LEARNED ASSESSING OFFICER HAS ISSUED NOTICE U/S 274 READ WITH SECTION 271 OF THE INCOME TAX ACT ON 15/12/2008 WHERE NONE OF THE TWIN CHARGE S HAVE BEEN STRUCK OF BY THE LEARNED ASSESSING OFFICER . HE , THEREFORE , SUBMITTED THAT IN SUCH CIRCUMSTANCES THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER IS NOT SUSTAINABLE IN VIEW OF THE SEVERAL DECISIONS. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEH EMENTLY SUPPORTED THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE CLAIM OF THE ASSESSEE WAS KOHLI INTERCONTINENTAL VS ACIT ITA NO. 6050/DEL/2016 (ASSESSMENT YEAR: 2006 - 07) PAGE | 4 FOUND TO BE FALSE AND THEREFORE THE PENALTY HAS BEEN RIGHTLY LEVIED. IT WAS FURTHER STATED THAT IN THE ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING O FFICER IT IS CLEARLY STATED THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREFORE ASSESSEE WAS AWARE OF THE SPECIFIC CHARGE AGAINST IT. MERELY NOT CANCELLING ONE OF THE TWIN CHARGES BY THE LEARNED ASSESSING OFFICER IN A NON - STATUTORY NOTICE DOES NOT VITIATE THE PENALTY PROCEEDINGS AND SUBSEQUENT LEVY OF THE PENALTY. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN THE PRESENT CASE THE ASSESSEE HAS FURNISHED, FORM NO. 56H OF THE INCOM E TAX ACT WHERE THE ASSESSEE IN PARA NO. 5 OF ANNEXURE A HAS CLEARLY DISCLOSED THAT ASSESSEE IS A TRADER OF HANDICRAFTS. THE CLAIM OF THE ASSESSEE HAS FURTHER BEEN CERTIFIED BY THE CHARTERED ACCOUNTANT . THE SALE PROCEEDS OF EXPORT IS RECEIVED IN CONVERTIB LE FOREIGN EXCHANGE. THE COMPUTATION OF THE DEDUCTION HAS BEEN MADE BY ACCOUNTANT AS PER CERTIFICATE DATED 30/10/2006. NO DOUBT, THE CLAIM OF THE ASSESSEE IS NOT ALLOWABLE TO THE ASSESSEE WHICH HAS BEEN ACCEPTED BY THE ASSESSEE ALSO BUT COMPLETE PARTICULARS HAVE BEEN FURNISHED BY THE ASSESSEE. IT IS A MERE CLAIM WHICH HAS BEEN REJECTED. FURTHER , LOOKING AT THE NOTICE DATED 15/12/2008 ISSUED BY THE LEARNED ASSESSING OFFICER U/S 274 READ WITH SECTION 271 OF THE INCOME TAX ACT HAS CLEARLY SHOWS THA T NONE OF THE TWIN CHARGES HAVE BEEN CANCELLED BY THE LEARNED ASSESSING OFFICER . THOUGH THE LD AO HAS INITIATED PENALTY PROCEEDINGS ON FURNISHING OF INACCURATE PARTICULARS HOWEVER IN THE PENALTY NOTICE THE ASSESSING OFFICER HAS NOT STATED SO BUT HAS OPENED BOTH THE CHARGES FOR LEVY OF THE PENALTY. THEREFORE , THERE IS ALWAYS A CONFUSION IN THE MIND OF THE TAXPAYER. 8. BARE PERUSAL OF THE NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT, EXTRACTED ABOVE, IN ORDER TO INITIATE THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE GOES TO PROVE THAT THE AO HIMSELF WAS NOT AWARE / SURE AS TO WHETHER HE IS ISSUING NOTICE TO INITIATE THE PENALTY PROCEEDINGS EITHER FOR 'CONCEALMENT OF PARTICULARS OF INCOME' OR 'FU RNISHING OF INACCURATE PARTICULARS OF SUCH INCOME' BY THE ASSESSEE RATHER ISSUED VAGUE AND AMBIGUOUS NOTICE BY INCORPORATING BOTH THE LIMBS OF SECTION KOHLI INTERCONTINENTAL VS ACIT ITA NO. 6050/DEL/2016 (ASSESSMENT YEAR: 2006 - 07) PAGE | 5 271(1)(C) . WHEN THE CHARGE IS TO BE FRAMED AGAINST ANY PERSON SO AS TO MOVE THE PENAL PROVISIONS AGAINST HIM/HER, HE/SHE IS REQUIRED TO BE SPECIFICALLY MADE AWARE OF THE CHARGES TO BE LEVELED AGAINST HIM/HER. HON'BLE HIGH COURT OF KARNATAKA IN CASE OF CIT VS . MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) WHILE DECIDING THE IDENTICAL ISSUE HELD THAT WHEN THE AO HAS FAILED TO ISSUE A SPECIFIC SHOW - CAUSE NOTICE TO THE ASSESSEE AS REQUIRED U/S 274 READ WITH SECTI ON 271(L)(C) , PENALTY LEVIED IS NOT SUSTAINABLE. THE OPERATIVE PART OF THE JUDGMENT IS REPRODUCED AS UNDER: - '59. AS THE PROVISION STANDS, THE PENALTY PROCEEDINGS CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORITY CATE GORICALLY RECORDS A FINDING REGARDING THE EXISTENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274 , THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF THE EXISTENCE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXP LANATION 1 OR IN EXPLANATION 1 (B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HA VE FULL OPPORTUNITY TO MEET THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271 (1)( C) DO NOT EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPARTMENT SE NDING A PRINTED FORM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS SAID PROVISIONS HAVE TO BE HELD TO BE STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SA Y, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE KOHLI INTERCONTINENTAL VS ACIT ITA NO. 6050/DEL/2016 (ASSESSMENT YEAR: 2006 - 07) PAGE | 6 OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENAL TY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POI NT OUT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON T HE GROUNDS ON WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE IN ITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE P ARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF T AS HOK POI V. CIT [2007] 292 ITR 11 /161 TAXMAN 340 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF CIT V. MANU ENGG. [1980] 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRGO MARKETING (P) LTD . [2008] 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR P ENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING KOHLI INTERCONTINENTAL VS ACIT ITA NO. 6050/DEL/2016 (ASSESSMENT YEAR: 2006 - 07) PAGE | 7 INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON - APPLICATION OF MIND. ' 9. HON'BLE APEX COURT IN CASE OF CIT VS. SSA 'S EMERALA MEADOWS - (2016) 73 TAXMANN.COM 248 (SC) WHILE DIS MISSING THE SLP FILED BY THE REVENUE QUASHING THE PENALTY BY THE TRIBUNAL AS WELL AS HON'BLE HIGH COURT ON GROUND OF UNSPECIFIED NOTICE HAS HELD AS UNDER: - ' SECTION 274 , READ WITH SECTION 271(1)(C) , OF THE INCOME - TAX ACT , 1961 - PENALTY - PROCEDURE FOR IMPOSITION OF (CONDITIONS PRECEDENT) - ASSESSMENT YEAR 2009 - 10 - TRIBUNAL, RELYING ON DECISION OF DIVISIO N BENCH OF KARNATAKA HIGH COURT RENDERED IN CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY [2013] 359 1TR 565/218 TAXMAN 423/35 TAXMANN.COM 250, ALLOWED APPEAL OF ASSESSEE HOLDING THAT NOTICE ISSUED BY ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271 (1 )(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271 (1 )(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME - HIGH COURT HELD THAT MATTER WAS COVERED BY AFORESAID DECISION OF D IVISION BENCH AND, THEREFORE, THERE WAS NO SUBSTANTIAL QUESTION OF LAW ARISING FOR DETERMINATION - WHETHER SINCE THERE WAS NO MERIT IN SLP FILED BY REVENUE, SAME WAS LIABLE TO BE DISMISSED - HELD, YES [PARA 2] [IN FAVOUR OF ASSESSEE]' 10. HON'BLE DELHI HIGH COURT IN CASE OF PR. CIT VS. SAHARA INDIA LIFE INSURANCE COMPANY LTD . (SUPRA) WHILE DECIDING THE IDENTICAL ISSUE HELD AS UNDER : - '21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271 (1) (C) OF THE ACT, WHICH WAS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF THE KARNATAKA HIGH COURT IN CIT V. MANJUNATHA COTTON & G INNING FACTORY 359 ITR 565 (KAR) AND OBSERVED THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) (C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED UNDER I. E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIGH COURT HAD FOLLOWED THE ABOVE JUDGMENT IN THE SUBSEQUENT ORDER IN COMMISSIONER OF INCOME TAX V. SSA 'S EMERALD MEADOWS (2016) 73 TAXMAN.COM 241 (KAR) , THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA IN SLP NO. 11485 OF2016 BY ORDER DATED 5TH AUGUST, 2016.' KOHLI INTERCONTINENTAL VS ACIT ITA NO. 6050/DEL/2016 (ASSESSMENT YEAR: 2006 - 07) PAGE | 8 11. FOLLOWING THE DECISIONS RENDERED IN THE CASES OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY, CIT VS. SSA 'S EMERALA MEADOWS AND PR. CIT VS. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (SUPRA), WE ARE OF THE C ONSIDERED VIEW THAT WHEN THE NOTICE ISSUED BY THE AO IS BAD IN LAW BEING VAGUE AND AMBIGUOUS HAVING NOT SPECIFIED UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS INITIATED U/S 271 (1)(C) ARE NOT SUSTAINABLE. SO, INITIATING PENALTY PROCEEDINGS ON THE BASIS OF VAGUE AND AMBIGUOUS NOTICE IS BAD IN LAW AND AS SUCH NOT SUSTAINABLE. 12. CONSEQUENTLY, PENALTY LEVIED BY THE AO AND CONFIRMED BY THE LD. CIT (A) IS DELETED AND THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 / 11 / 2019 . - SD/ - - SD/ - ( K.N.CHARY ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 7 / 11 / 2019 COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI