ASST CIT CIR 19(2), MUMBAI V. RESHMI M. PANJWANI, MUMBAI

ITA 6328/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3460 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 16-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R M MADHAVI
• Keywords: Unexplained cash credit; Principle of natural justice; Initiation of penalty proceedings; Tax effect
• Section: 27

Judgement Text

DIPESH M PANJWANI ITAS NO. 6330 AND 5878 /M/2012 RASHMI M PANJWANI ITAS NO. 6328 & 6188/M/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D , MUMBAI , , BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI RAMIT KOCHAR , ACCOUNTAN T MEMBER ITA NO. : 6330 /MUM/20 1 2 (ASSESSMENT YEAR: 200 8 - 09 ) ACIT - 19(2), PIRAMAL CHAMBERS, PAREL, MUMBAI - 400 012 VS DIPESH M PANJWANI , 601, SILVER C O LOHIL, ST. PAUL ROAD, BANDRA(WEST), MUMBAI - 400 050 (APPELLANT) (RESPONDENT) APPELLANT BY : MISS R M MADHAVI RESPONDENT BY : SHRI PRAKASH JHUNJHUNWALA ITA NO. : 5878/MUM/2012 (ASSESSMENT YEAR: 2008 - 09 ) DIPESH M PANJWANI , MUMBAI - 400 050 .: PAN: AISPP 8843 J VS ACIT - 19(2), MUMBAI - 400 012 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAKASH JHUNJHUNWALA RESPONDENT BY : MISS R M MADHAVI ITA NO. : 6 32 8/MUM/2012 (ASSESSMENT YEAR: 2008 - 09 ) ACIT - 19(2), PIRAMAL CHAMBERS, PAREL, MUMBAI - 400 012 VS RASHMI M PANJWANI , 601, SILVER C O LOHIL, ST. PAUL ROAD, BANDRA(WEST), MUMBAI - 400 050 (APPELLANT) (RESPONDENT) APPELLANT BY : MISS R M MADHAVI RESPONDENT BY : SHRI PRAKASH JHUNJHUNWALA DIPESH M PANJWANI ITAS NO. 6330 AND 5878 /M/2012 RASHMI M PANJWANI ITAS NO. 6328 & 6188/M/2012 2 ITA NO. : 6188 /MUM/2012 (ASSESSMENT YEAR: 2008 - 09 ) RASHMI M PANJWANI , 601, SILVER CLOPHIL, ST. PAUL ROAD, BANDRA(WEST), MUMBAI - 400 050 .: PAN: AAA PP 5 3 64 Q VS ACIT - 19(2), PIRAMAL CHAMBERS, PAREL, MUMBAI - 400 012 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAKASH JHUNJHUNWALA RESPONDENT BY : MISS R M MADHAVI /DATE OF HEARING : 21 - 01 - 201 6 / DATE OF PRONOUNCEMENT : 18 - 03 - 201 6 ORDER : . . : PER AMIT SHUKLA , JM : THE AFORESAID CROSS APPEAL S HAVE BEEN FILED BY THE REVENUE AS WELL AS BY THE ASSESSEE AGAINST SEPARATE IMPUGNED ORDER S OF EVEN DATE , 27.07.2012 , PASSED BY THE CIT(A) - 30 MUMBAI, IN RELATI ON TO THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) FOR THE ASSESSMENT YEAR 2008 - 09. 2. AT THE OUTSET, IT HAS BEEN ADMITTED BY BOTH THE PARTIES THAT, SO FAR AS A DEPARTMENTAL APPEALS IN ITAS NO. 6330/MUM/2012 AND 6328/MUM/2012, THE TAX EFFECT IS BELOW 1 0 LAKHS AND ACCORDINGLY, IN VIEW OF THE LATEST CBDT CIRCULAR NO. 21 OF 2015. T HESE APPEALS ARE NOT MAINTAINABLE. 3. AFTER GOING THROUGH THE DISPUTED ISSUE AND THE QUANTUM OF PENALTY, WH I CH HAS BEEN CHALLENGED BY THE REVENUE IN THE GROUNDS OF APPEAL , WE FI ND THAT THE TAX EFFECT IN THE IMPUGNED APPEALS OF THE REVENUE IS LESS THAN RS. 10 LAKHS AND HENCE, SAME ARE NOT MAINTAINABLE. DIPESH M PANJWANI ITAS NO. 6330 AND 5878 /M/2012 RASHMI M PANJWANI ITAS NO. 6328 & 6188/M/2012 3 N OW , IN THE WAKE OF CBDTS CIRCULAR NO. 21 OF 2015 DATED 10.12.2015, THE MONETARY LIMIT PRESCRIBED FOR FILING OF APPEAL BEFORE THE TRIBUNAL HA S BEEN EXTENDED UPTO RS. 10 LAKHS. FURTHER IT HAS ALSO BEEN CLARIFIED THAT THIS CIRCULAR WILL APPLY ON PENDING APPEALS ALSO WHICH IS EVIDENT FROM PARA 10 OF THE IMPUGNED CIRCULAR, WHICH READS AS UNDER: - 10. THIS INSTRUCTION WILL APPLY RET ROSPECTIVELY TO PENDING APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/TRIBUNALS. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/NOT PRESSED. APPEALS BEFORE THE SUPREME COURT WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJ ECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 4 . THUS, THE AFORESAID APPEAL S FILED BY THE REVENUE ARE TREATED AS DISMISSED AS NON - MAINTAINABLE. 5 . SO FAR AS THE ASSESSEES APPEAL, THE SAME ARE ARISING OUT OF IDENTICAL SET OF FACTS, WHEREBY, THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF PENALTY UNDER SECTION 271(1)(C) FOR RS. 8,79,597/ - IN THE CASE OF DIPESH M PANJWANI AND RS. 8,93,937/ - IN THE CASE OF M S . RASHMI M PANJWANI. 6 . IN ADDITION TO GROUNDS RAISED ON MERITS , THE ASSESSEE HAS ALSO FI LED AN ADDITIONAL GROUND VIDE SEPARATE PETITION IN BOTH THE APPEALS, WHICH READS AS UNDER: - 1.0 ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE PENALTY ORDER U/S 271(1)(C) IS BAD - IN - LAW SINCE THE NOTICE U/S 274 R.W.S. 271(1)(C) HAD BEEN ISSUED IN MECHANICAL MANNER AND DOES NOT SPECIFY THE REASON FOR INITIATION OF THE PENALTY. 7 . AS A LEAD CASE, WE ARE DISCUSSING THE FACTS AND ISSUE IN THE CASE OF SHRI DIPESH M PANJWANI , WHICH APPLIES PARI MATERIA IN OTHER CASE ALSO, EXCEPT FOR THE VARIATION IN F IGURES. AN AIR INFORMATION WAS RECEIVED THAT, THE ASSESSEE HAD DEPOSITED CASH INTO HIS BANK ACCOUNT MAINTAINED BY WITH RUPEE CO - OPERATIVE DIPESH M PANJWANI ITAS NO. 6330 AND 5878 /M/2012 RASHMI M PANJWANI ITAS NO. 6328 & 6188/M/2012 4 BANK FOR SUMS AGGREGATING TO RS.25,15,000/ - , D URING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2008 - 09 . [ IN THE CAS E OF MS . R A SHMI M PANJWANI IT WAS RS.25,39,500/ - ] . IN RESPONSE TO THE SHOW CAUSE NOTICE, AS TO WHY THE SAME SHOULD NOT BE ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT, THE ASSESSEE SUBMITTED THAT, HE, INADVERTENTLY COULD NOT OFFER THE CASH AS WELL AS CHEQUE DEPOSIT IN THIS PARTICULAR BANK ACCOUNT FOR TAXATION AND ACCORDINGLY, HE FILED A REVISED COMPUTATION OFFERING THE INCOME OF RS.27,57,812/ - CONSISTE NTLY OF CASH DEPOSIT AND CHEQUE DEPOSITS AND BANK INTEREST OF RS.6 ,747/ - . THUS, THE ADDITION WAS MADE ON THE BASIS OF OFFER MADE BY THE ASSESSEE AND THE SAME WAS TAXED BY THE AO UNDER THE HEAD INCOME FROM OTHER SOURCES. IN THE ASSESSMENT ORDER, THE AO INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) IN THE FOL LOWING MANNER: - PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) R.W. EXPLANATION 1 THERETO OF THE INCOME TAX ACT, 1961 ARE ALSO INITIATED SEPARATELY FOR CONCEALING THE PARTICULARS OF THE INCOME AND FOR FURNISHING INACCURATE PARTICULARS OF TAXABLE INCOME. TH EREAFTER, A NOTICE UNDER SECTION 274 R.W.S. 271 WAS ISSUED. I N THE PENALTY PROCEEDINGS, IN RESPONSE TO THE NOTICE THE ASSESSEE SUBMITTED H IS DETAILED EXPLANATION AND SUBMISSIONS WHICH HAS BEEN INCORPORATED BY THE AO FROM PAGES 2 TO 6 OF THE PENALTY ORDER . H OWEVER, THE AO REJECTED THE ASSESSEES CONTENTION AND LEVIED THE PENALTY AT RS.15 LAKHS FOR CONCEALING THE PARTICULARS OF INCOME, WHICH WAS FAR MORE THAN THE MINIMUM PENALTY WHICH WAS S OUGHT TO BE EVADED BY THE ASSESSEE . 8 . BEFORE US, QUA THE L EGAL ISSUE RAISED IN THE ADDITIONAL GROUNDS THE LD. COUNSEL SUBMITTED THAT, FIRSTLY , IN THE ASSESSMENT ORDER, THE AO HAS NOT FRAMED ANY SPECIFIC CHARGE, ON WHICH HE INTENDS TO IMPOSE PENALTY, HE HAS MENTIONED UNDER BOTH THE CHARGES , WHICH CANNOT BE THE CASE , BECAUSE B OTH THE CHARGES IN PENALTY OPERATES IN TWO DIFFERENT FIELDS. SECONDLY , HE SUBMITTED DIPESH M PANJWANI ITAS NO. 6330 AND 5878 /M/2012 RASHMI M PANJWANI ITAS NO. 6328 & 6188/M/2012 5 THAT, IN THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271, THE AO HAS NOT SATISFIED HIMSELF AND HAS NOT STRUCK OFF THE PARTICULAR CHARGE , THAT IS, PENALTY SOUGHT TO BE IMPOS ED IS WHETHER ON CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE P ENALTY ORDER WHILE LEVYING THE PENALTY, HE HAS LEVIED THE PENALTY FOR CONCEALING THE PARTICULARS OF TAXABLE INCOME, THAT IS, FOR CONCEALMENT OF INCOME. THUS, HE S UBMITTED THAT SUCH A LEVY OF PENALTY IS NOT TENABLE IN VIEW OF LAW LAID DOWN IN CATENA OF DECISIONS INCLUDING THAT OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY , REPORTED IN [ 2013] 359 ITR 565 . THIS DECISION, HE S UBMITTED HAS BEEN FOLLOWED BY VARIOUS BENCHES OF THE TRIBUNAL AND LATER ON REITERATED BY THE KARNATAKA HIGH COURT AGAIN IN THE CASE OF STEEL INDUSTRIES, REPORTED IN [2014] 51 TAXMANN.COM 127. THE LISTS OF ALL THE DECISIONS FILED BEFORE US IN THE FORM OF SE PARATE COMPUTATION ARE AS UNDER: - SR. NO. CASE LAW ITA / CITATION 1 SANGHAVI SAVLA COMMODITY BROKERS P LTD. VS ACIT ITA NO. 1746/MUM/2011 2 SHRI HAFEEZ S CONTRACTOR VS ACIT ITA NO. 6222/MUM/2013 3 H LAKSHMINARAYANA VS ITO 61 TAXMANN.COM 373 (BANG - TRIB ) 4 DCIT V ITTINA PROPERTIES PVT LTD. ITA NO.36/BANG/2014 5 SUVAPRASANNA BHATACHARYA VS ACIT ITA NO.1303/KOL/2010 6 PARINEE DEVELOPERS PVT LTD VS ACIT 45 CCH 47 (MUM - TRIB) 7 CIT VS STEEL CENTRE 51 TAXMANN.COM 127 (KAR - HC) 8 CIT VS MANJUNATHAN COTTON & GINNING FACTOR 359 ITR 565 (KAR - HC) 9 . ON THE OTHER HAND, LD. DR SUBMITTED THAT, THE ENTIRE FACTS AND CIRCUMSTANCES LEADING TO THE LEVY OF PENALTY HAS TO BE SEEN AND SIMPLY BECAUSE PENALTY HAS BEEN INITIATED ON ONE CHARGE AND LEVIED ON A DIFFERENT CH ARGE THAT DOES NOT MEAN THAT WHOLE PENALTY PROCEEDINGS GETS VITIATED. SECTION 271(1)(C) PROVIDES LEVY OF PENALTY UNDER BOTH THE CHARGES AND IF THE AO IN THE PENALTY ORDER HAS LEVIED THE PENALTY ON ANY ONE OF THE CHARGE THEN ALSO, IT CANNOT BE HELD THAT PEN ALTY ORDER IS BAD IN LAW. THE SUBSTANCE AND FACTS DIPESH M PANJWANI ITAS NO. 6330 AND 5878 /M/2012 RASHMI M PANJWANI ITAS NO. 6328 & 6188/M/2012 6 RELATING TO LEVY OF PENALTY HAS TO BE SEEN. ON MERITS, HE SUBMITTED THAT, HE STRONGLY RELIED UPON THE ORDER OF THE CIT(A). 10 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE IMPUGNED ORDERS QUA THE PRELIMINARY OBJECTION RAISED BY THE LD. COUNSEL BEFORE US. AS STATED ABOVE, THE AO IN THE ASSESSMENT ORDER HAD INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) FOR BOTH THE CHARGES, THAT IS, FOR THE CONCEALMENT OF THE INCOME AND FOR FURNISHING THE IN ACCURATE PARTICULARS OF INCOME. THUS, WHILE MAKING ADDITION IN THE ASSESSMENT ORDER, THE CHARGE FRAMED BY THE AO FOR INITIATING THE PROCEEDINGS WAS ON BOTH THE COUNTS THAT IS, HE WAS NOT SURE UNDER WHICH CHARGES PENALTY IS TO BE IMPOSED. AT THE STAGE OF I SSUANCE OF NOTICE UNDER SECTION 274 R.W.S. 271 ALSO, THE AO DID NOT SPECIFY AT ALL, UNDER WHICH CHARGE HE IS CONTEMPLATING TO INITIATE OR IMPOSE THE PENALTY. FINALLY, IN THE PENALTY ORDER, HE HAS LEVIED THE PENALTY FOR CONCEALING THE PARTICULAR OF TAXABLE INCOME WITHIN THE MEANING OF SECTION 271(1)(C) R.W. EXPLANATION 1 . SECTION 271(1)(C) ENVISAGES THAT, IF THE AO IN THE COURSE OF ANY PROCEEDINGS IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF ITS INCOME OR HAS FURNISHED INACCURATE PARTICU LARS OF INCOME , THEN HE SHALL BE LIABLE FOR PENALTY. THE SATISFACTION OF THE AO AT THE TIME OF INITIATION IN THE COURSE OF THE PROCEEDINGS IS THE VITAL AND KEY STAGE WHERE AO HAS TO SPECIFY WHETHER PENALTY IS TO BE INITIATED FOR EITHER CONCEALING THE PART ICULARS OF THE INCOME OR FOR FURNISHING THE INACCURATE PARTICULARS OF INCOME. THE TWO CHARGES FOR INITIATING THE PENALTY OPERATE ON TWO DIFFERENT FOOTING AND UNDER THE PENAL PROVISION THE CHARGE HAS TO BE VERY SPECIFIC AND NOT VAGUE . THESE CHARGES ARE N OT TO BE RECKONED AS ANY CASUAL REMARK, WHICH CAN BE INTERCHANGED BY THE AO AT ANY STAGE ON HIS WHIMS AND FANCIES. IT IS NOT A N ERROR WHICH IS RECTIFIABLE OR TO BE IGNORED, ALBEIT IT IS A FATAL ERROR WHICH VITIATES THE ENTIRE INITIATION ITSELF. HOWSOEVER THE STRONG CASE MAY BE FOR THE LEVY OF PENALTY ON A GIVEN FACT, THE AO SHOULD HAVE A DIPESH M PANJWANI ITAS NO. 6330 AND 5878 /M/2012 RASHMI M PANJWANI ITAS NO. 6328 & 6188/M/2012 7 PROPER SATISFACTION FOR A LEVY OF A CHARGE FOR DIRECTING THE ASSESSEE TO PAY THE PENALTY AND SUCH A CHARGE SHOULD BE SPECIFIED IN THE NOTICE ITSELF. THERE CANNOT BE INCONG RUITY IN THE INITIATION I.E. WHILE ISSUING NOTICE AND ON CONCLUSION OF THE PENALTY PROCEEDINGS , OTHERWISE THE WHOLE CHARGE GETS VITIATED. THE AO CANNOT INITIATE A PENALTY FOR ONE CHARGE THEN AMBUSH THE ASSESSEE FINALLY BY LEVYING PENALTY ON A DIFFERENT CHA RGE BECAUSE THE INITIAL ONUS TO EXPLAIN AND REBUT THE CHARGE IS UPON THE ASSESSEE. IF CHARGE ITSELF IS VAGUE AND NOT CLEAR, THEN THE ONUS CAST UPON THE ASSESSEE UNDER E XPLANATION ITSELF GETS VITIATED AS ASSESSEE IS PRECLUDED FROM A CHANCE TO GIVE A SPECIFI C REBUTTAL ON THAT CHARGE. IT IS A TRITE LAW THAT CIRCUMSTANCES AND FACTS FOR LEVY OF PENALTY UNDER BOTH THE GROUNDS OPERATE IN A DIFFERENT FIELDS. THE COURTS HAVE HELD THAT IN THE NOTICE UNDER SECTION 274 R.W.S. 271, THE AO HAS TO SPECIFY THE CHARGE ON WH ICH HE INTENDS TO LEVY PENALTY. THIS ASPECT OF THE MATTER HAS BEEN CONSISTENTLY REITERATED BY THE HONBLE HIGH COURTS FROM TIME TO TIME. THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY ( SUPRA ) HAS OBSERVED AND HELD AS UNDER: - 5 9. AS THE PROVISION STANDS, THE PENALTY PROCEEDINGS CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXISTENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROC EEDINGS 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 DISCER NED FROM THE SAID ORDER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION - 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 HAVE FULL OPPO RTUNITY 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 SENDING A PRINTED FORM WHERE ALL THE GROUND MENTIONED IN SECTION 27 1 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN DIPESH M PANJWANI ITAS NO. 6330 AND 5878 /M/2012 RASHMI M PANJWANI ITAS NO. 6328 & 6188/M/2012 8 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 THE SAID PROVISIONS HAVE TO BE HELD T O 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 COUL D BE IMPOSED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, 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 CA SES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY 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 FINDIN G HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT 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 PROCEEDING S 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 THE 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 INITIATION 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 ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING 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 SUSTAI NABLE. 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 CLA USE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS 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 PA RTICULARS. THE APEX COURT IN THE CASE OF DIPESH M PANJWANI ITAS NO. 6330 AND 5878 /M/2012 RASHMI M PANJWANI ITAS NO. 6328 & 6188/M/2012 9 ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJRAT HIGH COURT IN THE CASE OF MANU ENGINEERING REP ORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMN 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 PENALTY 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 INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CL AUSES WILL LEAD TO AN INFERENCE AS TO NON - APPLICATION OF MIND . P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR NOT FURNISHING OF INCORRECT PARTI CULARS OF INCOME. Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTIC E IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. IN THE AFORESAID DECISION THEIR LORDSHIPS HAV E TAKEN INTO CONSIDERATION, SIMILAR RATIO LAID DOWN BY HONBLE DELHI HIGH COURT AND HONBLE GUJARAT HIGH COURT. AGAIN IN CASE OF CIT VS. STEEL CENTRE ( SUPRA ) , THE HONBLE KARNATAKA HIGH COURT HAS REITERATED THE SAME PROPOSITION. THUS, FROM THE AFORESAID DE CISIONS, IT IS ABUNDANTLY CLEAR THAT THE INITIATION AND LEVY OF THE PENALTY SHOULD BE ON A SPECIFIC CHARGE OTHERWISE THE WHOLE PROCEEDINGS IS BAD IN LAW AND GETS VITIATED. THIS PRINCIPLE HAS BEEN FOLLOWED BY THE TRIBUNAL IN SEVERAL CASES AS REFERRED TO ABO VE BY THE COUNSEL. BEFORE US, NO CONTRARY DECISIONS OF ANY OTHER HIGH COURT HAVE BEEN BROUGHT TO OUR NOTICE, ACCORDINGLY, WE ARE OF THE VIEW THAT THE ENTIRE PROCEEDINGS OF INITIATION AND LEVY OF PENALTY UNDER SECTION 271(1)(C) IS BAD IN LAW AND HENCE, THE PENALTY LEVIED BY THE AO AND DIPESH M PANJWANI ITAS NO. 6330 AND 5878 /M/2012 RASHMI M PANJWANI ITAS NO. 6328 & 6188/M/2012 10 AS CONFIRMED BY THE CIT(A) IS QUASHED. ACCORDINGLY, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED. 11. SINCE SIMILAR ISSUES INVOLVED IN CASE OF R A SHMI M PANJWANI, WHICH IS ON IDENTICAL FACTS THEREFORE, FINDING GIVEN IN THE CASE OF DIPESH M PANJWAN WILL APPLY MUTATIS MUTANDIS IN THIS APPEAL ALSO. ACCORDINGLY, THE PENALTY LEVIED BY THE AO AND CONFIRMED BY CIT(A) IS QUASHED AND THUS, GROUND RAISED IN BOTH THE APPEALS OF THE ASSESSEES ARE ALLOWED. 12. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED AND THAT OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH M ARCH , 2016 . SD/ - SD/ - ( ) ( ) ( RAMIT KOCHAR ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 18 TH MARCH , 2016 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 30 , MUMBAI . 4 ) THE COMMISSIONER OF INCOME TAX - CITY - 19 , MUMBAI . 5 ) , , / THE D.R. D BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS