M/S N N JEWELLERS, JAIPUR V. INCOME TAX OFFICER, WARD-2-1, JAIPUR

ITA 64/JPR/2019

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0776 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 17-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANURADHA JCIT DHK
• Keywords: Principle of natural justice; Question of law; Initiation of penalty proceedings; Non passing of speaking order; Set aside
• Section: 271(1)(c)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA , ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NOS. 63 TO 68/JP/2019 FU/KZKJ.K O'KZ@ ASSESSMENT YEARS : 2005-06 TO 2010-11 M/S N N JEWELLERS, 3261-3262, MAJID MANSION, NAWAB KA CHOURAHA, GHAT GATE, JAIPUR. CUKE VS. I.T.O., WARD 2(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABFN 3331 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL (FCA) JKTLO DH VKSJ LS@ REVENUE BY : MS. ANURADHA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20/03/2019 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 26/03/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE DIFFERENT ORDERS OF THE LD.CIT(A)-1, JAIPUR DATED 02/11/2018 F OR THE A.Y. 2005-06 TO 2010-11 IN THE MATTER OF IMPOSITION OF PENALTY U /S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THESE APPEALS, THE ASSESSEE HAS CHALLENGED TH E PENALTY SO IMPOSED ON MERITS AS WELL AS DEFECTIVE NOTICE ALSO. AS THE FACTS AND ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 2 CIRCUMSTANCES IN ALL THE ASSESSMENT YEARS UNDER CON SIDERATION ARE SAME, AS A LEAD CASE, I TAKE THE APPEAL FOR THE A.Y. 2005 -06. 3. IT WAS ARGUED BY THE LD AR OF THE ASSESSEE THAT T HE PENALTY PROCEEDINGS WERE INITIATED WITHOUT SPECIFYING THE LIM B FOR REASONS IN THE PENALTY NOTICE TO IMPOSE THE PENALTY I.E. WHETHER TH E PENALTY WAS INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREAFTER THE PEN ALTY WAS LEVIED BY HOLDING THAT THE ASSESSEE HAD FURNISHED THE INACCUR ATE PARTICULARS OF INCOME. THEREFORE, THE INITIATION AND IMPOSING OF P ENALTY PROCEEDINGS IS WRONG, BAD IN LAW, IN VALID AND VOID AB INITIO. THE NO TICE U/S 271 SHOULD BE SPECIFIC ON IMPOSING OF PENALTY U/S 271(1)(C) OF INCOME TAX ACT, 1961 I.E. CONCEALED PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IN THIS REGARD THE RELIANCE IS PLACED ON TH E FOLLOWING DECISIONS: - I) HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & OTHERS VS M/S SSAS EMERALD MEADOWS REPORTED IN 2015 (11) TMI 1620 , WHEREIN HONBLE COURT HAS HELD THAT:- 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSES SING OFFICER UNDER S ECTION 274 READ WITH SECTION 271(1)( C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD B EEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS 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 DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISS IONER OF INCOME TAX - VS - MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBS TANTIAL QUESTION OF ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 3 LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. THE DEPARTMENT HAS FILED SLP IN HONBLE SUPREME COUR T WHICH HAS BEEN DISMISSED. THEREFORE, HONBLE SUPREME COURT HAS APPR OVED THE FINDINGS MADE BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS AND CIT VS MANJUNATHA COTTON & GINNIN G FACTORY & OTHER [2013] 359 ITR 565. HONBLE KARNATAKA HIGH COU RT HAS PASSED DETAILED ORDER ON THIS ISSUE IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY & OTHER [2013] 359 ITR 565. THE CONCL UDING PARA OF THE ORDER IS AS UNDER:- CONCLUSION 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EMER GES IS AS UNDER: A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LI ABILITY. B) MENSREA IS NOT AN ESSENTIAL ELEMENT FOR IMPOS ING PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGRE DIENT FOR ATTRACTING CIVIL LIABILITY. D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 271(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271. E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DI SCERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORIT Y OR REVISIONAL AUTHORITY. F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDIN G THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FRO M THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALME NT BECAUSE OF DEEMING PROVISION. ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 4 G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE ASSESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDIN GS UNDER SECTION 271(1)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFI CER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAI NED IN SECTION 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABL E TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMI SSIONER. I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILI TY IS ADMITTED IS NOT AUTOMATIC. K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE O RDER OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TAX AND INTER EST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERN IBLE FROM THE ASSESSMENT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNE ARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITTED AND IF NOT IT WOU LD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN T HE ASSESSMENT ORDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EX PLANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PRO VE THAT THE EXPLANATION OFFERED IS NOT BONAFIDE, AN ORDER IMPOS ING PENALTY COULD BE PASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT S UBSTANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. N) THE DIRECTION REFERRED TO IN EXPLANATION 1B T O SECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEE DINGS, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE A UTHORITY AND NOT THE ASSESSING AUTHORITY. (P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD S PECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETH ER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORREC T PARTICULARS OF INCOME Q) SENDING PRINTED FORM WHERE ALL THE GROUND MEN TIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 5 R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUST ICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPO SED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENA LTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEP ENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCE EDINGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORREC T PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PR OCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSU ANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS. II) RECENTLY HONBLE ITAT IN THE CASE NEHA SHARMA V/S I TO, WARD 2(3), JAIPUR IN ITA NO. 781/JP/2017 FOR AY 200 7-08 VIDE ORDER DATED 08/03/2019 HELD THAT (PB PAGE 172- 181) :- 15. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND C AREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO DELIBE RATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY THE LD. AR AND LD. DR DURING THE C OURSE OF HEARING BEFORE US IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. WE HA D ALSO PERUSED THE NOTICE ISSUED U/S 274 READ WITH SECTION 271 OF THE ACT DAT ED 23/3/2016 AS PLACED ON THE RECORD. IT IS CLEAR FROM THE NOTICE SO ISSUED T HAT THE ASSESSING OFFICER HAD LEVIED CHARGE OF CONCEALED THE PARTICULARS OF INCOM E OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN VIEW OF THE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINBELOW, THE NOTICE ISSUED UNDER SECTION 274, R EAD WITH SECTION 271 (1) (C) OF THE INCOME TAX ACT, 1961, SHOULD SPECIFY UND ER WHICH LIMB OF SECTION 271 (1) (C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE OF WHICH NO P ENALTY SHOULD BE LEVIED ON THE ASSESSEE AS DETERMINATION OF SUCH LIMB IS SINE QUA NON FOR IMPOSITION OF PENALTY UNDER SECTION 271 (1) (C) OF THE ACT. 16. THERE CAN BE NO DOUBT THAT PENALTY U/S. 271(1)(C) O F THE ACT IS LEVIEDFORCONCEALINGPARTICULARSOFINCOMEORFORFURNISHI NGINACCURATEPARTIC ULARS OF SUCH INCOME, WHICH ARE THE TWO LIMBS OF TH IS PROVISION. IN OTHER WORDS, IT IS ONLY WHEN THE AUTHORITY INVESTED WITH THE REQUISITE POWER IS SATISFIED THAT EITHER OF THE TWO EVENTS EXISTED IN A PARTICULAR CASE THAT PROCEEDINGS U/S. 271(1)(C) OF THE ACT ARE INITIATED . THIS PRE-REQUISITE SHOULD INVARIABLY BE EVIDENT FROM THE NOTICE ISSUED U/S. 274 R.W.S. 271 OF THE ACT, WHICH IS THE JURISDICTIONAL NOTICE, FOR VI SITING AN ASSESSEE WITH ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 6 THE PENAL PROVISION. THE INTENT AND PURPOSE OF THIS NOTICE IS TO INFORM THE ASSESSEE AS TO THE SPECIFIC CHARGE FOR WHICH HE HAS BEEN SHOW CAUSED SO THAT HE COULD FURNISH HIS REPLY WITHOUT A NY CONFUSION AND TO THE POINT. IN THE PRESENT CASE, NEITHER THE ASSESSE E NOR ANYONE ELSE COULD MAKE OUT AS TO WHETHER THE NOTICE U/S. 274 R.W.S. 2 71 OF THE ACT WAS ISSUED FOR CONCEALING THE PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME DISABLING IT TO MEET WITH THE CASE OF THE ASSESSING OFFICER. THERE ARE A CATENA OF JUD GMENTS HIGHLIGHTING THE NECESSITY FOR IDENTIFYING THE CHARGE FOR WHICH THE ASSESSEE IS BEING VISITED AND IN ALL THOSE DECISIONS, HON'BLE COURTS HAVE REPEATEDLY HELD THAT WHERE THE JURISDICTIONAL NOTICE IS VAGUE, SIM ILAR TO THE ONE IN THE PRESENT CASE, THE CONSEQUENT LEVY CANNOT BE SUSTAIN ED. 17. IN THIS CONNECTION, RELIANCE IS FIRST PLACED UPON T HE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. MANJUNATHA COTTON AND GINNING FACTORY & ORS. AND VEERABHADRAPPA SANGA PPAAND CO.(359 ITR 565, 577, 601, 603-604) IN WHICH THE FA CTS ARE SIMILAR. IN THOSE BUNCH OF TAX APPEALS, SEVERAL ASSESSEE AND SE VERAL ISSUES WERE INVOLVED. IN SO FAR AS I.T.A. NO. 5020 OF 2009 WAS CONCERNED, ONE OF THE SUBSTANTIAL QUESTIONS ON WHICH THE APPEAL WAS FILED BY THE REVENUE WAS: 'WHETHER THE NOTICE ISSUED UNDER SECTION 271(1)(C) IN THE PRINTED FORM WITHOUT SPECIFICALLY MENTIONING WHETHE R THE PROCEEDINGS ARE INITIATED ON THE GROUND OF CONCEALM ENT OF INCOME OR ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS IS VALID AND LEGAL?' 18. WHILE ANSWERING THE ABOVE IN FAVOUR OF THE ASSESSEE , THE FOLLOWING FINDINGS WERE RECORDED BY THE HON'BLE COURT: '61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE A CT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED I N THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOM E UNDER CLAUSE (C). CONCEALMENT FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT THUS, THE ASSESSING OFFICER WHILE IS SUING 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 ASHOK PA I REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CON CEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN T HE CASE OF MANU ENGINEERING WORKS REPORTED IN [1980] 122 ITR 3 06 (GUJ) AND THE DELHI HIGH COURT IN THE CASE OF CIT V . VIRGO MARKETING P LTD REPORTED IN [2008 171 TAXMAN 156 HA S 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 NO T SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO I NVOKE THE FIRST LIMB BEING CONCEALMENT THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED SIMILAR IS THE CASE FOR FURNIS HING INACCURATE PARTICULARS OF INCOME. '(P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS ME NTIONED IN SECTION 271(1)(C) I.E. WHETHER IT IS FOR CONCEALMEN T OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME. THE STANDARD ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 7 PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES W ILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND 19. THEREAFTER, IN SO FAR AS THE MANNER IN WHICH THE ST ATUTORY NOTICE WAS REQUIRED TO BE ISSUED, THE HON'BLE COURT CONCLU DED THUS: (P) NOTICE U/S 274 OF THE ACT SHOULD BE SPECIFICALL Y STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C),I.E. WHETHER IT IS F OR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME. 20. FINALLY, IN CONCURRING WITH THE FINDINGS RECORDED I N THE ORDER OF THE TRIBUNAL, IT WAS HELD THUS: '66. IN VIEW OF THE AFORESAID LAW, WE ARE OF THE VI EW THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE ENTIRE PROCEEDINGS AR E VITIATED AS THE NOTICE ISSUED IS NOT IN ACCORDANCE WITH LAW AND ACC ORDINGLY JUSTIFIED IN INTERFERING WITH THE ORDER PASSED BY THE APPELLA TE AUTHORITY AS WELL AS THE ASSESSING AUTHORITY AND IN SETTING ASIDE THE SAME. HENCE, WE ANSWER THE SUBSTANTIAL QUESTIONS OF LAW FRAMED IN T HIS CASE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ' 21. THE AFORESAID JUDGMENT WAS UNSUCCESSFULLY CHALLENGE D BY THE REVENUE BEFORE THE SUPREME COURT, AS IT WAS REJECTE D VIDE PETITION FOR SPECIAL LEAVE TO APPEAL (C) NO. 13898/2014 DATED 11 .07.2016. RELIANCE WAS NEXT PLACED UPON ANOTHER JUDGMENT OF T HE HON'BLE KARNATAKA HIGH COURT IN THE CASE CIT V. SSA'S EMERA LD MEADOWS (INCOME TAX APPEAL NO. 380 OF 2015 DECIDED ON 23.11 .2016). IN THIS CASE ALSO SIMILAR SITUATION AROSE IN AS MUCH AS THE HONBLE COURT WAS REQUIRED TO ADJUDICATE ON THE FOLLOWING SUBSTANTIAL QUESTION: (1) WHETHER, OMISSION OF ASSESSING OFFICER TO EXPL ICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF I NACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCE ALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE?' 22. THE AFORESAID QUESTION WAS DEALT WITH BY THE HONBL E COURT IN FAVOUR OF THE ASSESSEE IN THE FOLLOWINGWORDS: 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION 271(1)(C) OF THE INCOME-TAX ACT 1961 ( FOR SHORT 'THE ACT; TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH L IMB OF SECTION 271(1)(C) OF THE ACT THE PENALTY PROCEEDINGS HAD BE EN INITIATED LE. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOM E OR ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 8 FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELI ED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDER ED IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW SINCE THE MATTER IS COVERED BY JUDGM ENT OF THE DIVISION BENCH OF THIS COURT WE ARE OF THE OPINION NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINA TION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. 23. THE SLP FILED BY THE DEPARTMENT IN THE AFORESAID CA SE ALSO WAS DISMISSED BY THE HON'BLE SUPREME COURT VIDE PETITIO N FOR SPECIAL LEAVE TO APPEAL (C) NO .... ./2016 (CC NO. 11485/2016) DA TED05.08.2016. 24. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. SHRI SAMSON PERINCHERY [INCOME TAX APPEAL NO. 1154 OF 2014 AND OTHERS DATED 05.01.2017] HAD ALSO OCCASION TO CONSIDER A SIMILAR ISSUE. IN THIS CASE, THOUGH PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE I NITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, IN THE NOTICE ISSUED U/S. 274 R.W.S. 271 OF THE ACT IN THE STANDARD FORM, THE CHARGE FOR WHICH IT WAS ISSUED WAS ALSO NOT IDENTIFIED, AS IN THE PRESE NT CASE. IN DELETING THE LEVY ,SO FAR AS NON-SPECIFICATION OF THE DEFAULT IN THE JURISDICTIONAL NOTICE, THE FOLLOWING FINDINGS WERE RECORDED BY THE HON'BLE BOMBAY HIGH COURT: '7 THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN FAVOUR OF THE RESPONDENT-ASSESSEE BY THE DECISION OF THE KARN ATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINN ING FACTORY(SUPRA). NOTHING HAS BEEN SHOWN TO US IN THE PRESENT FACTS WHICH WOULD WARRANT OUR TAKING A VIEW DIFFERE NT FROM THE KARNATAKA HIGH COURT IN THE CASE OF MENJUNETH C OTTON AND GINNING FACTORY (SUPRA). 8. IN VIEW OF THE ABOVE, THE QUESTION AS FRAMED DO NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW THUS, NOT ENTERTAINED' 25. THE HON'BLE SUPREME COURT IN DILIP N. SHROFF V/S JC IT, [2007] 291 ITR 519 (SC), HAS OBSERVED THAT WHILE ISSUING THE N OTICE UNDER SECTION 274 R/W SECTION 271, IN THE STANDARD FORMAT, THE AS SESSING OFFICER SHOULD DELETE THE INAPPROPRIATE WORDS OR PARAGRAPHS , OTHERWISE, IT MAY INDICATE THAT THE ASSESSING OFFICER HIMSELF WAS NOT SURE AS TO WHETHER HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CO NCEALED HIS INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THIS, ACCORDING TO THE HON'BLE SUPREME COURT, DEPRIVES THE ASSESSEE OF A FAIR OPPORTUNITY TO EXPLAIN ITS STAND, THEREBY, VIOLATES THE PRINCIP LES OF NATURAL JUSTICE. AS HELD BY THE HON'BLE SUPREME COURT IN CIT V/S RELIAN CE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC), THE AFORESAID PR INCIPLE LAID IN DILIP N. SHROFF (SUPRA) STILL HOLDS GOOD IN SPITE OF THE DECISION OF THE HON'BLE SUPREME COURT IN UOI V/S DHARMENDRA TEXTILE PROCESS ORS (2008) 306 ITR 277 (SC). THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S SMT. KAUSHALYA & ORS., [1995] 216ITR660 (BOM), OBSERVED THAT NOTICE ISSUED UNDER SECTION 274 MUST REVEAL APPLICATION OF MIND BY THE ASSESSING OFFICER AND THE ASSESSEE MUST BE MADE AWA RE OF THE EXACT CHARGE ON WHICH HE HAD TO FILE HIS EXPLANATION. THE COURT OBSERVED, ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 9 VAGUENESS AND AMBIGUITY IN THE NOTICE DEPRIVES THE ASSESSEE OF REASONABLE OPPORTUNITY AS HE IS UNAWARE OF THE EXAC T CHARGE HE HAS TO FACE. THE HON'BLE JURISDICTIONAL HIGH COURT IN SAMS ON PERINCHERY (SUPRA), FOLLOWING THE DECISION OF HON'BLE KARNATAK A HIGH COURT IN CIT V/S MANJUNATHA COTTON & GINNING FACTORY, [2013] 359 ITR 565 (KAR.), HELD, ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND ON WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED. 26. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F SHEVATA CONSTRUCTION CO. PVT. LTD. (SUPRA) HAS IN PARA 9 AS UNDER: ...... TAKING INTO CONSIDERATION THE DECISION OF TH E ANDHRA PRADESH HIGH COURT WHICH VIRTUALLY CONSIDERED THE SUBSEQUEN T LAW AND THE LAW WHICH WAS PREVAILING ON THE DATE THE DECISION W AS RENDERED ON 27.08.2012. IN VIEW OF THE OBSERVATION MADE IN THE SAID JUDGEMENT, WE ARE OF THE OPINION THAT THE CONTENTION RAISED BY THE APPELLANT IS REQUIRED TO BE ACCEPTED AND IN THE FINDING OF ASSES SING OFFICER IN THE ASSESSMENT ORDER IT IS HELD THAT THE A.O. HAS TO GI VE A NOTICE AS TO WHETHER HE PROPOSES TO LEVY PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. HE CANNOT HAVE B OTH THE CONDITIONS AND IF IT IS SO HE HAS TO SAY SO IN THE NOTICE AND RECORD A FINDING IN THE PENALTY ORDER .....' 27. APPLYING THE PROPOSITION OF LAW LAID DOWN BY THE VA RIOUS HON'BLE HIGH COURTS INCLUDING THE HONBLE JURISDICT IONAL HIGH COURT, WE DO NOT FIND ANY MERIT FOR THE PENALTY SO IMPOSED, ACCORDINGLY, AO IS DIRECTED TO DELETE THE PENALTY S O IMPOSED U/S. 271(1)(C) OF ACT. 28. IN THE RESULT, APPEAL OF THE ASSESSEE ISALLOWED III) SIMILARLY IN THE CASE OF PARTNER OF ASSESSEE SHRI G ULAM FAROOQ ANSARI HONBLE ITAT JAIPUR BENCH HAD ALLOWED THE AP PEAL IN FAVOUR OF ASSESSEE VIDE ORDER DATED 23/04/2018 AND CANCEL THE PENALTY SO IMPOSED BY AO (THE COPY OF ORDER AT PB P AGE 132- 140): - IV) HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF SHEV ATA CONSTRUCTION CO LTD IN ITA NO. 534/2008, THE FINDIN G OF HONBLE HIGH COURT AT PARA 9 IS AS UNDER (COPY AT P B PAGE182- 184) :- TAKING INTO CONSIDERATION THE DECISION OF THE A NDHRA PRADESH HIGH COURT WHICH VIRTUALLY CONSIDERED THE S UBSEQUENT LAW AND THE LAW WHICH WAS PREVAILING ON THE DATE TH E DECISION WAS RENDERED ON 27.08.2012. IN VIEW OF THE OBSERVAT ION MADE IN THE SAID JUDGEMENT, WE ARE OF THE OPINION THAT THE CONTENTION RAISED BY THE APPELLANT IS REQUIRED TO BE ACCEPTED AND IN THE FINDING OF ASSESSING OFFICER IN THE ASSESSMENT ORDE R IT IS HELD THAT THE A.O. HAS TO GIVE A NOTICE AS TO WHETHER HE PROPOSES TO LEVY PENALTY FOR CONCEALMENT OF INCOME OR FURNISHIN G INACCURATE ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 10 PARTICULARS. HE CANNOT HAVE BOTH THE CONDITIONS AND IF IT IS SO HE HAS TO SAY SO IN THE NOTICE AND RECORD A FINDING IN THE PENALTY ORDER . V) HONBLE ITAT JAIPUR BENCH, JAIPUR IN ITS JUDGMENT I N ITA 878/JP/2013 DATED 11.03.2016 IN THE CASE OF SHANKAR LAL KHANDELWAL VS DCIT HELD THAT WHEN ASSESSING OFFICER HAS MENTIONED AT THE TIME OF INITIATION OF PENALTY PROC EEDING UNDER BOTH THE LIMBS I.E. CONCEALED THE PARTICULARS OF IN COME AND FURNISHED INACCURATE PARTICULARS OF INCOME BUT AT T HE TIME OF NOTICE U/S 274 HE SIMPLY HAS TICKED IN PRESCRIBED P ROFORMA CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE PARTICULARS OF INCOME WITHOUT DELETING EITHER LIMB OF PENALTY EVEN HE HAS NOT PUT AND IN THE NOTICE ITSELF BETWEE N TWO LIMBS THAN THE INITIATION OF PENALTY PROCEEDINGS CANNOT B E CONSIDERED AS PER LAW AND ASSESSING OFFICER DID NOT HAVE ANY JURI SDICTION TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. VI) HONBLE ITAT IN ITS JUDGMENT IN CASE OF NARAYANA HE IGHTS & TOWERS, VS. ITO WARD-2-4 JAIPUR ITA NO 1033/JP/2016 HAS CANCELED THE PENALTY BY HOLDING THAT (COPY AT PB PA GE 143- 152):- 3.2. WE HAVE HEARD THE RIVAL CONTENTION, PERUSED T HE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FOR THE SAKE OF CLARITY THE RELEVANT CONTENT S OF THE ASSESSMENT ORDER ARE REPRODUCED AS UNDER: PENALTY U/S 271(1)( C) IS SEPARATELY AS ASSESSEE HAS CONCEALED THE INCOME. RELEVANT CON TENTS OF THE PENALTY ORDER ARE REPRODUCED AS UNDER:- AS THE ASS ESSEE HAD NOT FILED ANY APPEAL AGAINST ORDER OF THE AO AND IT APP EARS THAT THE ASSESSEE IS SATISFIED WITH THE ORDER PASSED BY THE AO. THEREFORE, IT APPEARS THAT THE ASSESSEE HAS NOTHING TO SAY AND HA S NO OBJECTION REGARDING IMPOSING THE PENALTY U/S 271(1)(C) OF I.T . ACT, 1961. THEREFORE, I IMPOSE A PENALTY OF EQUAL TO 100% OF T AX SOUGHT TO BE EVADED ON ACCOUNT OF THE ABOVE ACTS OF THE ASSESSEE OF RS. 34,05,436/- I.E. 100% TAX EVADED. IN THE LIGHT OF THE ABOVE, W E NEED TO EXAMINE WHETHER ASSESSMENT ORDER AND THE PENALTY ORDER COMP LY WITH THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. WE FIND THAT ON PAGE 3 OF THE ASSESSMENT ORDER, THE ASSESSING ORDER, AO OBSERVED AS UNDER:- 14 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. AS THE ASSESSEE HAS CONCEALED/FURNISHED THE INACCURATE PARTICULARS OF I NCOME THEREFORE, PENALTY U/S 271(1)(C) IS ALSO INITIATED. 3.3. AS P ER SECTION 271 (1)(C), THE ASSESSING OFFICER IS EMPOWERED TO IMPOSE PENALT Y IF IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT AN Y PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. FROM THE ABOVE PROVISIO N IT IS CLEAR THAT THERE HAS TO BE A SPECIFIC SATISFACTION BY THE ASSE SSING OFFICER THAT THE ASSESSEE IS GUILTY OF CONCEALING THE PARTICULARS OF HIS INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOMES. 3.4. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER SHOUL D GIVE A SPECIFIC ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 11 FINDING. IN THE PRESENT CASE, IN THE ASSESSMENT ORD ER AS NOTED ABOVE THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS CONCEALED/FURNISHED THE INACCURATE PARTICULARS OF INCOME. THEREFORE, TH E PENALTY UNDER SECTION 271(1) (C) WAS ALSO INITIATED, FROM THIS IT CANNOT BE INFERRED WHETHER THERE IS SPECIFIC CHARGE OF CONCEALING THE PARTICULARS OF INCOME OR FURNISHED THE INACCURATE PARTICULARS OF S UCH INCOME LAW IS WELL SETTLED THAT THE ASSESSING OFFICER HAS TO COME TO A DEFINITE SATISFACTION WHETHER THE ASSESSEE HAS CONCEALED THE INCOME OF PARTICULARS OR FURNISHED THE INACCURATE PARTICULARS OF INCOME. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT AND ANOTHER VS. MANJUNATHA COTTON AND GINNING FACTORY,359 ITR 565(K AR.) HAS HELD THAT THE NOTICE U/S 274 OF THE ACT SHOULD SPECIFICA LLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED FOR CONCEALMENT OF PARTIC ULARS OF INCOME OR INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CA SE NOTICE UNDER SECTION 274 DATED 25/3/2015 ENCLOSED AT PAPER BOOK PAGE 16 READS AS UNDER: PENALTY NOTICE UNDER SECTION 274, READ WITH SECTION 271 OF THE IT ACT. 1961 15 ITA NO. 1033/JP/2016 NARAYANA HEIGHTS & TOWER. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2012-13. IT APPEARS TO ME THAT YOU HAVE:- READ WITH SECTION 271(1)(C) CONCEALED PARTICULARS OF INCOME O R FURNISHED INACCURATE PARTICULARS OF INCOME. THEREFORE, THERE IS NO SPECIFIC CHARGE BY THE ASSESSING OFFICER. FURTHER, IT IS NOT ED THAT THE ASSESSING OFFICER IN PENALTY ORDER (AS NOTED HEREINABOVE) HAS PROCEEDED ON THE BASIS OF THE ASSUMPTION THAT THE ASSESSEE IS SATISF IED WITH THE ASSESSMENT ORDER. THEREFORE, IT APPEARS THAT THE AS SESSEE HAS NOTHING TO SAY AND HAS NO OBJECTION REGARDING THE IMPOSING OF THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN OUR CONSIDER ED VIEW, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN IMPOSING THE PENALTY ON THIS BASIS, THE ACTION OF THE ASSESSING OFFICER IS CONTRARY TO THE PROVISION OF LAW. FURTHER THE HONBLE RAJASTHAN HIGH COURT IN THE CAS E OF PR. CIT OF WEALTH TAX-1 VS NARAYANA HEIGHTS AND TOWERS IN D B INCOME TAX APPEAL NO. 203/2017 ORDER DATED 17/08/2017 HAD CONFIRMED THE ORDER OF HONBLE ITAT JAIPUR BENCH (SUPRA)(COPY AT PB PAGE 141-142) IN THE CASE OF SHRI MURARI LAL MITTAL ITA NO. 334/J P/2015 ORDER DATED 09/11/16 HAS CANCELED THE PENALTY ON THE SAME GROUNDS FOLLOWING THE DECISION OF SHRI SHANKER KHANDELWAL . VII) FURTHER RELIANCE IS ALSO PLACED ON HONBLE ITAT JAI PUR BENCH IN THE CASE OF SHRI LAL CHAND MITTAL VS THE DCIT, CENT RAL CIRCLE-3, JAIPUR IN ITA NO. 772/JP/2016 VIDE ORDER DATED 29/1 2/2016 2.5. THE LD CIT(A) CONFIRMED THAT PENALTY BY HOLDI NG THAT:- A) THE PLEA HAS NOT BEEN TAKEN BEFORE THE LD. AO. IT IS ADMITTED POSITION OF LAW THAT THE PLEA OF TH E ASSESSEE IS TAKEN ON THE BASIS OF FACTS AVAILABLE ON RECORD AND BEING THE LEGAL ISSUE ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 12 THE SAME CAN BE TAKEN AT ANY STAGE OF THE PROCEEDIN GS. BEING THE CO-TERMINUS POWER VESTED TO THE CIT (A) HE IS ALSO THE AUTHORITY TO DECIDE THE ISSUE RAISED BEFORE HIM. B) THE DISMISSAL OF DEPARTMENTS SLP BY HONBLE APEX C OURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS IS BY A NON SPEAKING ORDER:- LD CIT(A) FAILED TO APPRECIATE THAT HONBLE APEX CO URT DISMISSED THE SLP OF THE DEPARTMENT BY MENTIONING T HAT WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPE CIAL LEAVE PETITION IS ACCORDINGLY, DISMISSED. THEREFORE, HONBLE SUPREME COURT HAS APPROVED THE F INDINGS MADE BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS AND CIT VS MANJUNATHA COTTON & GINNING FACTORY & OTHER [2013] 359 ITR 565 BY MENTI ONING THAT THEY HAVE NOT FIND ANY MERIT IN THE PETITION O F THE DEPARTMENT. C) RELYING ON DECISION OF THIRD MEMBER JUDGMENT IN THE CASE OF GRASS FIELD FARMS & RESORTS (P) LTD VS DCIT [2016] 176 TAXMANN.COM 176 (JAIPUR-TRIB)(TM). THE LD CIT(A) WITHOUT APPRECIATING THE FACTS OF ASS ESSEES CASE RELIED UPON ABOVE REFERRED THIRD MEMBER JUDGMENT. IN THE CASE OF GRASS FIELD FARMS & RESORTS (P) LTD VS DCIT IT HAS BEEN CLEARLY MENTIONED THAT THE PENALTY MAY ATTRACT BOTH THE OFFENCES . I.E. THE CONCEALMENT OF INCOME AS WELL AS FURNISHIN G OF INACCURATE PARTICULARS OF INCOME AND THEREFORE THE ASSESSING OFFICER RIGHTLY INITIATED THE PENALTY PROCEEDINGS F OR BOTH THE OFFENCES. IN PENALTY NOTICE ALSO BOTH THE OFFENCE W ERE MENTIONED. BUT IN THE ASSESSEES CASE, IN THE ASSESSMENT ORDER AS WELL AS IN NOTICE ISSUED U/S 274 OF INCOME TAX ACT AS NO TED ABOVE THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS CONCEALED/OR FURNISHED THE INACCURATE PARTICULARS OF INCOME. THE REFORE, FROM THIS IT CANNOT BE INFERRED THAT THE PENALTY WAS INI TIATED FOR BOTH THE OFFENCES AND SINCE THERE IS NO SPECIFIC CHARGE OF CONCEALIN G THE PARTICULARS OF INCOME OR FURNISHED THE INACCURA TE PARTICULARS OF SUCH INCOME, THE INITIATION OF PENALTY U/S 271(1 )(C) IS BAD IN LAW. LAW IS WELL SETTLED THAT THE ASSESSING OFFICER HAS TO COME TO A DEFINITE SATISFACTION WHETHER THE ASSESSEE HAS CO NCEALED THE INCOME OF PARTICULARS OR FURNISHED THE INACCURATE P ARTICULARS OF INCOME. FURTHER DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHEVATA CONSTRUCTION CO PVT. LTD (SU PRA) WILL ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 13 PREVAIL OVER THE THIRD MEMBER JUDGMENT WHEREIN IT H AS BEEN HELD THAT THE AO, HAS TO GIVE A NOTICE AS TO WHETHER HE PROPO SES TO LEVY PENALTY FOR CONCEALMENT OF INCOME OR FURNIS HING INACCURATE PARTICULARS. HE CANNOT HAVE BOTH THE CON DITIONS AND IF IT IS SO HE HAS TO SAY SO IN THE NOTICE AND RECORD A FINDING IN THE PENALTY ORDER.....' (EMPHASIS SUPPLIED) D) THE CASE OF SHILPY SHARMA V/S ITO IN ITA NO. 3728/DEL./2014 FOR AY 2009-10 OF HONBLE ITAT IS ALSO NOT APPLICAB LE IN THE CASE OF THE ASSESSEE AS IN SUCH CASE THE PENALTY WA S INITIATED ON THE INCOME HIMSELF DECLARED BY THE ASSESSEE. FURTHE R IN THIS THE HONBLE ITAT FIND THAT THE SATISFACTION OF AO WAS D ISCERNIBLE FROM THE ASSESSMENT ORDER THAT THE PENALTY PROCEEDI NGS WERE PROPOSED TO BE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME BUT IN THE CASE OF ASSESSEE THE PENALTY PROC EEDINGS WERE INITIATED BY HOLDING THAT PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IS INITIATED FOR CONCEALMENT OF INCOME/FOR FURNISHING INACCURATE PARTICULARS OF INCOME. E) THE CASE IN THE CASE OF K. P. MADHUSUDHANA V/S CIT (2201) 118 TAXMAN 324 (SC) IS ALSO NOT APPLICABLE IN THE CASE OF ASSESSEE AS THE SAME IS ON DIFFERENT FACTS AND IN VIEW OF SUBSE QUENT DECISIONS HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SH EVATA CONSTRUCTION CO PVT. LTD (SUPRA) AND DECISION OF HO NBLE APEX COURT IN THE CASE OF CIT VS SSAS EMERALD MEAD OWS. F) THE DECISION OF M/S AIREN METALS PVT. LTD JAIPUR V/ S ACIT ITA NO. 820/JP/2016 OF HONBLE ITAT IS NOT RELEVANT IN THE CASE OF THE ASSESSEE BECAUSE IN SUCH CASE THE APPEAL OF THE ASSESSEE WAS REJECTED ON THE GROUND THAT THE ASSESSEE DID NOT FI LE ANY SUBMISSION/EXPLANATION BEFORE THE LOWER AUTHORITIES . G) THE CASE OF DINESH KUMAR VIJAY V/S ITO IN ITA NO , 58/JP/2016 IS ALSO APPLICABLE IN THE CASE OF THE ASSESSEE BECAUSE IN THIS CASE IT WAS HELD BY ITAT THAT THE INITIATION OF PENALTY PROCEEDINGS INCLUDED BOTH THE OFFENCES AND THE SHOW -CAUSE NOTICE ALSO INCLUDED BOTH THE OFFENCES, THE ASSESSE E GOT THE ADEQUATE OPPORTUNITY TO EXPLAIN BOTH THE OFFENCES A ND THEREFORE, THERE IS NO ILLEGALITY IN LEVYING THE PENALTY. IN THE CASE OF ASSESSEE THE PENALTY WAS INITIATED WITHOUT SPECIFYI NG THE OFFENCE I.E. WHETHER FILED INACCURATE PARTICULARS OR CONCEA LED THE PARTICULARS OF INCOME AND IN THE ORDER THE PENALTY WAS IMPOSED ON A/C OF FURNISHING THE INACCURATE PARTICULARS OF INCOME. FURTHER, THE LATER DECISION OF HON'BLE ITAT JAIPUR IN THE CASE OF MS NEHA SHARMA VS ITO WOULD PREVAIL OVER THE OLD DE CISIONS. ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 14 THEREFORE, THE CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME, TWO ARE DIFFERENT DEFAULTS AN D THEY CANNOT BE INTERMIXED. THEREFORE, THE ORDER OF ASSESSING OFFICE R DESERVES TO BE SET ASIDE AND PENALTY LEVIED BY ASSESSING OFFICER DESER VES TO BE CANCELLED. 4. ON MERITS IT WAS ALLEGED THAT ADDITION HAS BEEN M ADE ONLY ON ESTIMATION BASIS, THEREFORE, NO PENALTY IS IMPOSABL E WHILE MAKING ANY ADDITION ON ESTIMATE BASIS. FOR THIS PURPOSE, RELIA NCE WAS PLACED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CAS E OF SHIV LAL TAK VS CIT (2002) 121 TAXMAN 99. 5. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE I TAT JODHPUR BENCH IN THE CASE OF ITO VS GURUNANAK OIL AGENCY [20 13] 35 TAXMANN.COM 562 (JODHPUR - TRIB.). THE FINDING OF TRIB UNAL IS AS UNDER: 4. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFULLY TREADED THROUGH THE ENTIRE RECORD. WE HAVE FOUND THAT THE I MPUGNED PENALTY IS BASED ONLY ON ESTIMATED ADDITIONS. BESID ES THAT ALL ADDITIONS HAVE BEEN DELETED EXCEPT FOR A SMALL ONE OF RS. 1,62,240 WHICH HAS BEEN SUSTAINED. HOWEVER, THIS AD DITION IS NOT THE BASIS OF IMPOSITION OF PENALTY. OTHERWISE, ALSO THE SUSTAINED ADDITION IS ALSO AN ESTIMATED ADDITION. THE LEGAL P OSITION IN THIS REGARD HAS BEEN SUCCINCTLY GIVEN IN THE DECISION IN THE CASE OF DR. HAKEEM S.A. SAJED SATTAR V. ASSTT. CIT [2009] 1 20 ITD 1 (CHENNAI). IT HAS BEEN HELD THAT ON ESTIMATED ADDIT ION, PENALTY UNDER S. 271(1)(C) OF THE ACT CANNOT BE IMPOSED BEC AUSE THERE CAN BE NO CONCEALMENT IN THESE CASES, NOR THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. ANY EST IMATE IS AN OPINION WHICH IS TAKEN SUBJECTIVELY, WHEN THIS DIFF ERENCE OF OPINIONS LEADS TO ANY ADDITION, IT CANNOT TERMINATE INTO A PENALTY UNDER S. 271(L)(C) OF THE ACT. THE DECISION OF SHIV LALTAK V. CIT ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 15 [2001] 251 ITR 373/[2002] 121 TAXMAN 99 (RAJ.) OF H ON'BLE RAJASTHAN HIGH COURT IS ALSO RELEVANT. 5. THUS, IT IS MANIFESTLY CLEAR THAT THE SUSTAINED ADDITIONS ARE A RESULT OF ESTIMATED DISALLOWANCES OF EXPENSES AND E STIMATED TRADING ADDITION. ACCORDINGLY, BY RESPECTFULLY FOLL OWING THE ABOVE JUDGMENTS/ORDERS AND BY APPLYING THEIR RATIO DECIDENDI TO THE FACTS OF THIS CASE, WE ARE LEFT WITH NO OPTION BUT TO CONFIRM THE IMPUGNED ORDER OF LEARNED CIT(A), WHO HAS ALSO DELE TED THE IMPUGNED PENALTY ON THE SIMILAR REASONING. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CARE FULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE ASSESSMENT OF ASSESSEE WAS COMPLETED BY THE AO FOR AY 2005-06 TO A Y 2010-11 BY ESTIMATION OF GROSS PROFIT @ 25% ON THE ESTIMATED SA LES. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND HONBLE ITAT JAIPUR BENCH. THE DETAILS OF RELIEF GRAN TED BY LD. CIT(A) AND ITAT AS UNDER:- AY GROSS PROFIT ESTIMATED BY AO NET ADDITION GROSS PROFIT ESTIMATED BY CIT(A) NET ADDITION SUSTAINED GROSS PROFIT ESTIMATED BY ITAT NET ADDITION SUSTAINED 2005-06 RS. 33,83,182/- (25% OF 1,35,32,729) RS. 29,41,395/- (RS. 33,83,182- 4,41,787) RS. 13,76,284/- (16% OF RS. 86,01,774) RS. 9,34,497/- RS. 7,40,657/- (14.22% OF 52,08,563). RS. 2,98,780 2006-07 RS 28,22,742/- (25% OF 1,12,90,969) RS. 23,77,539/- (RS. 28,22,742- 4,45,203) RS. 17,67,605/- (16% OF RS. 1,10,47,533) RS. 13,22,402 RS. 10,70,855/- (14.22% OF 75,30,620). RS. 6,25,652 2007-08 RS 38,43,639/- (25% OF 1,53,74,556) RS. 33,96,837/- (RS. 38,43,639- 4,46,802) RS. 26,45,497/- (16% OF RS. 1,65,34,355) RS. 21,98,695 RS. 12,98,334/- (14.22% OF 91,30,339). RS. 8,51,532 2008-09 RS 41,56,251/- (25% OF 1,66,25,006) RS. 36,58,369/- (RS. 41,56,251- 4,97,882) RS. 22,82,560/- (16% OF RS. 1,42,66,001) RS. 17,84,678 RS. 7,88,610/- (14.22% OF 55,45,779). RS. 2,90,728 2009-10 RS 23,07,943/- (25% OF 92,31,773) RS. 19,00787/- (RS. 23,07,943- 4,07,156) RS. 16,62,834/- (16% OF RS. 1,03,92,716) RS. 12,55,678 RS. 8,48,453/- (15.33% OF 55,34,598). RS. 4,41,297 2010-11 RS 29,80,549/- (25% OF 1,19,22,198) RS. 25,90,875/- (RS. 29,80,549- 3,89,674) RS. 15,29,462/- (16% OF RS. 95,59,140) RS. 11,39,788 RS. 9,20,908/- (14.22% OF 64,76,145). RS. 5,31,234 ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 16 THE AO HAD COMPUTED THE PENALTY ON INCOME COMPUTED A FTER RELIEF PROVIDED BY HONBLE CIT(A). HOWEVER LD CIT(A) HAD ALLO WED THE RELIEF BY DIRECTING THE LD AO TO COMPUTE THE PENALTY ON THE N ET ADDITION SUSTAINED BY HONBLE ITAT JAIPUR. IT HAD BEEN SETTLED LAW THAT ON ESTIMATED ADDITION, PENALTY UNDER S. 271(1)(C) OF THE ACT CAN NOT BE IMPOSED BECAUSE THERE CAN BE NO CONCEALMENT IN THESE CASES, NOR THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME. ANY ESTIMATE IS AN OPINION WHICH IS TAKEN SUBJECTIVELY, WHEN THIS DIF FERENCE OF OPINIONS LEADS TO ANY ADDITION, IT CANNOT TERMINATE INTO A P ENALTY UNDER S. 271(L)(C) OF THE ACT. FURTHER, IT CANNOT BE SAID TH AT THE PROCESS OF IMPOSITION OF PENALTY IS AUTOMATIC IN THE EVENTUALI TY OF ESTIMATED INCOME. ALL THE ATTENDANT CIRCUMSTANCES OF THE CASE MUST BE CAREFULLY SCRUTINIZED. THE QUESTION WHETHER PENALTY SHOULD BE LEVIED MUST BE CONSIDERED ON THE BASIS OF THE JUDICIAL DETERMINATION. THE MERE F ACT OF ADDITION ON AN ESTIMATED BASIS, PARTICULARLY WHEN THE ASSESSMENT IS MADE ON THE INFERENCE FLOWING FROM THE INABILITY OF THE ASSESSEE TO ESTABLISH THE CASE PLEADED BY HIM, WILL NOT BE SUFFICIENT FOR THE PURPO SE OF IMPOSITION OF PENALTY. THE DEGREE OF PROOF REQUIRED FOR THE IMPOSI TION OF PENALTY IS QUITE DIFFERENT FROM AND IS OF A MUCH HIGHER ORDER THAN THAT REQUIRED FOR THE PURPOSE OF MAKING ADDITION ON AN ESTIMATED BASI S. BESIDES, ADDITION ON THE BASIS OF ESTIMATE DOES NOT IPSO FACTO SUPPLY EVIDENCE OF ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 17 CONCEALMENT SO AS TO JUSTIFY PENALTY. FINDING OF CO NCEALMENT CANNOT BE BASED ON ESTIMATION ALONE. IN THE FACTS OF THE INST ANT CASE, THE FACTUM OF CONCEALMENT WAS NOT PROVED BEYOND THE SHADOW OF DOUBT . UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, APPLYING THE P ROPOSITION OF LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT, I DO NOT FIND ANY JUSTIFICATION FOR IMPOSITION OF PENALTY U/S 271(1)( C) OF THE ACT IN ALL THE YEARS UNDER CONSIDERATION. HENCE, THE PENALTY IS HE REBY DELETED. 7. AS WE HAVE ALREADY DECIDED THE MERIT OF THE IMPOS ITION OF PENALTY U/S 271(1)(C) OF THE ACT, I AM NOT GOING INTO THE G ROUND TAKEN BY THE ASSESSEE WITH REGARD TO DEFECTIVE NOTICE. 8. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSE SSEE ARE ALLOWED IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 26/03/2019 SD/- JES'K LH 'KEKZ ( RAMESH C SHARMA ) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26 TH MARCH, 2019. *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S N N JEWELLERS, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 2(1), JAIPUR. 3. VK;DJ VK;QDR @ CIT ITA 63 TO 68/JP/2019 M/S N N JEWELLERS VS ITO 18 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 63 TO 68/JP/2019) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR