Rainbow Products Pvt Ltd, Patna V. ACIT, Central Circle-1, Patna

ITA 61/PAT/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6331 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2014-2015
• Appeal Filed On: 21-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDERJI T SINGH
• Assessee Lawyers: N O N E
• Keywords: Opportunity of being heard; Principle of natural justice; Retrospective amendment; Reasonable cause; Set aside
• Section: 271(1)(c); 153A; 292BB; 274; 139(1); 27; 2; 139

Judgement Text

1 ITA NO.61/PAT/2019 RAINBOW PRODUCTS PVT. LTD., AY-2014-15 IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, VIRTUAL HEARING AT KOLKATA [BEFORE SHRI S. S. GODARA, JM & DR. A. L. SAINI, AM ] I.T.A. NO. 61/PAT/2019 ASSESSMENT YEAR:2014-15 RAINBOW PRODUCTS PVT. LTD. (PAN: AABCR1033L) VS. ASSISTANT COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE-1, PATNA APPELLANT RESPONDENT DATE OF HEARING 17.09.2020 DATE OF PRONOUNCEMENT 17.09.2020 FOR THE APPELLANT N O N E FOR THE RESPONDENT SHRI INDERJIT SINGH, CIT, DR ORDER PER BENCH THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 ARISES AGAINST THE COMMISSIONER OF INCOME-TAX (APPEAL)-3, PATNAS ORDE R DATED 13.12.2018 PASSED IN CASE NO.ITBA APPEAL NO.3/100215/2016-17, IMPOSING P ENALTY OF 7,50,000/- IN PROCEEDING U/S. 271AAB OF THE INCOME-TAX ACT, 1961 ; IN SHORT TO AS THE ACT. NONE APPEARED ON BEHALF OF THE ASSESSEE. ACCORDING LY, WE DISPOSE OF THE APPEAL EX PARTE AFTER HEARING THE LEARNED CIT-SENIO R-DR 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE THAT A RISES FOR OUR APT ADJUDICATION IS THAT OF CORRECTNESS OF THE LOWER AUTHORITIES IMPOS ING SECTION 271AAB PENALTY OF 7.50 LAKHS. WITH THE ABLE ASSISTANCE OF MR. SINGH 3 0% OF THE UNDISCLOSED INCOME TO THE TUNE OF 25,00,000/- UNEARTHED DURING THE COURSE OF SEARCH. 132 OF THE ACT. THE ASSESSING OFFICERS PENALTY NOTICE APPARENT TO HAVE NOWHERE SPECIFIED AS TO UNDER WHICH LIMB THE HE SOUGHT TO INVOKE SEC. 271AAB PENA L ACTION. THIS TRIBUNALS CO- ORDINATE BENCH IN SHRI ASHOK BHATIA VS. DCIT CENTRAL-1, INDORE IN ITA NO.869/IND/2018 DECIDED ON 05.02.2020 HAS DELETED IDENTICAL SEC. 2 71AAB IN SIMILAR CIRCUMSTANCES AS UNDER:- 2 ITA NO.61/PAT/2019 RAINBOW PRODUCTS PVT. LTD., AY-2014-15 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RE CORDS PLACED BEFORE US. THE LEGAL ISSUE BEFORE US IS THAT WHETHER THE NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT SUFFERS FROM FATAL ERROR AND TECHNICAL DEFECT THEREBY NOT PROVIDING AN OPPORTUNITY TO THE ASSESSEE TO PLEAD HIS CASE. SINCE THE LEGAL GROUND GOES TO BE ROOT CAUSE OF THE ISSUE LEVYING PENALTY U/S 271AAB OF THE ACT, WE IN VIEW OF THE RATIO HELD BY THE HON'BL E APEX COURT IN THE CASE OF NATIONAL THERMAL POWER COMPANY LIMITED (SUPRA) ADMIT THE ADD ITIONAL LEGAL GROUND FOR ADJUDICATION. FOR LEVYING PENALTY U/ S 271AAB OF THE ACT THE LD. A.O NEEDS TO PRIMARILY ISSUE NOTICE U/S 274 OF THE ACT SO FOR INITIATING PROCEEDINGS U J S 271AAB OF THE ACT THE LD.. A.O HAS TO FIRST PASS THROUGH THE HURDLE OF SECTION 274 OF THE ACT. FOR BETTER UNDERSTANDING WE REPRODUCE THE PROVISIONS OF SECTION 271MB AND 274 OF THE ACT WHIC H READS AS FOLLOWS:- 271AAB . PENALTY WHERE SEARCH HAS BEEN INITIATED.-(1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PRO VISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTIO N 132 ON OR AFTER THE 1ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALT Y, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM,- (A) A SUM COMPUTED AT THE RATE OF TEN PER CENT OF T HE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES TH E MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND (III) ON OR BEFORE THE SPECIFIED DATE- (A) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF THE UNDISCLOSED INCOME; AND (B) FURNISHES THE RETURN OF INCOME FOR THE SPECIFIED P REVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN; (B) A SUM COMPUTED AT THE RATE OF TWENTY PER CENT O F THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, DOES NOT ADMIT THE UNDISCLOSED INCOME; AND (II) ON OR BEFORE THE SPECIFIED DATE- (A) DECLARES SUCH INCOME IN THE RETURN OF INCOME FURNIS HED FOR THE SPECIFIED PREVIOUS YEAR; AND (B) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN R ESPECT OF THE UNDISCLOSED INCOME; (C) A SUM WHICH SHALL NOT BE LESS THAN THIRTY PER C ENT BUT WHICH SHALL NOT EXCEED NINETY PER CENT OF THE UNDISCLOSED INCOME OF THE SP ECIFIED PREVIOUS YEAR, IF IT IS NOT COVERED BY THE PROVISIONS OF CLAUSES (A) AND (B). (2) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF S UB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF TH E UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). 3 ITA NO.61/PAT/2019 RAINBOW PRODUCTS PVT. LTD., AY-2014-15 (3) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, AS F AR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION. EXPLANATION.-FOR THE PURPOSES OF THIS SECTION,- (A) ' SPECIFIED DATE ' MEANS THE DUE DATE OF FURNISHING OF RETURN OF INC OME UNDER SUB- SECTION (I) OF SECTION 139 OR THE DATE ON WHICH THE PERIOD SPECIFIED IN THE NOTICE ISSUED UNDER SECTION 153A FOR FURNISHING OF RETURN OF INCOME EXPIRES, AS THE CASE MAY BE; (B) ' SPECIFIED PREVIOUS YEAR ' MEANS THE PREVIOUS YEAR-- (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 FOR SUC H YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED T HE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE DATE OF SEARCH; OR (II) IN WHICH SEARCH WAS CONDUCTED; (C) ' UNDISCLOSED INCOME ' MEANS- (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRE SENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS- (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISSIO NER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. '. SECTION 274 OF THE ACT (1) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHA LL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD} OR HAS BEEN GIVEN A REASONABLE OPPORTUN ITY OF BEING HEARD. (2) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHA LL BE MADE- (A) BY THE INCOME- TAX OFFICER, WHERE THE PENALTY EXCEE DS TEN THOUSAND RUPEES; (B) BY THE ASSISTANT COMMISSIONER} WHERE THE PENALTY E XCEEDS TWENTY THOUSAND RUPEES) EXCEPT WITH THE PRIOR APPROVAL OF THE DEPUT Y COMMISSIONER.] (3) AN INCOME- TAX AUTHORITY ON MAKING AN ORDER UNDER THIS CHAPTER IMPOSING A PENALTY, UNLESS HE IS HIMSELF THE ASSESSING OFFICER, SHALL F ORTHWITH SEND A COPY OF SUCH ORDER TO THE ASSESSING OFFICER'] 8. FROM PERUSAL OF THE ABOVE PROVISION WE OBSERVE THA T SUB SECTION 3 OF SECTION 271AAB OF THE ACT TALKS ABOUT ISSUING THE NOTICE U/S 274 OF T HE ACT. SO FOR INITIATING THE PENALTY PROCEEDINGS U/S 271AAB OF THE ACT THE FIRST STEP TO BE TAKEN BY LD. A.O IS TO ISSUE A VALID 4 ITA NO.61/PAT/2019 RAINBOW PRODUCTS PVT. LTD., AY-2014-15 NOTICE U/S274 OF THE ACT. SUB-SECTION (1) TO SECTIO N 274 OF THE ACT PROVIDES A PROCEDURE THAT NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHAL L BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD, OR HAS BEEN GIVEN A REASONABLE OPPORTUN ITY OF BEING HEARD '. TO COMPLY WITH THIS REQUIREMENT THE NOTICE U/S 274 SHOULD BE CLEAR ENOUGH TO CONVEY THE ASSESSEE ABOUT THE CHARGE WHICH IS TO BE LEVIED AGAINST HIM/HER/IT FOR LEVYING THE PENALTY FOR THE CONTRAVENTION OF THE RELATED PROVISIONS OF THE ACT WHICH IN THE INST ANT CASE RELATES TO NOT SURRENDERING OF UNDISCLOSED AMOUNT DURING THE COURSE OF SEARCH WHIC H IS SUBSEQUENTLY ADMITTED DURING THE COURSE OF ASSESSMENT AND NOT CHALLENGED BEFORE THE LD. CIT(A). SO IT WAS INCUMBENT FOR LD. A.O THAT IN THE NOTICE ISSUED U/S 274 OF THE ACT HE SHOULD HAVE MENTIONED THAT PENALTY U/S 271MB OF CLAUSES (A)/(B)/(C) OF SECTION 271AAB OF T HE ACT. HE SHOULD HAVE THE ACT MAY BE LEVIED @10 /20 / 30% SINCE THE ASSESSEE FALLS IN CL AUSES (A) / (B) / (C) OF SECTION 271AAB OF THE ACT. HE SHOULD HAVE FURTHER MENTIONED THAT AS T HE ASSESSEES CASE FALLS UNDER CLAUSE-C OF SECTION 271AAB OF THE ACT, WHY SHE SHOULD NOT BE VI SITED BY PENALTY @ 30% OF THE UNDISCLOSED INCOME. AGAINST THIS CHARGE THE ASSESSE E SHOULD HAVE BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. 9. NOW LET US REVERT BACK TO THE FACT OF THE INSTANT CASE OF THE ASSESSEE AND LOOK INTO WHAT HAS BEEN MENTIONED IN THE ALLEGED NOTICES ISSUED U/S 27 4 R.W.S. 2371AAB OF THE ACT, WHICH ARE REPRODUCED BELOW; NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB OF THE INCOME TAX ACT, 1961 PAN. ACFPB4590H OFFICE OF THE ASSTT. COMMISSIONER OF INCOM E TAX (CENTRAL)-I, INDORE DATE: 22.03.2016 TO SHRI ASHOK KUMAR BHATIA 33-A RADHA NAGAR NEELKANTH COLONY INDORE-452006 WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2014-15 IT APPEARS TO ME THAT YOU :- *HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WITH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVEN UNDER SECTION 22(1)/22(2)/34 OF THE INDIA INCOME TAX ACT, 1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 193( 1) OR BY A NOTICE GIVEN UNDER SECTION 193(2)/148 OF THE INCOME TAX ACT 1961, NO ..... DATED .....OR HAVE WITHOUT REASONABLE CAUSE FAILED TO FUR NISH IT WITHIN THE ALLOWED AND THE MANNER REQUIRED BY THE SIDE SECTION 139(1) OR BY SU CH NOTICE. *HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WIT H A NOTICE UNDER SECTION 22(4)/23(2) OF THE INDIA INCOME TAX ACT, 1922 OR UN DER SECTION 142(1)/143(2) OF THE INCOME TAX ACT 1961, NO. DATED HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FU RNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME ON 21. 04.2016 AT 3.30 PM AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 5 ITA NO.61/PAT/2019 RAINBOW PRODUCTS PVT. LTD., AY-2014-15 271AAB OF THE INCOME TAX ACT 1961 IF YOU DO NOT WIS H TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEARING HEARD IN PERSON OR THROUGH A UTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SIDE DATE WH ICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271AAB. SD/- (AMIT KUMAR SONI) ASSTT. COMMISSIONER OF IN COME TAX (CENTRAL}-I I NDORE OFFICE OF THE DEPUTY C OMMISSIONER OF INCOME TAX (CENTRAL)-I, INDORE PAN. ACFPB4590H DATE: 03.06.2016 TO SHRI ASHOK KUMAR BHATIA 33-A RADHA NAGAR NEELKANTH COLONY INDORE-452006 SIR, SUB: PENALTY FIXATION U/S 271AAB OF THE INCOME TAX ACT, 1961 FOR THE A.Y. 2014- 15-REG. PLEASE REFER TO THE PENALTY PROCEEDINGS U/S 271AAB OF THE INCOME TAX ACT 1961 FOR THE A.Y. 2014-15 IN THE ABOVE MENTIONED CASE, YOU ARE HEREBY REQUESTED TO APPEAR BEFORE THE UNDERSIGNED ON 10.06.2016 AT 11.50AM IN MY OFFICE A T ROOM NO.101, AAYAKARBHAWAN, MAIN OPP. WHITE CHURCH, INDORE PERSONALLY OR THROUG H AUTHORIZED REPRESENTATIVE TO SHOW CAUSE AS TO WHY PENALTY U/S 271AAB OF THE LT. ACT 1 961 BE NOT LEVIED AGAINST YOU? IF YOU DO NOT WANT TO APPEAR PERSONALLY, YOU MAY SEND YOUR WR ITTEN REPLY ON OR BEFORE ABOVE MENTIONED DATE, OTHERWISE PENALTY PROCEEDINGS SHALL BE DECIDE D ON MERITS. SD/- (AMIT KUMAR SONI) DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL)-I INDORE OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL)-I, INDO RE PAN. ACFPB4590H DATE: 16.09.2 016 TO SHRI ASHOK KUMAR BHATIA 33-A RADHA NAGAR NEELKANTH COLONY INDORE-452006 SIR, SUB: PENALTY FIXATION U/S 271AAB R.W.S. 1~9 OF THE INCOME TAX ACT, 1961 -REG, PLEASE REFER TO THE ABOVE THE FOLLOWING PENALTY PROCEEDING ARE INITIATED DURI NG ASSESSMENT AS MENTIONED BELOW: 6 ITA NO.61/PAT/2019 RAINBOW PRODUCTS PVT. LTD., AY-2014-15 S.NO. A.Y. SECTION PENALTY INITIATED ON 1 2014-15 271AAB 22.03.2016 YOU ARE REQUESTED TO APPEAR BEFORE THE UNDERSIGNED ON 19.09.2016 AT 11.00 AM IN MY OFFICE AT ROOM NO.101, AAYAKARBHAWAN, MAIN OPP. WHITE CHUR CH, INDORE PERSONALLY OR THROUGH AUTHORIZED REPRESENTATIVE TO SHOW CAUSE AS TO WHY P ENALTY U/S 271AAB OF THE I.T. ACT 1961 BE NOT LEVIED AGAINST YOU? IF YOU DO NOT WANT TO APPEA R PERSONALLY, YOU MAY SEND YOUR WRITTEN REPLY ON OR BEFORE ABOVE MENTIONED DATE. IF ANY THA T YOU HAVE NOTHING TO SAY IN THIS REGARD. IT IS TO BROUGHT TO YOUR NOTICE THAT THERE IS A CHANGE IN INCUMBENT HENCE THIS NOTICE IS ISSUED TO PROVIDE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SD/- (AMIT KUMAR SONI) DEPUTY COMMISSIONER OF INCOME T AX (CENTRAL}-I INDORE 10. FROM GOING THROUGH THE ABOVE THREE NOTICES ISSUED TO THE ASSESSEE ON 22.03.2016, 03.06.2016 AND 16.09.2016, WE FIND THAT THERE IS NO MENTION ABOUT VARIOUS CONDITIONS PROVIDED U/S 271 AAB OF THE ACT. THE LD. A.O HAS VERY CASUALLY USED THE PROFORM A USED FOR ISSUING NOTICE BEFORE LEVYING PENALTY U/S 271(1)(C) OF THE ACT FOR THE CONCEALMENT OF INC OME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. EXCEPT MENTIONING THE SECTION 271AAB OF THE ACT IN THE NOTICE IT DOES NOT TALK ANYTHING ABOUT THE PROVISION OF SECTION 271MB. CERTAINLY SUC H NOTICE HAS A FATAL ERROR AND TECHNICALLY IS NOT A CORRECT NOTICE IN THE EYES OF LAW BECAUSE IT INTEND S TO PENALIZE AN ASSESSEE WITHOUT SPELLING ABOUT TH E CHARGE AGAINST THE ASSESSEE. 11. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PC IT V/S KULWANT SINGH BHAIIA (SUPRA) DEALT THE ISSUE OF DEFECTIVE NOTICE ISSUED II] 274 R.W.S. 27 1(1)(C) OF THE ACT AND HON'BLE COURT AFTER RELYING JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CI T V/S MANJUNATHA COTTON GINNING FACTORY AND CIT V/S SSA'S EMERALD MEADOWS (SUPRA) HELD THAT SUC H SHOW CAUSE NOTICES WOULD NOT SATISFY THE REQUIREMENT OF LAW AS NOTICE WAS NOT SPECIFIC. MERE LY ISSUING NOTICE IN GENERAL PROFORMA WILL NEGATE THE VERY PURPOSE OF NATURAL JUSTICE. HON'BLE APEX C OURT IN THE CASE OF DILIP N SHRAF 161 TAXMANN 218 HELD THAT ' THE QUASI CRIMINAL PROCEEDINGS U/ S 271 (1 )(C) OF THE ACT OUGHT TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE '. 12. IN THE CASE OF DCIT VIS R. ELANGOVAN LTD (SUPRA) , CO-ORDINATE BENCH, CHENNAI WHILE DEALING WITH THE LEGAL GROUND CHALLENGING THE VALIDITY OF N OTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT OBSERVED THAT; 'IT IS CLEAR FROM THE SUB SECTION (3) OF SECTION 27 1 AAB THAT SECTIONS 274 AND SECTION 275 OF THE ACT SHALL, SO FAR AS MAY BE, APPLY. SUB SECTION (1) OF SECTION 274 OF THE ACT MANDATES THAT ORDER IMPOSING PENALTY HAS TO BE IMPOSED ONLY AFTER HEARING THE ASSESSEE OR GIVING A ASSESSEE OPPORTUNITY OF HEARING. OPPORTUNITY THAT IS TO BE G IVEN TO THE ASSESSEE SHOULD BE A MEANINGFUL ONE AND NOT A FARCE. NOTICE ISSUED TO THE ASSESSEE REPRODUCED (SUPRA), DOES NOT SHOW WHETHER PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR HAVING UNDISCLOSED INC OME WITHIN THE MEANING OF SECTION 271AAB OF THE ACT. NOTICE IN OUR OPINION WAS VAGUE. HON'BLEKAMATAKA HIGH COURT IN THE CASE OF SSA 'S EMERALD MEADOWS (SUPRA) RELYING IN I TS OWN JUDGMENT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAD H ELD AS UNDER:- ' 2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWING S UBSTANTIAL QUESTIONS OF LAW. 7 ITA NO.61/PAT/2019 RAINBOW PRODUCTS PVT. LTD., AY-2014-15 (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICIT LY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF I NACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER L IABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUB T THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE PENALTY NO TICE UNDER SECTION 274 R.W.S. 271(1)(C) IS BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 271 (1B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROP ERLY RECORDING THE SATISFACTION FOR THE SAME? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAINST THE R EVENUE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPE CIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE A SSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WIT H SECTION 271 (L)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT,) TO BE B AD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271 (1 )(C) OF THE ACT, THE P ENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHI LE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISIO N BENCH OF THIS COURT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING F ACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGMEN T OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIAL QUESTI ON OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDIN GLY DISMISSED '. IN THE EARLIER CASE OF MANJUNATHA COTTON AND GINNIN G FACTORY (SUPRA) THEIR LORDSHIP HAD OBSERVED AS UNDER:- 'NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFI CALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C) , I.E., WHETHER IT IS FOR CONC EALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME. SENDING PRINTED FO RM WHERE ALL THE GROUNDS MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SA TISFY THE REQUIREMENT OF LAW; THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS T O MEET SPECIFICALLY. OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE ARE OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIM B IS BAD IN LAW; PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEE DINGS: THOUGH PROCEEDINGS FOR IMPOSITION OF PENALTY EMANATE FROM PROCEEDINGS OF A SSESSMENT, THEY ARE INDEPENDENT AND A SEPARATE ASPECT OF THE PROCEEDINGS; THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS IN SO FAR AS ' CONCEALMENT OF INCOME ' AND ' FURNISHING OF INCORRECT PARTICULARS ' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSES SEE TO CONTEST THE PROCEEDINGS ON THE MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF 8 ITA NO.61/PAT/2019 RAINBOW PRODUCTS PVT. LTD., AY-2014-15 WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATT ER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED INVAL ID IN THE PENALTY PROCEEDINGS'. VIEW TAKEN BY THE HON'BLE KARNATAKA HIGH COURT IN T HE ABOVE JUDGMENT WAS INDIRECTLY AFFIRMED BY THE HORI 'BLE APEX COURT, WH EN IT DISMISSED AN SLP FILED BY THE REVENUE AGAINST THE JUDGMENT IN THE CASE OF SSA 'S EMERALD MEADOWS (SUPRA), SPECIFICALLY OBSERVING THAT THERE WAS NO MERITS IN THE PETITION FILED BY THE REVENUE. CONSIDERING THE ABOVE CITED JUDGMENTS, WE HOLD THAT THE NOTICE ISSUED U/S.274 R. W.S. 271AAB OF THE ACT, REPRODUCED BY US AT PARA 5 ABOVE WAS NOT VALID. EX-CONSEQUENTI, THE PENALTY ORDER IS SET ASIDE . 13. THE VIEW TAKEN BY THE CO-ORDINATE BENCH OF CHENNAI IN THE CASE OF DCIT V/S R. ELANGOVAN 1199/CHNY/2017 ORDER DATED 05.04.2018 HAS BEEN SUBSEQUENTLY FOLLOWED BY THE CO-ORDINATE BENCH OF JAIPUR IN THE CASE OF RAM MATH UR VS. DCIT, ITA NO.969/JP/2017 HOLDING THAT SUCH SHOW CAUSE NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT ARE NOT SUSTAINABLE IN LAW. 14. AS REGARDS TO JUDGMENT OF HON'BLE ALLAHABAD HIGH C OURT IN THE CASE OF PR. CIT VS SANDEEP CHANDAK (SUPRA) WHICH HAS BEEN RELIED BY TH E DEPARTMENTAL REPRESENTATIVE IS CONCERNED, WE FIND THAT IN THE DECISION RENDERED BY THE CO-ORDINATE BENCH OF JAIPUR IN THE CASE OF RAM MATHURVS DCIT (SUPRA) WHEREIN ALSO SIMI LAR ISSUE OF DEFECTIVE NOTICE U/S 274 R.W.S. 271AAB WAS ADJUDICATED, THE JUDGMENT OF HON' BLE A1LAHABAD HIGH COURT IN THE CASE OF PR. CIT VS SANDEEP CHANDAK (SUPRA) HAS BEEN DISC USSED AND DISTINGUISHED OBSERVING AS FOLLOWS:- IT IS FURTHER SUBMITTED THAT IN PARA 5 OF THIS JUDG MENT (RAUIMATHUR), THE CASE QUOTED BY ID CIT(A) PR. CIT VS SANDEEP CHANDAK (ALL.) WAS DISTIN GUISHED AS UNDER: 5. BEFORE WE PROCEED FURTHER, THE DECISIONS RELIED UP ON BY THE LD D/R ARE TO BE CONSIDERED. IN THE CASE OF PRINCIPAL CIT VS SANDEEP CHANDAK& OTHERS [ TS-6389- HC-20 17(ALLAHABAD)-O] (SUPRA) THE ISSUE BEFORE THE HON 'BLE HIGH COURT W AS THE DEFECT IN THE NOTICE ISSUED UNDER SECTION 271AAB ON ACCOUNT MENTIONING WRONG PROVISION OF THE ACT BEING 271(1)(C) OF THE ACT. TH E HON'BLE HIGH COURT AFTER CONSIDERING THE FACT THAT THE SHOW CAUSE NOTICE ISS UED BY THE AO THOUGH MENTIONS SECTION 271(1) IN THE CAPTION OF THE SAID NOTICE, H OWEVER, THE BODY OF THE SHOW CAUSE NOTICE CLEARLY MENTIONS SECTION 271AAB, WHICH WAS F ULLY COMPREHENDED BY THE ASSESSEE AS REVEALS IN THE REPLY FILED BY THE ASSES SEE AGAINST THE SAID SHOW CAUSE NOTICE. HENCE THE HON'BLE HIGH COURT HAS HELD AS UN DER: - 'THE ID A.RS HAVE ALSO CHALLENGED THAT THE CAPTION OF THE NOTICE MENTIONED ONLY SECTION 271 AND NOT 271AAB. IN THIS RESPECT, T HE COPY OF NOTICE HAS BEEN PRODUCED BY THE ID. A.R. BEFORE ME. IT IS SEEN THAT THE ID A.R IS CORRECT IN OBSERVING THAT THE SECTION OF PENALTY HAS NOT BE EN CORRECTLY MENTIONED BY THE AO IN THE CAPTION. HOWEVER, THE AO WILL GET THE BENEFIT OF SECTION 292BB OF THE INCOME TAX ACT, 1961 BECAUSE FIRSTLY, THE ASSESSEE HAS RAISED NO OBJECTION BEFORE THE AO IN THIS REGARD. SECONDLY , LAST LINE OF THE NOTICE CLEARLY MENTIONS SECTION 271AAB. THIRDLY, THE ASSES SEE HAS GIVEN REPLY TO SAID NOTICE WHICH SHOWS THAT THE ASSESSEE FULLY COM PREHENDED THE IMPLICATION OF THE NOTICE THAT IT IS FOR SECTION 271 AAB. THE ASSESSEE HAS ALSO CHALLENGED THAT THE PRINCIPLE S OF NATURAL JUSTICE HAS NOT FOLLOWED BY THE AD. THE DETAILED SUBMISSIONS OF A.R . IN THIS REGARD HAS ALREADY BEEN REPRODUCED ABOVE. THE A.R. DID NOT PRO DUCE ANY EVIDENCE TO 9 ITA NO.61/PAT/2019 RAINBOW PRODUCTS PVT. LTD., AY-2014-15 SHOW THAT HE WAS NOT GIVEN PROPER OPPORTUNITY OF HE ARING. IT IS CLEAR FROM THE PENALTY ORDER THAT THE AO HAS GIVEN NOTICE AND WHIC H WAS ALSO REPLIED BY THE ASSESSEE. THEREFORE, IN MY OPINION, PRINCIPLE OF NA TURAL JUSTICE HAS NOT BEEN VIOLATED. THUS IN VIEW OF ABOVE DISCUSSION PENALTY IMPOSED BY AO U/. 271AAB OF THE ACT IS CONFIRMED .' THUS IT WAS FOUND BY THE HON'BLE HIGH COURT THAT TH E MISTAKE IN MENTIONING THE SECTION IN THE SHOW CAUSE NOTICE IS COVERED UNDER S ECTION 292BB AND THE AO WILL GET THE BENEFIT OF THE SAME. THE SAID DECISION WILL NOT HELP THE CASE OF THE REVENUE SO FAR AS THE ISSUE INVOLVES THE MERITS OF LEVY OF PENALTY UNDER SECTION 271AAB. AS REGARDS THE DECISION OF KOLKATA BENCHES OF THE TRIBUNAL IN THE CASE OF DCIT VS AMIT AGRAWAL ( TS-7675-ITAT-2017(KOLKATAJ-O ) (SUPRA), WE FIND THAT THE SAID DECISION WAS SUBSEQUENTLY RECALLED BY THE TRIBUNAL AND A FRE SH ORDER DATED 14TH MARCH, 2018 WAS PASSED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSE E. THEREFORE, THE DECISION RELIED UPON BY THE LD D/R IS NO MORE IN EXISTENCE. ' 15. WE, THEREFORE RESPECTFULLY FOLLOWING THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT V/S KULWANT SINGH BHATIA (SUPRA), DECISION OF CO-ORDINATE BENCH OF CHENNAI IN THE CASE OF DCIT V/S R. ELANGOVAN (SUPRA) AND JAIPUR BE NCH IN THE CASE OF RAM MATHURVS DCIT (SUPRA) AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WHEREIN THE MATTER WRITTEN IN THE BODY OF THE NOTICE ISSUED U/S 274 OF THE ACT DOES N OT REFER TO THE CHARGES OF PROVISION OF SECTION 271AAB OF THE ACT MAKES THE ALLEGED NOTICE DEFECTIVE AND INVALID AND THUS DESERVES TO BE QUASHED. SINCE THE PENALTY PROCEEDINGS ITSELF HAS BEEN QUASHED THE IMPUGNED PENALTY OF RS.64,22,348/- STANDS DELETED. THUS ASSESSEE SUCCEE DS ON LEGAL GROUND CHALLENGING THE VALIDITY OF NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT. 16. SINCE THE PENALTY U/S 271AAB HAS BEEN DEALT AND DE LETED ON THE PRELIMINARY LEGAL POINTS, OTHER ARGUMENTS OF THE ASSESSEE DEALING WITH THE ME RITS OF THE LEVY OF PENALTY ARE NOT BEEN DEALT WITH, AS THE SAME ARE RENDERED ACADEMIC IN NA TURE. THUS GROUNDS RAISED ON MERITS ARE DISMISSED AS INFRUCTUOUS. APPEAL OF THE ASSESSEE FO R THE ASSESSMENT YEARS 2014-15 IS PARTLY ALLOWED . WE ADOPT THE ABOVE EXTRACTED DETAILED REASONING MUTATIS MUTANDIS TO DELETE THE IMPUGNED PENALTY. 3. THIS ASSESSEES APPEAL IS ALLOWED. ORDER IS PRONOUNCED IN OPEN COURT ON 17TH SEPTEMBER , 2020 AT THE TIME OF HEARING. SD/- SD/- (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) *JD/DKP. SR.P.S. - 17/09/2020 10 ITA NO.61/PAT/2019 RAINBOW PRODUCTS PVT. LTD., AY-2014-15 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S. RAINBOW PRODUCTS PVT LTD., 603, ASH IANA PLAZA, BUDH MARG, PATNA, BIHAR-800001 2. /RESPONDENT-ACIT, CENTRAL CIRCLE-1, PATNA 3. / CONCERNED CIT PATNA 4. - / CIT (A) PATNA 5. , ,/ DR, ITAT, PATNA 6. / GUARD FILE. /TRUE COPY/ BY ORDER/ , SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO ,