THE ITO, Visakhapatnam V. Makina Annapurna, Visakhapatnam

ITA 625/VIZ/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6522 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C KAMESWARA RAO
• Assessee Lawyers: R S ARAVINDAN
• Keywords: Invalid notice; Principle of natural justice; Question of law; Initiation of penalty proceedings; Reasonable cause; Agreed addition
• Section: 143(3); 54F; 142(1); 133A; 32; 148

Judgement Text

ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.604 & 605/VIZAG/2014 ( / ASSESSMENT YEARS: 2007-08 & 2008-09) SMT. MAKINA ANNAPURNA, VISAKHAPATNAM VS. ITO, WARD - 5(2), RANGE - 5, VISAKHAPATNAM [PAN: APFPM1072A ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NOS.625/VIZAG/2014 ( / ASSESSMENT YEARS: 2009-10) ITO, WARD - 5(2), RANGE - 5, VISAKHAPATNAM VS. SMT. MAKINA ANNAP URNA, VISAKHAPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI C. KAMESWARA RAO, AR / RESPONDENT BY : SHRI R.S. ARAVINDAN, DR / DATE OF HEARING : 24.01.2017 / DATE OF PRONOUNCEMENT : 02.02.2017 ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 2 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THESE ARE TWO APPEALS FILED BY THE ASSESSEE FOR TH E ASSESSMENT YEARS 2007-08 & 2008-09 AND ONE APPEAL F ILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2009-10 ARE DIRECTE D AGAINST COMMON ORDER OF THE CIT(A), VISAKHAPATNAM DATED 26.9.2014. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THEY ARE CLUBB ED, HEARD TOGETHER AND DISPOSED-OFF BY WAY OF THIS COMMON ORDER FOR TH E SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL NOT ASSESSED TO INCOME TAX REGULARLY. A SURVEY OPE RATION U/S 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'TH E ACT') WAS CONDUCTED IN THE ASSESSEES PREMISES ON 10.2.2011. DURING TH E COURSE OF SURVEY, IT WAS NOTICED THAT THE ASSESSEE HAS ENTERED INTO A DE VELOPMENT AGREEMENT ON 6.2.2006 WITH M/S. KAMAL BUILDERS FOR DEVELOPMENT OF LAND OWNED BY HER OF AN EXTENT OF 1272 SQ.YD. AND A GREED TO SHARE THE BUILT UP AREA IN THE RATIO OF 50% FOR THE ASSESSEE AND 50% FOR THE BUILDER. DURING THE COURSE OF SURVEY, WHEN THESE D OCUMENTS WERE CONFRONTED TO THE ASSESSEE, THE ASSESSEE HAS AGREED TO PAY TAX IN ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 3 RESPECT OF SALE PROCEEDS ON SALE OF FLATS FOR THE A SSESSMENT YEARS 2007-08 TO 2009-10. 3. SUBSEQUENTLY, THE A.O. ISSUED NOTICE U/S 148 OF THE ACT ON 25.3.2011 FOR ASSESSMENT YEAR 2007-08 AND ON 27.5.2 011 FOR ASSESSMENT YEARS 2008-09 & 2009-10. IN RESPONSE TO NOTICES, THE ASSESSEE HAD FILED RETURNS OF INCOME DISCLOSING INC OME ADMITTED AS PER SWORN STATEMENT DURING THE COURSE OF SURVEY OPERATI ON. THEREAFTER, THE CASES HAVE BEEN SELECTED FOR SCRUTINY AND ACCORDING LY, NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED. THE ASSESS MENTS WERE COMPLETED U/S 143(3) R.W.S. 147 OF THE ACT, ON 30.1 2.2011 DETERMINING THE TAXABLE INCOME OF ` 1,04,16,000/-, ` 75,47,000/- & ` 66,36,320/- FOR THE ASSESSMENT YEARS 2007-08, 2008-09 & 2009-10 RES PECTIVELY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FOR THE ASSES SMENT YEAR 2007-08, THE A.O. DETERMINED TOTAL INCOME OF ` 1,04,16,000/- AS AGAINST INCOME ADMITTED BY THE ASSESSEE OF ` 68,37,000/-, MAKING AN ADDITION OF ` 35,79,000/- TOWARDS CONSIDERATION FOR UNSOLD FLATS , WHICH WAS CLAIMED EXEMPTION U/S 54F OF THE ACT BY THE ASSESSE E. 4. THEREAFTER, THE A.O. INITIATED PENALTY PROCEEDIN GS U/S 271(1)(C) OF THE ACT, FOR CONCEALMENT OF PARTICULARS OF INCOME A ND FURNISHING INACCURATE PARTICULARS OF INCOME. IN RESPONSE TO S HOW CAUSE NOTICE, THE ASSESSEE FILED A WRITTEN SUBMISSION ON 16.9.2013 ST ATING THAT THERE IS NO ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 4 CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME, AS SHE IS AN AGED AND ILLITERATE LADY NO T ASSESSED TO INCOME TAX IN THE PAST. THE ASSESSEE FURTHER SUBMITTED TH AT SHE HAD ADMITTED INCOME IN RESPECT OF DEVELOPMENT AGREEMENT BEFORE T HE SEARCH PARTY AND FILED HER RETURN OF INCOME FOR ALL THE ASSESSME NT YEARS DISCLOSING INCOME ADMITTED DURING THE COURSE OF SEARCH AND PAI D TAXES. THEREFORE, HER OWN ADMISSION OF ADDITIONAL INCOME IN RESPECT O F DEVELOPMENT AGREEMENT CANNOT BE CONSIDERED AS CONCEALMENT OF PA RTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. IT WAS FURTHER SUBMITTED THAT ALTHOUGH THERE IS A DIFFERENCE IN IN COME ASSESSED BY THE A.O., WHEN COMPARED TO INCOME RETURNED FOR THE ASSE SSMENT YEAR 2007-08, WHICH IS BECAUSE OF REJECTION OF EXEMPTION CLAIMED U/S 54F OF THE ACT, TOWARDS 4 FLATS RETAINED BY HER. SHE HAD CLAIMED EXEMPTIONS TOWARDS 4 FLATS U/S 54F OF THE ACT, BASED ON THE DE CISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. K.G. RU KMINIAMMA, WHICH WAS FOLLOWED BY THE HONBLE A.P. HIGH COURT IN THE CASE OF CIT-2 HYDERABAD VS. SYED ALI ADIL. THOUGH, SHE HAS PREFE RRED AN APPEAL AGAINST THE ORDER OF A.O. FOR THE ASSESSMENT YEAR 2 007-08, SHE HAD WITHDRAWN THE APPEAL FILED BEFORE THE CIT(A) TO COO PERATE WITH THE DEPARTMENT AND TO END THE LITIGATION. THEREFORE, P ENALTY CANNOT BE LEVIED U/S 271(1)(C) OF THE ACT, FOR AGREED ADDITIO NS AND ALSO FOR ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 5 DISALLOWANCE OF A BONAFIDE CLAIM, WHICH IS SUPPORTE D BY THE ORDER OF THE HIGHER JUDICIAL FORUMS. THE ASSESSEE ALSO PLACED H ER RELIANCE IN THE CASES OF CIT VS. SAS PHARMACEUTICALS (2011) 244 CTR (DELHI) 51 AND CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 23 0 CTR (SC) 32. 5. THE A.O. AFTER CONSIDERING THE EXPLANATIONS OF T HE ASSESSEE, HELD THAT THE ASSESSEE HAD NOT MADE OUT ANY REASONABLE C AUSE TO JUSTIFY NON- LEVY OF PENALTY. THE A.O. WAS ALSO OF THE VIEW THA T MENS REA WAS NOT AN ESSENTIAL PRE-REQUISITE FOR CIVIL LIABILITY U/S 271 (1)(C) OF THE ACT, SINCE SUCH PENALTY IS FOR BREACH OF CIVIL LIABILITY AND W ILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING SUCH PENALTY . IN SUPPORT OF HIS FINDINGS, RELIED UPON THE DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS (SC) 306 ITR 277 AND CIT VS. ATUL MOHAN BINDAL (SC) 317 ITR 1. THE A.O. FURTHER OPINED THAT THE ASSESSEES AGREEMENT OF ADDITION OF CONCEA LED INCOME AFTER DETECTION THEREOF DOES NOT OFFER ANY IMMUNITY FROM PENALTY AND FOR WHICH THE A.O. RELIED UPON THE DECISION OF HONBLE HIGH COURT OF KERALA IN THE CASE OF P.C. JOSEPH AND BROTHERS VS. CIT 240 ITR 818 AND HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. RAKESH SURI 331 ITR 458. WITH THESE OBSERVATIONS, OPINED THAT THE A SSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AS ENVISAGED U/ S 271(1)(C) OF THE ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 6 ACT AND AS SUCH IT IS A FIT CASE FOR LEVY OF PENALT Y AND ACCORDINGLY, LEVIED PENALTY OF 100% TAX SOUGHT TO BE EVADED U/S 271(1)( C) OF THE ACT. 6. AGGRIEVED BY THE PENALTY ORDERS, THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS RAISED A LEGAL GROUND IN AS MUCH THE INITIATION OF PENALTY PROCEED INGS IS BAD IN LAW AS THE A.O. HAS NOT RECORDED HIS SATISFACTION IN THE A SSESSMENT ORDER FOR THE INITIATION OF PENALTY. THE ASSESSEE FURTHER CO NTENDED THAT THE A.O. HAS MERELY STATED THAT PENALTY PROCEEDINGS U/S 271( 1)(C) OF THE ACT ARE SEPARATELY INITIATED, WHICH IS NOT SUFFICIENT SATIS FACTION. THE ASSESSEE FURTHER CONTENDED THAT EVEN AFTER INTRODUCTION OF C LAUSE 1(B) TO SECTION 271 OF THE ACT, THE SATISFACTION RECORDED HAS TO BE DISCERNIBLE FROM THE ASSESSMENT ORDER AND ACCORDINGLY, INITIATION OF PEN ALTY PROCEEDINGS IS BAD IN LAW AND LIABLE TO BE QUASHED. TO SUPPORT HE R ARGUMENTS RELIED UPON THE DECISION IN THE CASE OF MADHUSHREE GUPTA V S. UOI 317 ITR 107 AND ALSO THE DECISION OF HONBLE A.P. HIGH COURT IN THE CASE OF CHENNAKESAVA PHARMACEUTICALS VS. CIT 349 ITR 196. THE ASSESSEE FURTHER CONTENDED THAT NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT IS VAGUE, AS THE A.O. HAD NOT SPECIFIED UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY IS EXIGIBLE. IN SUPPORT OF HER ARGUMENTS RELIED UPON THE DECISION OF HONBLE HIGH COURT OF KARNATAKA, ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 7 IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNIN G FACTORY (2013) 359 ITR 565 (KARN). 7. IN SO FAR AS MERITS, THE ASSESSEE CONTENDED THAT SHE IS AN OLD LADY AND WAS ALSO ILLITERATE AND WAS NOT A PERSON REGULA RLY ASSESSED TO INCOME TAX. IT WAS BECAUSE OF HER TRANSACTION TO S ELL AWAY HER LAND ON DEVELOPMENT BASIS, THERE WAS LIABILITY OF INCOME TA X WHICH WAS CAME TO KNOW DURING THE SURVEY PROCEEDINGS. IT WAS FURTHER CONTENDED THAT AS SOON AS SHE CAME TO KNOW THERE IS A TAX LIABILITY I N RESPECT OF DEVELOPMENT AGREEMENT, SHE AGREED TO DISCLOSE INCOM E IN RESPECT OF DEVELOPMENT AGREEMENT AND ACCORDINGLY, FILED RETURN OF INCOME IN RESPONSE TO NOTICE U/S 148 OF THE ACT ADMITTING INC OME DISCLOSED DURING SURVEY OPERATION AND PAID TAXES. THE ASSESSEE FURT HER CONTENDED THAT THOUGH THERE IS SLIGHT DIFFERENCE IN INCOME ASSESSE D BY THE A.O. FOR THE ASSESSMENT YEAR 2007-08, WHICH IS BECAUSE OF REJECT ION OF EXEMPTION U/S 54F OF THE ACT, CLAIMED TOWARDS 4 FLATS RETAINE D BY HER, THEREFORE, PENALTY U/S 271(1)(C) OF THE ACT CANNOT BE LEVIED F OR DISALLOWANCE OF BONAFIDE CLAIM MADE U/S 54F OF THE ACT. IN SUPPORT OF HER CLAIM, RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE C ASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 230 CTR 32 . IN SO FAR AS ASSESSMENT YEAR 2009-10, THE ASSESSEE CONTENDED THA T EXPLANATION (3) TO SECTION 271(1)(C) OF THE ACT, HAS NO APPLICATION AS THE CONDITIONS SET ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 8 OUT IN EXPLANATION (3) FOR ATTRACTING THE PENALTY I S NOT FULFILLED. THE A.O. HAS ISSUED NOTICE U/S 148 OF THE ACT, PRIOR TO THE EXPIRY OF THE STIPULATED PERIOD, AS SUCH PENALTY CANNOT BE LEVIED UNDER EXPL ANATION (3) TO SECTION 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEA R 2009-10. 8. THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE, HELD THAT FROM THE PERUSAL OF THE ASSESSMENT ORDERS , IT IS SEEN THAT THE A.O. HAD STATED THAT PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE INITIATED SEPARATELY. IT IS TO BE SEEN WHETHER THE OBSERVAT ION PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE INITIATED SEPARATELY WOULD BE SUFFICIENT COMPLIANCE TO THE REQUIREMENT STIPULATED IN SECTION 271(1B) OF THE ACT. IT WOULD BE PERTINENT TO NOTE THAT HONBL E SUPREME COURT, IN CIT VS. S.V. ANGIDI CHETTIAR 44 ITR 739 (SC), HAS H ELD THAT A MERE INDICATION AS TO THE INITIATION OF PENALTY PROCEEDI NGS SEPARATELY IN THE ASSESSMENT ORDER IS TANTAMOUNT TO AN INDICATION AS TO THE SATISFACTION OF THE AUTHORITIES. A SIMILAR ISSUE WAS CONSIDERED BY THE HONBLE HIGH COURT OF DELHI, IN THE CASE OF CIT VS. ECS LIMITED 336 ITR 162, WHEREIN IT WAS HELD THAT EVEN IF THE A.O. HAS NOT STATED IN SO MANY WORDS THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED PA RTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS, SUCH SATISFACT ION CAN BE DISCERNED FROM THE WORDS PENALTY PROCEEDINGS U/S 271(1)(C) O F THE ACT ARE BEING INITIATED SEPARATELY AND FROM THE READING OF THE A SSESSMENT ORDER IN ITS ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 9 ENTIRETY. THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. VS. CIT 358 ITR 593 (SC), HAS OBSERVED THAT THE A. O. HAS TO SATISFY WHETHER THE PENALTY PROCEEDINGS ARE INITIATED OR NO T DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE A.O. IS NOT REQUI RED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER OR REDUCE INTO WRITING. THUS, IT IS NOT NECESSARY THAT THE A.O. HAD TO SPELL OUT THE SATISF ACTION IN DETAIL AT THE TIME OF FINALISING THE ASSESSMENT PROCEEDINGS AND H ENCE, THE CLAIM OF THE ASSESSEE THAT THE A.O. HAS NOT RECORDED SATISFA CTION BEFORE INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT IS REJECTED. 9. IN SO FAR AS PENALTY NOTICE ISSUED U/S 274 OF TH E ACT, THE CIT(A) HELD THAT IN VIEW OF THE SUBSEQUENT NOTICE ISSUED B Y THE A.O. VIDE LETTER DATED 12.8.2013 CLEARLY SPECIFYING THE REASONS FOR INITIATION OF PENALTY, FOR WHICH THE ASSESSEE HAD FILED HER REPLY IN RESPE CT OF WHICH NO DEFICIENCY WAS POINTED OUT. THE CIT(A) FURTHER HEL D THAT IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF S. V. ANGIDI CHETTIAR VS. CIT (SUPRA) AND D.M. MANSAVI VS. CIT, THE CONTENTIO N OF THE ASSESSEE THAT THE IMPUGNED NOTICE IS VAGUE IS DEVOID OF ANY MERITS. THE PRIMA FACIE SATISFACTION TO INDICATE PROCEEDINGS U/S 271( 1)(C) OF THE ACT, HAVING BEEN RECORDED IN THE ASSESSMENT ORDER AND A SHOW CA USE NOTICE HAVING BEEN ISSUED SUBSEQUENTLY CALLING FOR THE ASSESSEES EXPLANATION AS TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, TO WHICH THE ASSESSEE HAD FILED ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 10 A REPLY, THERE IS NO MATERIAL BASIS TO TAKE A VIEW THAT THE PENALTY NOTICE WAS VAGUE AND WAS NOT ISSUED WITHOUT APPLICATION OF MIND. WITH THESE OBSERVATIONS, CIT(A) REJECTED CLAIM OF THE ASSESSEE THAT INITIATION OF PENALTY PROCEEDINGS WITH A VAGUE NOTICE IS INVALID. 10. IN SO FAR AS MERITS ON WHICH PENALTY IS LEVIED, THE CIT(A) HELD THAT AS REGARDS THE PENALTY LEVIED IN REGARD TO ADDITION MADE OF ` 35,79,000/- FOR THE ASSESSMENT YEAR 2007-08, IT IS SEEN THAT THE ADDITION WAS ON ACCOUNT OF DISALLOWANCE OF CLAIM OF DEDUCTIO N U/S 54F OF THE ACT. THE CLAIM MADE BY THE ASSESSEE WAS A BONAFIDE CLAIM AND THE ENTITLEMENT OF DEDUCTION TO MORE THAN 1 FLAT WAS A DEBATABLE ISSUE. THEREFORE, IN VIEW OF THE DECISION OF THE HONBLE A PEX COURT, IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA ), MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, W ILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. THERE FORE, DIRECTED THE A.O. TO DELETE PENALTY LEVIED IN REGARD TO THE ADDITION MADE OF ` 35,79,000/-. AS REGARDS THE PENALTY LEVIED IN REGARD TO THE INCO ME RETURNED, THE CIT(A) OBSERVED THAT THE ASSESSEES CASE IS SQUAREL Y COVERED BY THE PROVISIONS OF EXPLANATION (3) TO SECTION 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEAR 2007-08 & 2008-09. THE CONDITIONS LAID DOWN IN EXPLANATION (3) TO SECTION 271(1)(C) OF THE ACT ARE SATISFIED IN REGARD TO THE EXPLANATION FILED BY THE ASSESSEE AND THEREFORE , THE PENALTY LEVIED ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 11 BY THE A.O. FOR THE ASSESSMENT YEAR 2007-08 & 2008- 09 IN REGARD TO INCOME RETURNED IS UPHELD. IN SO FAR AS ASSESSMENT YEAR 2009-10, THE CIT(A) HELD THAT IT IS SEEN THAT THE ASSESSEES CAS E DO NOT FALL WITHIN THE PURVIEW OF EXPLANATION (3) TO 271(1)(C) OF THE ACT, AS NOTICE U/S 148 OF THE ACT WAS ISSUED PRIOR TO THE EXPIRY OF THE STIPU LATED PERIOD. THE DECISION RELIED ON BY THE ASSESSEE IN THE CASE OF C HHAGANLAL SUTERIYA VS. ITO 337 ITR 350 APPLIES TO THE ASSESSEES CASE. TH EREFORE, THE A.O. IS DIRECTED TO CANCEL IMPUGNED PENALTY FOR THE ASSESSM ENT YEAR 2009-10. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US. 11. THE LD. A.R. FOR THE ASSESSEE, SUBMITTED THAT P ENALTY PROCEEDINGS INITIATED BY THE A.O. U/S 271(1)(C) OF THE ACT, IS BAD IN LAW AND LIABLE TO BE QUASHED AS THE A.O. HAS NOT RECORDED SATISFACTIO N BEFORE INITIATION OF PENALTY PROCEEDINGS. THE A.R. FURTHER SUBMITTED TH AT THE A.O. HAS NOT RECORDED ANY SATISFACTION ABOUT HIS FORMING THE OPI NION THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) OF THE A CT ARE APPLICABLE TO THE ASSESSEE, THEREFORE, THE A.O. HAS NO JURISDICTION T O IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. IT IS FURTHER SUBMITTED THAT DEEMING FICTION CREATED BY SECTION 271(1B) OF THE ACT IS NOT APPLICABLE FOR THE ASSESSMENT YEAR 2008-09, AS THERE IS NO DIFFERENCE BETWEEN INCOME R ETURNED AND INCOME ASSESSED BY THE A.O. ONCE INCOME RETURNED BY THE A SSESSEE IS ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 12 ACCEPTED, THERE IS NO DEEMING CONCEALMENT TO INITIA TE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE A.R. FUR THER SUBMITTED THAT PENALTY NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF T HE ACT IS VAGUE IN NATURE AS THE A.O. HAS NOT STRIKED OFF INAPPROPRIAT E PORTION OF THE NOTICE. THE A.R. FURTHER SUBMITTED THAT NOTICE ISSUED BY TH E A.O. U/S 274 R.W.S. 271(1)(C) OF THE ACT IS BAD IN LAW AS IT DID NOT SP ECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDIN GS HAD BEEN INITIATED I.E. WHETHER IT IS FOR CONCEALMENT OF PARTICULARS O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. MERELY ISSUIN G A PRINTED FORM OF NOTICE WITHOUT MENTIONING THE REASONS FOR WHICH THE PENALTY PROCEEDINGS ARE INITIATED IS VAGUE IN NATURE, CONSEQUENTLY PENA LTY LEVIED IS LIABLE TO BE QUASHED. IN SUPPORT OF THE ARGUMENTS RELIED UPO N THE DECISION OF HONBLE HIGH COURT OF KARNATAKA, IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 AND CIT VS. M/S. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 248 (SC). 12. IN SO FAR MERITS, THE A.R. SUBMITTED THAT THE A .O. WAS ERRED IN LEVYING PENALTY U/S 271(1)(C) OF THE ACT, WITHOUT S PECIFYING WHETHER PENALTY IS LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE A.R. FURTHER SUBMITTED THAT THERE IS NEITHER CONCEALMENT OF PARTICULARS OF INCOME NOR FURNISHING INACCURATE PARTICULARS OF INCOME AS THE ASSESSEE IS AN ILLITER ATE NOT ASSESSED TO ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 13 INCOME TAX FOR THE PAST, HAD ADMITTED INCOME IN PU RSUANCE OF JOINT DEVELOPMENT AGREEMENT AND FILED RETURN DISCLOSING I NCOME ADMITTED DURING THE COURSE OF SURVEY AND PAID TAXES. THOUGH THERE IS DIFFERENCE IN INCOME RETURNED BY THE ASSESSEE AND INCOME ASSES SED BY THE A.O. FOR THE ASSESSMENT YEAR 2007-08, WHICH IS BECAUSE OF DI SALLOWANCE OF EXEMPTION CLAIMED U/S 54F OF THE ACT IN RESPECT OF 4 FLATS RETAINED BY HER, WHICH WAS SUPPORTED BY THE DECISION OF HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. K.G. RUKMINIAMMA ( SUPRA) AND HONBLE HIGH COURT OF A.P. IN THE CASE OF CIT VS. SYED ALI ADIL. THEREFORE, LEVY OF PENALTY ON AGREED ADDITION BY THE ASSESSEE AND A LSO FOR DISALLOWANCE OF BONAFIDE CLAIM OF EXEMPTION, WHICH WAS SUPPORTED BY THE DECISION OF JUDICIAL FORUMS IS INCORRECT. 13. THE LD. D.R. ON THE OTHER HAND, STRONGLY SUPPOR TING ORDERS OF THE CIT(A) FOR THE ASSESSMENT YEAR 2007-08 AND 2008-09 SUBMITTED THAT THE CIT(A) ERRED IN DELETING PENALTY LEVIED U/S 271(1)( C) OF THE ACT FOR THE ASSESSMENT YEAR 2009-10, SIMPLY HOLDING THAT THE AS SESSEES CASE DO NOT FALL WITHIN THE PURVIEW OF EXPLANATION 3 TO SEC TION 271(1)(C) OF THE ACT, AS NOTICE U/S 148 OF THE ACT WAS ISSUED PRIOR TO THE EXPIRY OF THE STIPULATED PERIOD. THE LD. CIT(A) FAILED TO APPREC IATE THE FACT THAT NOTICE U/S 148 OF THE ACT DATED 27.5.2011 WAS ISSUE D FOLLOWING SURVEY OPERATION CONDUCTED IN ASSESSEES CASE AND IT WAS W ELL WITHIN THE ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 14 SPECIFIED TIME LIMIT IN ACCORDANCE WITH THE PROVISI ONS OF SECTION 151(2) OF THE ACT. THE CIT(A) WITHOUT APPRECIATING THE FA CTS SIMPLY DELETED PENALTY AND HENCE PENALTY LEVIED BY THE A.O. SHOULD BE UPHELD. 14. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE FACTUAL MATRIX WHICH LEADS TO IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT, ARE THAT THERE WAS A SURVEY OPERATION IN THE C ASE OF ASSESSEE ON 10.2.2011. DURING THE COURSE OF SURVEY OPERATION, IT WAS NOTICED THAT THE ASSESSEE HAD ENTERED INTO A DEVELOPMENT AGREEME NT WITH M/S. KAMAL BUILDERS FOR DEVELOPMENT OF A LAND OWNED BY H ER AND AGREED TO SHARE THE BUILT UP AREA. DURING THE COURSE OF SURV EY, THE ASSESSEE HAS AGREED TO DISCLOSE INCOME IN RESPECT OF DEVELOPMENT AGREEMENT, ACCORDINGLY FILED RETURN AND PAID TAXES. THE A.O. INITIATED PENALTY PROCEEDINGS FOR THE REASON THAT THE ASSESSEE HAS CO NCEALED PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) O F THE ACT. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS NOT BEEN A BLE TO MAKE OUT ANY CASE FOR REASONABLE CAUSE TO JUSTIFY NON-LEVY OF PE NALTY. THE A.O. FURTHER WAS OF THE OPINION THAT MENS REA IS NOT AN ESSENTIAL PRE-REQUISITE FOR CIVIL LIABILITY OF PENALTY U/S 271(1)(C) OF THE ACT, SINCE SUCH LIABILITY IS FOR BREACH OF CIVIL LIABILITY AND WILLFUL CONCEALME NT IS NOT ESSENTIAL INGREDIENT FOR ATTRACTING SUCH PENALTY. IT IS THE CONTENTION OF THE ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 15 ASSESSEE THAT PENALTY PROCEEDINGS INITIATED U/S 271 (1)(C) OF THE ACT IS BAD IN LAW AND LIABLE TO BE QUASHED AS THE NOTICE I SSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT IS VAGUE, CONSEQUENTLY PENALTY ORDERS PASSED BY THE A.O. ARE LIABLE TO BE QUASHED. THE ASSESSEE FUR THER CONTENDED THAT THE A.O. HAS NOT SPECIFIED REASONS FOR WHICH PENALT Y IS INITIATED I.E. WHETHER IT IS FOR CONCEALMENT OF PARTICULARS OF INC OME OR FURNISHING INACCURATE PARTICULARS OF INCOME. MERE ISSUE OF PR INTED FORM OF NOTICE WITHOUT STRIKING OFF INAPPROPRIATE CLAUSE IN THE NO TICE IS INVALID, CONSEQUENTLY ANY PROCEEDINGS IN PURSUANCE OF INVALI D NOTICE ARE LIABLE TO BE QUASHED. 15. THE A.O. LEVIED PENALTY U/S 271(1)(C) OF THE AC T, FOR THE REASON THAT THE ASSESSEE HAS NOT BEEN ABLE TO MAKE OUT ANY CASE FOR REASONABLE CAUSE TO JUSTIFY NON-LEVY OF PENALTY. T HE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS CONCEALED THE PARTIC ULARS OF INCOME AS ENVISAGED U/S 271(1)(C) OF THE ACT AND AS SUCH, IT IS A FIT CASE FOR LEVY OF PENALTY. THE A.O. ISSUED NOTICE U/S 274 R.W.S. 271 (1)(C) OF THE ACT FOR ALL THE 3 YEARS. ON PERUSAL OF THE NOTICE ISSUED B Y THE A.O., WE FIND THAT THE A.O. HAS ISSUED PRINTED FORM OF NOTICE WITH A T ICK MARK ON THE PORTION OF THE NOTICE WHICH IS STATED THAT HAVE CO NCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME, WITHOUT SPECIFYING THE REASONS FOR WHICH PENALTY PR OCEEDINGS ARE ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 16 INITIATED, I.E. WHETHER IT IS FOR CONCEALMENT OF PA RTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT OF KARNATAKA, IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) OBSERVED THAT NOTICE U/S 274 OF THE ACT SHOULD SPECIFICALLY STATED THE GROUNDS MENTIONED IN SECTIO N 271(1)(C) OF THE ACT, I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME O R FOR FURNISHING INCORRECT PARTICULARS OF INCOME. SENDING PRINTED F ORM WHERE ALL THE GROUNDS MENTIONED IN SECTION 271 OF THE ACT ARE MEN TIONED WOULD NOT SATISFY REQUIREMENT OF LAW. THE HONBLE HIGH COURT FURTHER OBSERVED THAT THE ASSESSEE SHOULD KNOW THE GROUNDS, WHICH HE HAS TO MEET SPECIFICALLY, OTHERWISE PRINCIPLES OF NATURAL JUSTI CE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPO SED TO THE ASSESSEE. TAKING UP PENALTY PROCEEDING ON ONE LIMB AND FINDIN G THE ASSESSEE GUILTY ON ANOTHER LIMB IS BAD IN LAW. THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS IN SO FAR AS CONCEALMENT OF INCOME AND FURNISHING OF INCORRECT PARTICULARS WOULD NOT OPERA TE AS RES JUDICA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE PROCEEDINGS ON MERITS. THEREFORE, BEFORE ISSUING P ENALTY NOTICE, THE A.O. SHOULD SPECIFY IN THE NOTICE WHETHER IT IS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 17 16. A SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE KA RNATAKA HIGH COURT, IN THE CASE OF CIT VS. M/S. SSAS EMERALD ME ADOWS (SUPRA), WHEREIN IT IS HELD THAT THE NOTICE ISSUED BY THE A. O. U/S 274 R.W.S. 271(1)(C) OF THE ACT, IS BAD IN LAW AS IT DID NOT S PECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDIN GS HAD BEEN INITIATED I.E., WHETHER IT IS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE HONBLE H IGH COURT WHILE ALLOWING THE APPEAL OF THE ASSESSEE HAS RELIED UPON THE DECISION OF DIVISION BENCH OF HIGH COURT RENDERED IN THE CASE O F CIT VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA) AND HELD THAT PENA LTY NOTICE ISSUED BY THE A.O. IS VAGUE AND ACCORDINGLY, PENALTY ORDERS A RE LIABLE TO BE QUASHED. WHEN THIS MATTER WAS TAKEN UP BEFORE THE H ONBLE SUPREME COURT, THE HONBLE SUPREME COURT HAS DISMISSED SLP FILED BY THE REVENUE AGAINST THE ORDER OF THE HONBLE HIGH COURT OF KARNATAKA, WHEREIN THE HONBLE SUPREME COURT OBSERVED THAT WHE RE TRIBUNAL, RELYING ON A DECISION OF KARNATAKA HIGH COURT ALLOW ED APPEAL OF ASSESSEE HOLDING THAT NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT WAS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH L IMB OF SECTION 271(1)(C) OF THE ACT PENALTY PROCEEDINGS HAD BEEN I NITIATED AND HIGH COURT, ON APPEAL, HELD THAT THERE WAS NO SUBSTANTIA L QUESTION OF LAW ARISING FOR DETERMINATION, SLP WAS TO BE DISMISSED. SINCE, THE HONBLE ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 18 APEX COURT HAS DISMISSED SLP FILED BY THE REVENUE, THE ISSUE OF INVALID NOTICE IS REACHED FINALITY AS SUCH THE HONBLE SUPR EME COURT HAS UPHELD THE ORDER OF HONBLE HIGH COURT OF KARNATAKA, IN TH E CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA), WHEREI N IT WAS SPECIFICALLY HELD THAT ISSUING PRINTED FORM OF NOTICE WITHOUT ST RIKING OFF INAPPROPRIATE PORTION OF THE NOTICE OR WITHOUT MENTIONING THE REA SONS FOR WHICH PENALTY PROCEEDINGS ARE INITIATED, I.E. WHETHER IT IS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME, THE PENALTY PROCEEDINGS INITIATED IS INVALID. 17. IN THIS CASE, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE A.O. HAS ISSUED PRINTED FORM OF NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT, WHEREIN HE HAS PUT A RIGHT MARK ON THE PORTION OF THE NOTICE HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNIS HED INACCURATE PARTICULARS OF SUCH INCOME WITHOUT SPECIFYING THE REASONS FOR WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED. UNLESS THE A.O. SPECIFIES THE REASONS FOR WHICH PENALTY PROCEEDINGS ARE INITIATED I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME, IT WOULD BE DIFFICULT FOR THE ASSESSEE TO JUSTIFY THE CASE BEFORE THE A.O., THUS IT WOULD AMOUNT TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT INITI ATION OF PENALTY PROCEEDINGS WITHOUT A VALID NOTICE IS BAD IN LAW AN D LIABLE TO BE ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 19 QUASHED. HENCE, WE QUASHED PENALTY PROCEEDINGS INIT IATED BY THE A.O. U/S 271(1)(C) OF THE ACT, FOR THE ASSESSMENT YEARS 2007-08, 2008-09 & 2009-10. 18. IN SO FAR AS ASSESSMENT YEAR 2009-10 IS CONCERN ED, THE ASSESSEE HAS MADE AN ALTERNATIVE PLEA IN AS MUCH THE PENALTY PROCEEDINGS INITIATED BY THE A.O. FOR THE ASSESSMENT YEAR 2009- 10 IS BAD IN LAW, AS CONDITIONS STIPULATED IN EXPLANATION 3 TO SECTION 2 71(1)(C) OF THE ACT ARE NOT FULFILLED, AS THE A.O. HAS ISSUED NOTICE U/S 14 8 OF THE ACT WITHIN 2 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. WE FIND THAT THE A.O. HAS ISSUED NOTICE U/S 148 OF THE ACT ON 27.5.2 011, WHICH IS WITHIN 2 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR I.E. 31.3.2012. TO ATTRACT THE PROVISIONS OF EXPLANATION 3 OF SECTION 271(1)(C) OF THE ACT, THE ASSESSEE SHOULD NOT BE PREVIOUSLY ASSESSED, THE RETURN OF INCOME WAS NOT FILED WITHIN THE PERIOD SPECIFIED U/S 153(1 ) OF THE ACT AND NO NOTICE U/S 142(1) OR 148 OF THE ACT WAS ISSUED TO T HE ASSESSEE BEFORE THE EXPIRY OF 2 YEARS FROM THE END OF THE ASSESSMEN T YEAR. IN THIS CASE, UNDOUBTEDLY, THE A.O. HAS ISSUED NOTICE U/S 148 OF THE ACT WITHIN 2 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, CONSEQUENTLY, PENALTY CANNOT BE LEVIED UNDER EXPLANATION 3 TO SEC TION 271(1)(C) OF THE ACT. ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 20 19. THE ASSESSEE HAS RELIED UPON THE DECISION OF HO NBLE HIGH COURT OF GUJARAT, IN THE CASE OF CHHAGANLAL SUTERIYA VS. ITO (2011) 337 ITR 350, WHEREIN THE HONBLE HIGH COURT HELD THAT FOR THE PU RPOSE OF INVOKING THE PROVISIONS OF EXPLANATION 3 TO SECTION 271(1)(C) OF THE ACT, THE CONDITIONS ENUMERATED THEREIN ARE REQUIRED TO BE SA TISFIED CUMULATIVELY. THE A.O. HAVING ISSUED A NOTICE U/S 148 OF THE ACT WITHIN THE PERIOD SPECIFIED U/S 153(1) OF THE ACT, THE THIRD CONDITIO N NAMELY THAT NO NOTICE U/S 142(1) OR 148 OF THE ACT SHOULD HAVE BEEN ISSUE D WITHIN THE PERIOD SPECIFIED U/S 1 OF SECTION 153 OF THE ACT IS CLEARL Y NOT SATISFIED AND THEREFORE, THE FAILURE ON THE PART OF THE ASSESSEE TO FURNISH THE RETURN WITHIN THE SPECIFIED PERIOD CANNOT BE DEEMED TO BE CONCEALMENT WITHIN THE MEANING OF EXPLANATION 3 TO SECTION 271(1)(C) O F THE ACT AND NO PENALTY U/S 271(1)(C) OF THE ACT COULD BE LEVIED. THEREFORE, WE ARE OF THE VIEW THAT EVEN ON THIS COUNT, PENALTY LEVIED BY THE A.O. U/S 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEAR 2009-1 0 CANNOT SUSTAIN IN THE EYES OF LAW. 20. THE ASSESSEE HAS CONTENDED LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON MERITS IN AS MUCH THE PENALTY LEVIED BY THE A.O. U/S 271(1)(C) OF THE ACT IS BAD IN LAW AS THERE IS NEITHER CONCEALME NT OF PARTICULARS OF INCOME NOR FURNISHING INACCURATE PARTICULARS OF INC OME. WE FIND THAT THE ASSESSEE HAD ADMITTED INCOME IN RESPECT OF DEVELOPM ENT AGREEMENT AS ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 21 SOON AS SHE CAME TO KNOW THAT SHE HAD TO PAY TAX ON DEVELOPMENT AGREEMENT WHICH CANNOT BE TERMED AS CONCEALMENT OF PARTICULARS OF INCOME, MORE PARTICULARLY WHEN SHE IS AN ILLITERATE LADY NOT ASSESSED TO INCOME TAX IN THE EARLIER PERIOD. THE MATTER WOULD HAVE BEEN DIFFERENT IF SHE HAD ASSESSED TO INCOME TAX REGULARLY AND FIL ED HER RETURN OF INCOME FOR THESE ASSESSMENT YEARS UNDER REGULAR PRO VISIONS OF THE ACT AND NOT ADMITTED CAPITAL GAINS IN RESPECT OF DEVELO PMENT AGREEMENT IN THE RETURNS FILED FOR THOSE YEARS. BUT, THE FACT I S THAT THE ASSESSEE IS NOT ASSESSED TO INCOME TAX AND ALSO FACT THAT SHE HAD A DMITTED INCOME AND FILED HER RETURN OF INCOME DISCLOSING RESULTANT CAP ITAL GAINS IN PURSUANCE TO DEVELOPMENT AGREEMENT AND PAID TAXES, THEREFORE, ADMISSION OF ASSESSEE CANNOT BE CONSIDERED AS CONCEALMENT OF PAR TICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. TH OUGH THERE IS A SLIGHT DIFFERENCE IN INCOME ADMITTED BY THE ASSESSEE AND I NCOME DETERMINED BY THE A.O. FOR THE ASSESSMENT YEAR 2007-08, THIS I S BECAUSE OF DISALLOWANCE OF EXEMPTION CLAIMED U/S 54F OF THE AC T TOWARDS 4 FLATS RETAINED BY HER, WHICH WAS FURTHER SUPPORTED BY THE DECISION OF HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. K.G. RUKMINIAMMA, WHICH WAS FOLLOWED BY THE HONBLE HIGH COURT OF AND HRA PRADESH IN THE CASE OF CIT VS. SYED ALI ADIL (SUPRA). THEREFORE, WE ARE OF THE VIEW THAT THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHI NG INACCURATE ITA NOS.604, 605 & 625/VIZAG/2014 SMT. MAKINA ANNAPURNA, VISAKHAPATNAM 22 PARTICULARS OF INCOME, WHICH WARRANTS LEVY OF PENAL TY U/S 271(1)(C) OF THE ACT. HENCE, PENALTY LEVIED BY THE A.O. U/S 271 (1)(C) OF THE ACT FOR ALL THE ASSESSMENT YEARS 2007-08 TO 2009-10 IS NOT SUSTAINABLE, EVEN ON MERITS. 21. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E FOR THE ASSESSMENT YEARS 2007-08 & 2008-09 ARE ALLOWED AND APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2009-10 IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 2 ND FEB17. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 02.02.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SMT. MAKINA ANNAPURNA, D.NO.1-17 3, MITHILAPURI VUDA LAYOUT, MADHURAWADA, VISAKHAPATNAM 2. / THE RESPONDENT THE ITO, WARD-5(2), RANGE-5, VI SAKHAPATNAM 3. + / THE CIT-1, VISAKHAPATNAM 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // ASST. REGISTRAR ITAT, VISAKHAPATNAM