Vaibhav Global Limited, Jaipur V. Assistant Commissioner Of Income Tax, Circle-5, Jaipur

ITA 730/JPR/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8729 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 28-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLI AGARWAL
• Assessee Lawyers: S R SHARMA
• Keywords: Transfer pricing; International transaction; Source of fund; Question of law; Initiation of penalty proceedings; Difference of opinion; Commercial expediency
• Section: 271(1)(c); 92C; 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 730 & 731/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2009-10 & 2010-11 VAIBHAV GLOBAL LTD. (EARLIER KNOWN AS VAIBHAV GEMS LTD.) K-6-B FATEH TIBA, ADARSH NAGAR, JAIPUR. CUKE VS. THE ACIT, CIRCLE-5, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACV 4679 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VIJAY MEHTA (C.A.) & SHRI S.R. SHARMA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROLI AGARWAL (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 24/09/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 19/12/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINS T THE RESPECTIVE ORDERS OF LD. CIT(A)-2, JAIPUR DATED 28. 03.2018 FOR A.Y. 2009-10 & 2010-11 RESPECTIVELY. IN BOTH THE AP PEALS, THE ASSESSEE HAS CHALLENGED THE LEVY OF PENALTY U/S 271(1)(C) OF THE I.T. ACT. SINCE COMMON ISSUES ARE INVOLVED, BOTH THE APPEALS WERE H EARD TOGETHER AND ARE DISPOSED OFF BY THIS CONSOLIDATED ORDER. ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 2 2. FOR THE PURPOSE OF PRESENT DISCUSSIONS, WE TAKE THE APPEAL OF THE ASSESSEE IN ITA NO. 730/JP/2018 FOR A.Y. 2009-10 AS A LEAD CASE WITH THE CONSENT OF BOTH THE PARTIES. BRIEFLY THE FACT S OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACT URING AND EXPORT OF COLOURED GEM STONES, PRECIOUS/ SEMI-PRECIOUS STONES , STUDDED GOLD JEWELLERY, AND DIAMONDS. DURING THE YEAR UNDER CONS IDERATION, THE ASSESSEE HAS PROVIDED LOANS TO ITS ASSOCIATED ENTER PRISES (AES) AND THE SAID TRANSACTIONS HAVE BEEN BENCHMARKED USING COMPA RABLE UNCONTROLLED PRICE (CUP) AS THE MOST APPROPRIATE ME THOD AND ARRIVED AT NIL CONSIDERATION AS THE ARMS LENGTH PRICE COMPUTE D IN TERMS OF SECTION 92C OF THE INCOME TAX ACT. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE MATTER WAS REFERRED BY THE ASSESSING OFFICER TO THE TRANSFER P RICING OFFICER (TPO) AND THE TPO HAS ADOPTED THE CUP METHOD FOR DETERMIN ATION OF ARMS LENGTH PRICE AND HAS PROPOSED AN ADJUSTMENT OF RS. 18,65,77,973/- DETERMINED AS THE VALUE OF INTEREST RECEIVABLE @ 14.88% (SBI PLR PLUS 300 BASIS POINTS) ON LOANS GIVEN TO ASSOCIATED ENTERPRISES (AES) DURING THE YEAR AND WHICH WERE OUTSTANDING AT THE Y EAR END. SUBSEQUENTLY, THE MATTER WAS TAKEN UP BY THE ASSESS EE BEFORE THE DISPUTE RESOLUTION PENAL (DRP) WHICH HAS CONFIRMED THE ADJUSTMENT SO PROPOSED BY THE TPO. THEREAFTER, THE AO PASSED THE FINAL ASSESSMENT ORDER U/S 143(3) R/W 144C OF THE ACT INTERALIA MAKING THE TRANSFER PRICING ADJUSTMEMT/ADDITION OF RS 18,68,02,513 TO T HE RETURNED INCOME. 4. ON APPEAL, THE COORDINATE BENCH OF THIS TRIBUNAL HAS CONFIRMED THE ADJUSTMENT ON ACCOUNT OF INTEREST RECEIVABLE O N LOANS TO THE AES, ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 3 HOWEVER RESTRICTED THE RATE OF INTEREST TO PREVAILI NG LIBOR RATE PLUS 2% AND THE RELEVANT FINDINGS OF THE COORDINATE BENCH I N IT(TP) A NO. 01/JP/2014 DATED 25.08.2014 IS REPRODUCED AS UNDER: - WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MATERIALS AVAILABLE ON RECORD. THERE IS NO DISPUTE TO THE FAC T THAT LOANS WERE ADVANCED IN FOREIGN CURRENCY. FOLLOWING BENCHES OF ITAT INCLUDING THIS BENCH OF ITAT HAS HELD THAT PREVAILING LIBOR RATE W ITH MARGINAL VARIATION SHALL BE THE REASONABLE TP ADJUSTMENT. 1. AURIONPRO SOLUTIONS LTD. VS. ADDL. CIT (2013) 3 3 TAXAMN 187 (MUM.K. TRIBUNAL). 2. TATA AUTOCAMP SYSTEMS LTD. VS. ACIT (2012) 21 TA XMAN 6 MUM E TRIBUNAL). 3. M/S GLAMOUR ENTERPRISES (P) LTD. VS. DCIT (ITA N O. 114/JP/2011 DATED 08.07.2014. THIS BENCH OF ITAT WHILE DECIDING THE SIMILAR ISSUE HAS TAKEN THE FOLLOWING DECISION AS UNDER:- 2.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT IS A FACT THAT TH ERE WAS INTERNATIONAL TRANSACTION BETWEEN THE ASSESSEE AND ASSOCIATE ENTERPRISE DURING THE YEAR UNDER CONSIDERATION ON W HICH NO INTEREST HAS BEEN CHARGED ON THE LOAN GIVEN TO THE SUBSIDIARY COMPANY. THE DRP APPLIED 11.40% INTEREST RATE ON IN TERNATIONAL TRANSACTION ON THE BASIS OF BBB BOND AND CONSIDERIN G THE RISK IN CASE OF LOAN GIVEN TO THE ASSOCIATE ENTERPRISE. THE LOAN GIVEN TO SUBSIDIARY COMPANY HAS A LOWER RISK AS THE ASSESSEE HAS INDIRECT CONTROL ON IT. FURTHER LIBOR+ NOMINAL ADJUSTMENT HA S BEEN ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 4 UPHELD BY VARIOUS ITAT BENCHES AS REASONABLE. THERE FORE, WE FIND THAT INTEREST RATE PROPOSED BY THE ASSESSEE @ 8.90% IS REASONABLE AS AGAINST 11.40% DECIDED BY DRP. ACCORD INGLY, THE ASSESSEE GETS THE PARTIAL RELIEF. THUS BY RESPECTFULLY THE TRIBUNAL ORDERS INCLUDING OUR ORDERS (SUPRA), ENDS OF JUSTICE WILL BE MADE IN THIS CASE IF THE AD JUSTMENT ON ACCOUNT OF INTEREST FREE LOANS IN ASSESSEES CASE I S RESTRICTED TO PREVAILING LIBOR RATE PLUS 2% SHALL BE REASONABLE T P ADJUSTMENT. CONSEQUENTLY, WE DIRECT THE TPO TO WORK OUT THE ADJUSTMENT ACCORDING. THUS GROUND NO. 3 OF THE ASSE SSEE IS PARTLY ALLOWED. 5. AGAINST THE ORDER OF THE COORDINATE BENCH, BOTH THE REVENUE AS WELL AS ASSESSEE WENT IN APPEAL BEFORE THE HONBLE RAJASTHAN HIGH COURT WHICH HAS CONFIRMED THE TRANSFER PRICING ADJU STMENT BUT HAS RESTRICTED THE ADJUSTMENT AND HAS DIRECTED TO APPLY THE AVERAGE LIBOR RATE OF 0.79% AS AGAINST THE LIBOR PLUS 2% DETERMIN ED BY THE COORDINATE BENCH. THE QUANTUM PROCEEDINGS, THEREFOR E, HAVE ATTAINED FINALITY WHEREIN THE ADJUSTMENT HAS BEEN FINALLY DE TERMINED @ 0.79% IN RESPECT OF LOANS PROVIDED TO THE AES DURING THE YEA R UNDER CONSIDERATION. 6. NOW COMING TO THE PENALTY PROCEEDINGS, THE SAME WERE INITIATED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSES SMENT PROCEEDINGS U/S 143(3) R.W.S. 144C OF THE I.T. ACT WHEREIN THE AO HAS MADE TRANSFER PRICING ADJUSTMENT/ADDITION OF RS. 18,68,0 2,513/-AND HAS ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 5 STATED THAT PENALTY U/S 271(1)(C) IS LEVIABLE IN AC CORDANCE WITH EXPLANATION 7. THEN, TOWARDS THE END OF ASSESSMENT ORDER, IT HAS BEEN STATED THAT PENALTY PROCEEDINGS U/S 271(1)(C) OF TH E ACT ARE INITIATED SEPARATELY. 7. IN THE PENALTY ORDER DATED 30.03.2015, THE AO H AS STATED THAT AFTER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL IN QUANTUM PROCEEDINGS, THE ASSESSED LOSS IS FINALLY DETERMINED AT RS. 18,4 3,34,129/- AGAINST RETURNED LOSS OF RS. 23,16,74,228/- AND THEREFORE, THE REDUCTION IN LOSS OF RS. 4,68,40,099/- CLEARLY COMES UNDER THE AMBIT OF SECTION 271(1)(C) OF THE I.T. ACT AND PENALTY OF RS 1,59,20,950 HAS B EEN LEVIED. 8. IN THE AFORESAID PENALTY PROCEEDINGS, A SPECIFIC SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE AND AFTER TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE, THE AO HAS HELD TH AT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND/OR C ONCEALMENT OF INCOME TO THE EXTENT OF ADDITION CONFIRMED BY THE T RIBUNAL OF RS. 4,68,40,099/-. HERE, IT WOULD BE RELEVANT TO NOTE THE RELEVANT FINDINGS OF THE ASSESSING OFFICER WHILE LEVYING THE PENALTY WHICH IS REPRODUCED AS UNDER:- 11. THE CASE OF THE ASSESSEE FALLS CLEARLY WITHIN THE AMBIT OF EXPLANATION 7 BECAUSE IF THE ASSESSEE COULD NOT SAT ISFIED ALL THE ASSESSING AUTHORITIES I.E. TPO/DRP/AO AND HONBLE T RIBUNAL THAT THE PRICE CHARGED OR PAID IN SUCH TRANSACTION AS CO MPUTED IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 92C. THIS VIEW IS CLEARLY EVIDENCED BECAUSE THE ADDITION MADE BY THE TPO ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 6 HAS BEEN APPROVED BY THE DRP WHICH IS A COLLEGIUMS COMPRISING OF THREE COMMISSIONER OF INCOME TAX CONSTITUTED BY THE BOARD. FURTHER, THE HONBLE TRIBUNAL SUSTAINED ADDITION ON LY WITH THE DIRECTION OF COMPUTATION AND THERE IS A DIFFERENCE IN THE ADJUSTMENT CALCULATED BY THE ASSESSEE AND TPO WHILE GIVING EFFECT TO THE ORDER OF THE HONBLE TRIBUNAL. IF THE ADJUSTMENT HAD BEEN MADE BY THE ASSESSEE AS PER PROVISIONS OF SECT ION 92C THEN THERE SHOULD NOT ANY DIFFERENCE. THE REVISED ADJUST MENT OF RS. 4,68,40,099/- IN RESPECT OF INTEREST FREE LOANS OF AES WHICH ARE AS PER DIRECTION OF HONBLE ITAT FOR THE PURPOSES OF I MPOSITION OF PENALTY UNDER CLAUSE OF THIS SECTION, IS HEREBY D EEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. BECAUSE THE CASE OF THE ASSESSEE IS COMES UNDER THE AMBIT OF EXPLANATION 7 DEEMING PROV ISIONS OF SECTION 271(1)(C) ARE CLEARLY APPLICABLE TO THE ASS ESSEE. 12. AS FAR AS PROVISIONS OF SECTION 271(1)(C) ARE C ONCERNED, IT IS CLEAR CUT CASE OF CONCEALMENT OF INCOME/OR FURNISHI NG INACCURATE PARTICULARS. THIS FACT WAS REVEALED ONLY DURING TH E ASSESSMENT PROCEEDINGS. HAD THE ASSESSMENT U/S 143(3) NOT CARR IED OUT IN THIS CASE, THIS FACT COULD NOT HAVE BEEN BROUGHT ON RECORD EVER. THE ASSESSEE NOWHERE IN ITS REPLY JUSTIFIED THAT AS TO HOW ITS CASE DOES NOT FALL UNDER THE PURVIEW OF EXPLANATION 7 TO SECTION 271(1)(C) OF THE I.T. ACT, 1961. 13. THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT READ WITH EXPLANATION 1 CLEARLY PUT THE ONUS ON THE SHOULDERS OF THE ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 7 ASSESSEE TO ESTABLISH THAT THERE WAS NO CONCEALMENT AND/OR INACCURATE FURNISHING OF THE PARTICULARS OF INCOME. HOWEVER, IN THE SUBMISSION THE ASSESSEE HAS NOT BROUGHT ANY (NE W) EVIDENCE ON RECORD IN SUPPORT OF ITS CONTENTION NOR HAS THE ASSESSEE PUT FORTH ANY ARGUMENT WHEREBY THE ONUS CAST UPON IT IN RESPECT OF ITS INNOCENCE AND RIGHTEOUS CONDUCT IS ESTABLISHED. THE ASSESSEE HAS MERELY REITERATED THE ARGUMENTS PUT FORTH DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS. IN OTHER WORDS, THE ASSE SSEE HAS BEEN UNABLE TO DISCHARGE THE ONUS CAST UPON IT. 20. IN VIEW OF THE ABOVE, IT IS ESTABLISHED BEYOND DOUBT THAT THE ASSESSEE HAS FURNISHED INACCURATE AND/OR CONCEALED PARTICULARS OF ITS INCOME TO THE EXTENT OF THE ADDITION CONFIRMED BY THE HONBLE ITAT, JAIPUR BENCH, JAIPUR OF RS. 4,68,40,099/- REL ATING TO TP ADJUSTMENT. 9. ON APPEAL BY THE ASSESSEE, THE LD. CIT(A) HAS ST ATED THAT EXPLANATION 7 TO SECTION 271(1)(C) OF THE ACT IS AP PLICABLE AS THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT GOOD FAITH AND DUE DILIGENCE HAS BEEN FOLLOWED AND THE PENALTY LEVIED U/S 271(1) (C) WAS CONFIRMED, HOWEVER, IN VIEW OF THE ORDER OF THE HONBLE HIGH C OURT, THE QUANTUM OF PENALTY WAS DIRECTED TO BE DETERMINED BY THE AO TAKING INTO CONSIDERATION THE ORDER OF THE HONBLE HIGH COURT. 10. IN THE ABOVE FACTUAL BACKGROUND, THE ASSESSEE H AS MOVED THE PRESENT APPEAL. AT THE OUTSET, THE LD. AR REQUESTED FOR PERMISSION TO RAISE THE FOLLOWING ADDITIONAL GROUND OF APPEAL WHI CH READS AS UNDER:- ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 8 THAT THE LD. ASSESSING OFFICER IS WRONG AND BAD IN LAW IN AS MUCH AS THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE IT ACT, 1961 TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMP OF SECTION 271 (1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E . WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 11. THE LD. AR HAS SUBMITTED THAT THE ADDITIONAL GR OUND IS PURELY A LEGAL GROUND AND IT GOES TO THE ROOT OF THE MATTER, THE SAME SHOULD BE ADMITTED IN THE INTEREST OF JUSTICE. IN SUPPORT, RE LIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF NA TIONAL THERMAL POWER CORPORATION LTD. VS. CIT 229 ITR 383. AFTER H EARING BOTH THE PARTIES, THE ADDITIONAL GROUND BEING A PURELY LEGAL GROUND, THE SAME IS BEING ADMITTED FOR ADJUDICATION. 12. THE LD AR SUBMITTED THAT ANY NOTICE ISSUED UNDE R SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SHOULD SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, T HE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E. WHETHER FOR CON CEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. IN THE ABSENCE OF WHICH NO PENALTY SHOULD BE LEVIED ON THE ASSESSEE AS DETERMINATION OF SUCH LIMB IS SINE QUA NON FOR IMPO SITION OF PENALTY UNDER SECTION 271(1)(C). 13. IT WAS SUBMITTED THAT IN THE ASSESSMENT ORDER A ND NOTICE, LD. AO HAS NOT CLEARLY MENTIONED THE LIMB, ON THE BASIS OF WHICH, PENALTY WAS PROPOSED TO BE IMPOSED. LD. AO IN ASSESSMENT ORDER OR PENALTY NOTICES ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 9 DID NOT SPECIFIED THE LIMB UNDER WHICH THE PENALTY WAS INITIATED AND SIMPLY ISSUED A PRE-PRINTED NOTICE WITHOUT STRIKING OFF THE UNNECESSARY PORTIONS OF THE NOTICE. IF THE LD. AO WAS OF THE V IEW THAT THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHING INACCURATE P ARTICULARS OF INCOME THEN HE SHOULD HAVE DELETED OR NOT MENTIONED THE OT HER LIMB FOR IMPOSITION OF PENALTY I.E. CONCEALING THE PARTICULA RS OF INCOME. THE ABOVE ACT OF THE LD. AO CLEARLY SHOWS THAT THE ENTI RE EXERCISE OF INITIATION OF PENALTY PROCEEDINGS HAS BEEN DONE WIT HOUT APPLICATION OF MIND. 14. OUR REFERENCE WAS DRAWN TO THE PENALTY SHOW-CA USE NOTICE AND THE RELEVANT EXTRACT THEREOF READS AS UNDER: WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE A.Y. 2009-10 IT APPEARS TO ME THAT YOU HAVE- 271(1)(C) CONCEALED PARTICULARS OF INCOME OR FURNIS HED INACCURATE PARTICULARS OF INCOME. 15. FURTHER, OUR REFERENCE WAS DRAWN TO THE PENALT Y ORDER U/S 271(1)(C) PASSED ON 30-03-2015 WHEREIN PENALTY WAS IMPOSED ON ADDITION OF INCOME OF RS. 4,68,40,099/- BY HOLDING THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED HIS INCOME. THE RELEVANT FINDINGS OF LD. AO IN LAST PA RA (NO.20) ON PAGE 14 OF THE PENALTY ORDER IS AS UNDER:- 20. IN VIEW OF THE ABOVE, IT IS ESTABLISHED BEYO ND DOUBT THAT THE ASSESSEE HAS FURNISHED INACCURATE AND/OR CONCEALED PARTICULARS OF ITS INCOME TO THE EXTENT OF THE ADDITION CONFIRMED BY T HE HONBLE ITAT, JAIPUR BENCH, JAIPUR OF RS. 4,68,40,099/- RELATING TO TP ADJUSTMENT. ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 10 16. IT WAS SUBMITTED BY THE LD AR THAT AS PER ABOVE FACTS, IT IS APPARENT THAT THE PENALTY PROCEEDINGS WERE INITIATE D WITHOUT SPECIFYING THE LIMB FOR REASONS IN THE PENALTY NOTICE TO IMPOS E THE PENALTY I.E. WHETHER THE PENALTY WAS INITIATED FOR CONCEALMENT O F PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREAFTER THE PENALTY WAS LEVIED BY HOLDING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED THE INCOME TO THE EXTENT OF RS. 4,68,40,099/-. THEREFORE, THE INITIATION AN D IMPOSING OF PENALTY PROCEEDINGS IS WRONG, BAD IN LAW, INVALID AND VOID AB INITIO. 17. IT WAS SUBMITTED THAT IT IS A SETTLED LAW POSI TION ON THE ISSUE THAT THE NOTICE U/S 271(1)(C) SHOULD BE SPECIFIC ON IMPO SING OF PENALTY U/S 271(1)(C) OF I.T. ACT, 1961 I.E. CONCEALED PARTICUL ARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. RELIA NCE WAS PLACED ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF CIT VS. M/S. SSAS EMERALD MEADOWS REPORTED IN 2015 (11) TMI 162 0 WHEREIN HONBLE HIGH COURT HAS HELD THAT:- PARA NO. 3 THE TRIBUNAL HAS ALLOWED THE APPEAL FI LED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 274 READ WITH SECTION 271(1)(C) OF THE I.T.ACT, 1961(FO R SHORT THE ACT) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB O F SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD B EEN INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE HAS RELIED ON THE DECISI ON OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE O F CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 IT R 565. ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 11 IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGEME NT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION , NO SUBSTANTIAL QUESTION OF LAW ARISED IN THIS APPEAL FOR DETERMINA TION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED.. THE DEPARTMENT HAS FILED SLP IN HONBLE SUPREME COU RT WHICH HAS BEEN DISMISSED. THEREFORE, HONBLE SUPREME COURT HAS AP PROVED THE FINDINGS MADE BY HONBLE KARNATAKA HIGH COURT IN TH E CASE OF CIT VS. SSAS EMERALD MEADOWS AND CIT VS. MANJUNATHA COTTON & GINNING FACTORY & OTHERS (2013) 359 ITR 565. HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNA THA COTTON & GINNING FACTORY [2013] 359 ITR 565 (KARNATAKA) AFTE R REFERRING TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF T. ASHOK PAI (SUPRA) HELD AS UNDER: - . CONCEALMENT, FURNISHING INACCURATE PARTICULA RS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISS UING 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 PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHI NG INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO M ARKETING REPORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF P ENALTY 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 CON CEALMENT, THEN ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 12 THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ST ANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON APPLICATION OF MIND..? IN THE CASE OF M/S. JYOTI LTD. [2013] TAXMANN.COM 6 5 (HIGH COURT-GUJ), THE ASSESSING OFFICER IN HIS PENALTY ORDER NOTED AS UNDER: - IN VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT THE A SSESSEE CONCEALED INCOME/FURNISHED INACCURATE PARTICULARS OF INCOME. I, THEREFORE, CONSIDER IT A FIT CASE FOR LEVY OF PENALTY U/S 271 (1) (C) HON'BLE GUJRAT HIGH COURT IN THE ABOVE CASE HELD THAT, WHER E THE ASSESSING OFFICER IN ORDER OF PENALTY DID NOT COME TO A CLEAR FINDING REGARDING THE PENALTY BEING IMPOSED ON CONCEALMENT OF INCOME OR ON FURNISHING INACCURATE PARTICULARS OF INCOME, THE TR IBUNAL WAS JUSTIFIED IN SETTING ASIDE THE IMPUGNED PENALTY ORD ER. HON'BLE GUJRAT HIGH COURT FOLLOWED THE RATIO LAID DOWN IN T HE CASE OF NEW SORATHIA ENGG. CO. [2006] 282 ITR 642 (GUJ-HIGH COU RT). THE ABOVE RATIO LAID DOWN IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY SUPRA) HAS BEEN FOLLOWED BY VARIOUS HIGH CO URTS IN THE BELOW MENTIONED CASES: A. SHRI SAMSON PERINCHERY. ITA 1154, 953, 1097, 1226 OF 2014 (ORDER DATE 5.01.2017) (BOMBAY HIGH COURT) B. SSAS EMERALD MEADOWS [2016] 73 TAXMANN.COM 241 (KARNATAKA HIGH COURT) C. MITSU INDUSTRIES LTD. ITA NO. 216 OF 2004, GUJARAT HIGH COURT ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 13 18. FURTHER, OUR REFERENCE WAS DRAWN TO FOLLOWING D ECISIONS OF COORDINATE BENCHES: A. NARAYANA HEIGHTS & TOWERS, VS. I.T.O. WARD 2- 4 JAIPUR (ITA NO. 1033/JP/2016) HAS CANCELLED THE PENALTY BY HOLDING THAT: - 3.2 WE HAVE HEARD THE RIVAL CONTENTION, PERUSED TH E 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 CONTENTS OF THE PENALTY ORDER ARE REPRODUC ED AS UNDER: - AS THE ASSESSEE HAD NOT FILED ANY APPEAL AGAINST O RDER OF THE AO AND IT APPEARS THAT THE ASSESSEE IS SATISFIED WITH THE ORDER PASSED BY THE AO. THEREFORE, IT APPEARS THAT THE ASSESSEE HAS NOTHING TO SAY AND HAS NO OBJECTION REGARDING IMPOSING THE PEN ALTY US/ 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 ASSES SEE OF RS. 34,05,436/- I.E. 100% TAX EVADED. IN THE LIGHT OF THE ABOVE, WE NEED TO EXAMINE WHETH ER ASSESSMENT ORDER AND THE PENALTY ORDER COMPLY WITH THE PROVISI ONS OF SECTION 271 (1) (C) OF THE ACT. WE FIND THAT ON PAGE 3 OF T HE ASSESSMENT ORDER, THE ASSESSING OFFICER, AO OBSERVED AS UNDER: - ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 14 AS THE ASSESSEE HAS CONCEALED/FURNISHED THE INACCU RATE PARTICULARS OF INCOME THEREFORE, PENALTY U/S 271 (1 ) (C) IS ALSO INITIATED. 3.3 AS PER SECTION 271 (1) (C), THE ASSESSING OFFIC ER IS EMPOWERED TO IMPOSE PENALTY IF IN THE COURSE OF ANY PROCEEDIN GS UNDER THIS ACT IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. FROM THE ABOVE PROVISION IT IS CLEAR THAT THERE HAS TO B E A SPECIFIC SATISFACTION BY THE ASSESSING OFFICER THAT THE ASSE SSEE IS GUILTY OF CONCEALING THE PARTICULARS OF HIS INCOME OR FURNISH ING INACCURATE PARTICULARS OF SUCH INCOMES. 3.4 FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER SHOULD GIVE A SPECIFIC FINDING. IN THE PRESENT CASE, IN TH E ASSESSMENT ORDER AS NOTED ABOVE THE ASSESSING OFFICER HAS STAT ED THAT THE ASSESSEE HAS CONCEALED / FURNISHED THE INACCURATE P ARTICULARS OF INCOME. THEREFORE, THE PENALTY UNDER SECTION 271 (1 )(C) WAS ALSO INITIATED FROM THIS IT CAN NOT BE INFERRED WHETHER THERE IS SPECIFIC CHARGE OF CONCEALING THE PARTICULARS OF INCOME OR F URNISHED THE INACCURATE PARTICULARS OF SUCH INCOME LAW IS WELL S ETTLED THAT THE ASSESSING OFFICER HAS TO COME TO A DEFINITE SATISFA CTION WHETHER THE ASSESSEE HAS CONCEALED THE INCOME OF PARTICULARS OR FURNISHED THE INACCURATE PARTICULARS OF INCOME. THE HONBLE KARNA TAKA HIGH COURT IN THE CASE OF CIT AND ANOTHER VS. MANJUNATHA COTTO N AND GINNING FACTORY, 359 ITR 565 (KAR.) HAS HELD THAT THE NOTIC E U/S 274 OF THE ACT SHOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME O R INACCURATE ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 15 PARTICULARS OF INCOME. IN THE PRESENT CASE NOTICE U NDER SECTION 274 DATED 25/3/2015 ENCLOSED AT PAPER BOOK PAGE 16 READ S AS UNDER: - PENALTY NOTICE UNDER SECTION 274. READ WITH SECTIO N 271 OF THE IT ACT, 1961. WHEREAS IN THE COURSE OF PROCEEDINGS BEF ORE ME FOR THE ASSESSMENT YEAR 2012-13. IT APPEARS TO ME THAT YOU HAVE CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE PARTICULARS OF INCOME. THEREFORE, THERE IS NO SPECIFIC CHARGE BY THE ASSES SING OFFICER. FURTHER, IT IS NOTED THAT THE ASSESSING OFFICER IN PENALTY O RDER (AS NOTED HEREINABOVE) HAS PROCEEDED ON THE BASIS OF THE ASSU MPTION THAT THE ASSESSEE IS SATISFIED WITH THE ASSESSMENT ORDER. TH EREFORE, IT APPEARS THAT THE ASSESSEE HAS NOTHING TO SAY AND HAS NO OBJ ECTION REGARDING THE IMPOSING OF THE PENALTY UNDER SECTION 271 (1) (C) O F THE ACT. IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER WAS NOT JUST IFIED IN IMPOSING THE PENALTY ON THIS BASIS THE ACTION OF THE ASSESSING O FFICER IS CONTRARY TO THE PROVISION OF LAW. B. THE ITAT, JAIPUR BENCH, JAIPUR HAS ALSO IN CASE OF LAL CHAND MITTAL VS. DCIT (ITA NO. 772/JP/2016 ORDER DATED 29-12-201 1 AND VARIOUS OTHER CASES) DECIDED BY IT HELD THAT ON THE BASIS O F SUCH NOTICE ISSUED BY SENDING PRINTED WHERE ONLY ALL THE GROUND OF SEC TION 271 (1) (C) ARE MENTIONED OR WHERE SHOW CAUSE NOTICE U/S 271 (1) (C ) FOR IMPOSING OF PENALTY WITHOUT SPECIFYING THE LIMB FOR REASONS TO IMPOSE PENALTY WHETHER FOR CONCEALMENT OF INCOME OR FURNISH INACCU RATE PARTICULARS OF INCOME IS NOT AS PER LAW AND ASSESSING OFFICER DID NOT HAVE ANY JURISDICTION TO IMPOSE PENALTY U/S 271(1)(C). IN T HE CASE(S) OF RADHA MOHAN MAHESHWARI VS. DCIT (ITA NO.773/JP/2013), MOH D. SHARIF KHAN ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 16 VS. DCIT (ITA NO.441/JP/2014), SHANKAR LAL KHANDELW AL VS. DCIT (ITA NO. 878/JP/2013), MURARI LAL MITTAL (ITA NO.334/JP/ 2015 ORDER DATED 9- 11-2016), AND MRIDULA AGARWAL (ITA NO. 176/JP/2016) , THE BENCH UPHELD THE SAME VIEW. C. IN THE CASE OF DILIP KUMAR ARORA. V. ITO ITA NO. 658/JP/2017, WHEREIN THE ITAT AT PARA 9 AND 10 OF ITS ORDER HEL D AS UNDER: - 9. TAKING INTO CONSIDERATION THE DECISION OF THE A NDHRA 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 OBSERVATIONS MADE IN THE SAID JUDGMENT, WE ARE OF THE OPINION THAT THE CONTENTION RAISED BY THE APPELLANT IS REQUIRED TO BE ACCEPTED AND IN THE FIN DING OF ASSESSING OFFICER IN THE ASSESSMENT ORDER IT IS HELD THAT THE AO, HAS TO GIVE A NOTICE AS TO WHETHER HE PROPOSES TO LEVY PENALTY FO R CONCEALMENT OF INCOME OR FURNISHING INACCURATE 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. 10. IN THAT VIEW OF THE MATTER, THE ISSUE IS ANSWER ED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. ACCORDINGLY, IN VIEW OF THE BINDING PRECEDENT WE HO LD THAT WHEN THE AO HAS NOT SPECIFICALLY INDICATED THE GROUNDS F OR INITIATION OF PROCEEDINGS FOR LEVY OF PENALTY IS FOR CONCEALMENT PARTICULAR OF INCOME OR FOR FURNISHING INACCURATE PARTICULAR OF I NCOME THEN, THE SAID SHOW CAUSE NOTICE SUFFERS FROM ILLEGALITY AND CONSEQUENTIAL ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 17 ORDER PASSED BY THE AO U/S 271(1)(C) IS NOT SUSTAIN ABLE AND LIABLE TO BE QUASHED. ACCORDINGLY, WE SET ASIDE THE IMPUGN ED ORDER PASSED U/S 271(1)(C) AND DELETE THE PENALTY OF LEVI ED BY THE AO U/S 271(1)(C) OF THE ACT. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 19. FURTHER, OUR REFERENCE WAS DRAWN TO DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF SHEVATA CONSTRUCTION CO. PVT. LTD . ITA NO. 534/2008, WHEREIN THE HON'BLE HIGH COURT AT PARA 9 OF ITS ORDER HELD AS UNDER: - TAKING INTO CONSIDERATION THE DECISION OF THE A NDHRA 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 CONTENTIO N RAISED BY THE APPELLANT IS REQUIRED TO BE ACCEPTED AND IN THE FIN DING OF ASSESSING OFFICER IN THE ASSESSMENT ORDER IT IS HELD THAT THE AO HAS TO GIVE A NOTICE AS TO WHETHER HE PROPOSES TO LEVY PENALTY FO R CONCEALMENT OF INCOME OR FURNISHING INACCURATE 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 . (EMPHASIS SUPPLIED). 20. FURTHER, OUR REFERENCE WAS DRAWN TO THE DECISIO N OF THE HONBLE MADHYA PRADESH HIGH COURT, IN CASE OF PR. CIT VS. K ULWANT SINGH BHATIA (2018) 304 CTR 103 WHEREIN IT WAS HELD AS U NDER:- ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 18 PENALTY U/S 271(1)(C) VALIDITY-NON-SPECIFIC NOTICE -PENALTY NOTICES UNDER SECTION 274 R/W S. 271(1)(C) WERE ISSUED IN T HE TYPED FORMAT WITHOUT STRIKING OFF EITHER OF TWO CHARGES, I.E. H AVE CONCEALED THE PARTICULARS OF YOUR INCOME, OR . OR FURNISHED INA CCURATE PARTICULARS OF INCOME-CONSIDERING THE FACT THAT TH E GROUND MENTIONED IN SHOW-CAUSE NOTICE WOULD NOT SATISFY TH E REQUIREMENT OF LAW, AS NOTICE WAS NOT SPECIFIC, THE TRIBUNAL H AS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE AND SET ASIDE THE ORDER OF PENALTY IMPOSED BY THE AUTHORITIES-NO SUBSTANTIAL QUESTION OF LAW ARISES CIT VS. MANJUNATHA COTTON & GINNING FACTORY (2013) 263 CTR (KAR.) 153: (2013) 92 DTR (KAR) 111: (2013) 359 ITR 565 (KAR) AND CIT VS. SSAS EMERALD MEADOWS (SLP) NO. 11485 O F 2016 DT. 5TH AUGU. 2016) FOLLOWED. CONCLUSION: CONSIDERING THE FACT THAT THE GROUND ME NTIONED IN SHOW CAUSE NOTICE WOULD NOT SATISFY THE REQUIREMENT OF L AW, AS NOTICE WAS NOT SPECIFIC, THE TRIBUNAL HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE AND SET ASIDE THE ORDER OF PENALTY. 21. IN VIEW OF THE ABOVE SUBMITTED FACTS AND SETTLE D LAW POSITION, IT WAS SUBMITTED BY THE LD AR THAT THE PENALTY IMPOSED U/S 271(1)(C) IS WRONG, UNWARRANTED, BAD IN LAW AS THE CONCEALMENT O F INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME, ARE DI FFERENT DEFAULTS AND THEY CANNOT BE INTERMIXED. 22. NOW, COMING TO THE OTHER CONTENTION OF THE LD AR. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THERE IS NO CONCEAL MENT OR REPORTING OF INACCURATE PARTICULARS OF INCOME AS PER EXPLANATION 7 TO SECTION 271(1)(C). IT WAS SUBMITTED THAT THE ASSESSEE HAS COMPUTED ALP IN ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 19 ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 92C OF IT ACT AND IN THE MANNER PRESCRIBED UNDER THE SECTION, IN GOOD FA ITH AND WITH DUE DILIGENCE. IT WAS SUBMITTED THAT EXPLANATION 1 TO S ECTION 271(1)(C) HAD BEEN WRONGLY INVOKED AS THE CASE OF THE APPELLANT I S NOT COVERED BY THE EXPLANATION 1 TO SECTION 271(1)(C). IT WAS SUBMITTE D THAT THE LD. AO AS WELL AS LD. CIT(A) HAVE ERRED IN NOT CONSIDERING TH E CONDITIONS MENTIONED IN EXPLANATION 7 TO SECTION 271(1)(C) BEF ORE INVOKING THE SAME. 23. OUR ATTENTION WAS DRAWN TO EXPLANATION 7 TO SEC TION 271(1)(C) WHICH READS AS UNDER: EXPLANATION 7.WHERE IN THE CASE OF AN ASSESSEE WH O HAS ENTERED INTO AN INTERNATIONAL TRANSACTION OR SPECIFIED DOME STIC TRANSACTION DEFINED IN SECTION 92B, ANY AMOUNT IS ADDED OR DISA LLOWED IN COMPUTING THE TOTAL INCOME UNDER SUB-SECTION (4) OF SECTION 9 2C, THEN, THE AMOUNT SO ADDED OR DISALLOWED SHALL, FOR THE PURPOSES OF C LAUSE (C) OF THIS SUB- SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPE CT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTI CULARS HAVE BEEN FURNISHED, UNLESS THE ASSESSEE PROVES TO THE SATISF ACTION OF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE PRINCIPAL COMMISSIONER OR COMMISSIONER THAT THE PRICE CHARGED OR PAID IN SUCH TRANSACTION WAS COMPUTED IN ACCORDANCE WITH THE PRO VISIONS CONTAINED IN SECTION 92C AND IN THE MANNER PRESCRIBED UNDER T HAT SECTION, IN GOOD FAITH AND WITH DUE DILIGENCE. 24. IT WAS SUBMITTED THAT THE SCHEME OF EXPLANATIO N 7 TO SECTION 271(1)(C) OF THE IT ACT IS THAT THE ONUS ON THE APP ELLANT IS ONLY TO SHOW THAT THE ALP WAS COMPUTED BY THE APPELLANT IN ACCOR DANCE WITH THE ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 20 SCHEME OF SECTION 92C OF THE ITA IN GOOD FAITH AND DUE DILIGENCE. THE ASSESSEE WISHES TO STATE THAT IT HAS DISCLOSED ALL THE FACTS IN ITS FORM NO. 3CEB AND HAS COMPUTED THE ALP IN ACCORDANCE WIT H SECTION 92C OF THE IT ACT IN GOOD FAITH AND DUE DILIGENCE AND HAS BROUGHT OUT THE SAME IN ITS TRANSFER PRICING STUDY REPORT. 25. IT WAS SUBMITTED THAT THE LD. AO HAS NOT BEEN ABLE TO ESTABLISH THAT GOOD FAITH AND DUE DILIGENCE WAS NOT EXERC ISED BY THE APPELLANT AND HAS FAILED TO DISCHARGE THE ONUS CAST UPON HIM. IT WAS SUBMITTED THAT THE LD. AO, WHILE IMPOSING THE PENALTY, SIMPLY RELIED ON THE ADDITION/ADJUSTMENT AND DID NOT EXAMINE IN DETAIL A S TO WHETHER PENALTY WAS IMPOSABLE ON SUCH ADJUSTMENTS OR NOT. 26. IT WAS SUBMITTED THAT THE DEEMING FICTION UNDER EXPLANATION 7 TO SECTION 271(1)(C) CANNOT BE INVOKED SINCE THE CONDI TIONS PRECEDENT FOR INVOKING EXPLANATION 7 TO SECTION 271(1)(C) DO NOT EXIST AND THAT LACK OF DUE DILIGENCE IN DETERMINING THE ALP IS NEITHER IND ICATED NOR INFERRED BY THE LD. AO, THUS LEVYING PENALTY IS BAD IN LAW. 27. IN SUPPORT, RELIANCE WAS PLACED ON THE FOLLOWIN G JUDICIAL PRECEDENTS WHICH HAVE UPHELD THAT WHEN CONDITIONS T O EXPLANATION 7 OF SECTION 271(1)(C) ARE NOT FULFILLED AND WHEN THE AP PELLANT HAS DETERMINED THE ALP IN GOOD FAITH AND WITH DUE DILIG ENCE, PENALTY CANNOT BE LEVIED: DCIT V. MASTEK LTD. (ITA NO. 2785 & 2786/AHD/2013) MASTEK LTD V. DCIT [2012] 28 TAXMANN.COM 292 MITSUI PRIME ADVANCED COMPOSITES INDIA (P) LTD V. D CIT 178 TTJ 490 ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 21 CIT V. RBS EQUITIES INDIA LTD. 133 ITD 77 28. IT WAS FURTHER SUBMITTED THAT THE APPELLANT HA S DISCLOSED ALL MATERIAL FACTS AND PROVIDED REQUIRED INFORMATION IN THE FORM 3CEB FILED BY IT DISCLOSING PROVISION OF LOANS AS AN INTERNATI ONAL TRANSACTION. FURTHER, THE APPELLANT IN ITS TRANSFER PRICING STUD Y REPORT HAS SUBSTANTIATED THE ARMS LENGTH PRICE DETERMINED BY IT AT NIL IN ACCORDANCE WITH TRANSFER PRICING REGULATIONS. ALSO, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE APPELLANT IN ITS F ORM 3CEB ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE AND THUS THERE I S NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). IT WA S SUBMITTED THAT A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE APPELLANT. SUCH A CLAIM MADE IN THE RETURN CANN OT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 29. IT WAS FURTHER SUBMITTED THAT THE DETERMINATION OF ALP IS A DEBATABLE ISSUE AND IS A SUBJECTIVE MATTER. THUS, N O PENALTY U/S 271(1)(C) COULD NOT BE IMPOSED ON DEBATABLE ISSUES. FURTHER, IT IS A SETTLED JUDICIAL PRINCIPLE THAT PENALTY CANNOT BE I MPOSED AUTOMATICALLY MERELY BECAUSE THERE WAS A TRANSFER PRICING ADJUSTM ENT AND THE APPELLANT HAD NOT APPEALED AGAINST IT. 30. IT WAS ALSO SUBMITTED THAT MERELY BECAUSE THE T PO WAS OF A DIFFERENT VIEW ON THE METHODOLOGY OF DETERMINING TH E ALP THAN THAT ADOPTED BY THE APPELLANT, IT COULD NOT, IPSO FACTO LEAD TO THE CONCLUSION THAT THIS WAS A CASE OF CONCEALMENT OR FURNISHING I NACCURATE PARTICULARS ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 22 OF INCOME. THEREFORE, THE APPELLANT PLEADS THAT PEN ALTY ON ACCOUNT OF DIFFERENCE IN OPINION AND BEING A DEBATABLE ISSUE, PENALTY SHOULD NOT BE SUSTAINED. 31. IT WAS FURTHER SUBMITTED THAT WHEN AN ISSUE IS ADMITTED BY THE HIGH COURT ON THE GROUND THAT THE SAME INVOLVES SUB STANTIAL QUESTION OF LAW THEN PENALTY CANNOT BE LEVIED ON THAT ISSUE AGA INST THE APPELLANT. WHEN THE GROUND IS THAT OF QUESTION OF LAW THE SAME IS DEBATABLE AND PENALTY IS NOT JUSTIFIED IN SUCH A CASE. 32. IT WAS SUBMITTED THAT CONSIDERING THE FACT THAT THE HONBLE JURISDICTIONAL HIGH COURT IN APPELLANTS OWN CASE H AS ADMITTED AND CONSIDERED THE ISSUE IN RESPECT OF INTEREST FREE LO AN BEING A SUBSTANTIAL QUESTION OF LAW, IT IS AN INDICATION THAT THE ISSUE IS DEBATABLE AND LEVYING A PENALTY IS BAD IN LAW. IN SUPPORT, RELIAN CE WAS PLACED ON FOLLOWING JUDICIAL PRECEDENTS: CIT V. NAYAN BUILDERS AND DEVELOPERS 368 ITR 722 (B OM) CIT V. LIQUID INVESTMENTS AND TRADING CO. (ITA NO. 240/2009) (DELHI HIGH COURT) 33. PER CONTRA, THE LD. CIT DR SUBMITTED THAT EXPLA NATION 7 TO SECTION 271(1)(C) OF THE ACT IS CLEARLY APPLICABLE IN THE I NSTANT CASE AS THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT GOOD FAITH AND DUE DILIGENCE HAS BEEN FOLLOWED IN INTERNATIONAL TRANSACTION ENTE RED BY IT. IT WAS SUBMITTED BY THE LD CIT DR THAT THE ARMS LENGTH AD JUSTMENTS HAVE BEEN CONFIRMED BY THE HONBLE HIGH COURT AND THE ON LY RELIEF WHICH HAS BEEN PROVIDED IS REGARDING THE INTEREST RATE WHICH HAS TO BE APPLIED ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 23 WHEREAS THERE IS NO DISPUTE THAT INTEREST WAS CHARG EABLE ON LOANS GRANTED TO THE AES. IT WAS SUBMITTED BY LD CIT DR T HAT CONCEPT OF COMMERCIAL EXPEDIENCY AND REAL INCOME ARE NOT RELEV ANT FOR TRANSFER PRICING AND THE TRANSACTION WHICH WAS REQUIRED TO B E BENCHMARKED IN THE ASSESSEES CASE WAS THE INTERNATIONAL TRANSACTI ON OF EXTENDING INTEREST FREE LOANS TO AES AND NOT THE FACTORS LIKE SOURCE OF FUNDS, REASONS FOR ADVANCING ETC. THIS FACT IS ESTABLISHED AS ALL THE APPELLATE AUTHORITIES HAVE CONFIRMED THE SAME INCLUDING THE J URISDICTIONAL HIGH COURT. IT WAS ACCORDINGLY HELD THAT THE INGREDIENTS OF DUE DILIGENCE AND GOOD FAITH ARE MISSING COMPLETELY AND AS PER THE PR OVISIONS OF SECTION 92B, IT IS CLEAR THAT LENDING OR BORROWING OF MONEY BETWEEN TWO ASSOCIATED ENTERPRISES COMES WITHIN THE ADMIT OF IN TERNATIONAL TRANSACTION AND WHETHER THE SAME IS AT ARMS LENGTH HAS TO BE CONSIDERED. FURTHER, THE ADJUSTMENT MADE BY THE AO WAS CONFIRMED AT VARIOUS LEVELS I.E. DRP, ITAT AND EVEN THE HONBLE HIGH COURT WITH SLIGHT VARIATION IN THE RATE OF INTEREST TO BE APPL IED. IN VIEW OF THE ABOVE, THE PENALTY WAS RIGHTLY LEVIED U/S 271(1)(C) AND CONFIRMED BY THE LD CIT(A) AND THERE IS THUS NO INFIRMITY IN THE DECISION OF THE LD CIT(A) AND THE SAME SHOULD BE CONFIRMED. 34. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. 35. FIRSTLY, REGARDING THE CONTENTION OF THE LD. A R THAT IN THE ABSENCE OF ANY SPECIFIC CHARGE AGAINST THE ASSESSEE IN THE PENALTY NOTICE AND SUBSEQUENTLY IN THE PENALTY ORDER, CONSEQUENT PENAL TY IMPOSED BY AO IS ILLEGAL AND BAD IN LAW, WE HAVE RECENTLY EXAMINE D THIS ISSUE IN CASE OF ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 24 SMT. SHIPRA JAIN AND ORS. VS. ACIT (ITA NO. 922/JP/2018 & OTHERS DATED 31.10.2018) WHEREIN WE HAVE EXAMINED THE ISSUE AT LENGTH IN CONTEXT OF EXPLANATION 5A TO SECTION 271( 1)(C) AND IN LIGHT OF VARIOUS JUDICIAL AUTHORITIES (INCLUDING THOSE WHICH HAVE BEEN RELIED IN THE INSTANT CASE BY THE LD AR) AND OUR FINDINGS ARE CONTAINED AT PARA 4.2 TO 4.5 WHICH ARE REPRODUCED AS UNDER:- 4.2 NOW COMING TO THE FIRST CONTENTION SO RAISED B Y THE LD. AR THAT IN THE ABSENCE OF ANY SPECIFIC CHARGE AGAINST THE ASSE SSEE IN THE PENALTY NOTICE AND SUBSEQUENTLY IN THE PENALTY ORDER, CONSE QUENT PENALTY IMPOSED BY AO IS ILLEGAL AND BAD IN LAW. WE FIND TH AT EXPLANATION 5A TO SECTION 271(1)(C) IS A DEEMING PROVISION AND SUBJEC T TO FULFILLING THE REQUISITE CONDITIONS, IT DEEMS THE ASSESSEE TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME SIMILAR TO WHAT HAS BEEN PROVIDED IN CLAUSE (C) TO SECTION 271(1) OF THE ACT. IN SEARCH CASES AS WELL, THE LE GISLATURE HAS THUS ENVISAGED APPLICABILITY OF ONE OR BOTH OF THESE CHA RGES. IT IS SETTLED POSITION NOW AS HELD BY CATENA OF JUDICIAL PRONOUNC EMENTS THAT THE NOTICE INITIATING THE PENALTY PROCEEDINGS SHOULD SP ECIFY THE CHARGE AGAINST THE ASSESSEE AND EVEN WHERE THE CHARGE IS U NCERTAIN AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS, SUBSEQUE NTLY DURING THE PENALTY PROCEEDINGS, THE AO MUST GET DECISIVE, WHIC H SHOULD BE REFLECTED IN THE PENALTY ORDER, AS TO WHETHER THE A SSESSEE IS GUILTY OF 'CONCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHI NG OF INACCURATE PARTICULARS OF SUCH INCOME'. ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 25 4.3 IN THIS REGARD, USEFUL REFERENCE CAN BE DRAWN T O THE DECISION OF THE COORDINATE BENCH IN CASE OF HPCL MITTAL ENERGY VS ADD. CIT REPORTED IN 96 TAXMAN.COM 3 WHERE THE MATTER WAS RE FERRED TO THE THIRD MEMBER TO DECIDE ON THE ISSUE AS TO 'WHETHER, IN CASE WHERE THE SATISFACTION OF THE AO WHILE INITIATING PENALTY PRO CEEDINGS U/S. 271(L)(C) OF THE INCOME-TAX ACT, 1961 IS WITH REGARD TO ALLEG ED CONCEALMENT OF INCOME BY THE ASSESSEE, WHEREAS THE IMPOSITION OF T HE PENALTY IS FOR 'CONCEALMENT/FURNISHING INACCURATE PARTICULARS OF I NCOME', THE LEVY OF PENALTY IS NOT SUSTAINABLE?'. AFTER ANALYZING CATENA OF JUDICIAL PRONOUNCEMENTS I NCLUDING THE DECISIONS WHICH HAVE BEEN CITED BY THE LD AR, THE C OORDINATE BENCH SPEAKING THROUGH THE THIRD MEMBER HAS HELD AS UNDER : 9. ON AN ANALYSIS OF THE FACTUAL MATRIX NARRATED A BOVE, IT IS MANIFESTED THAT THE AO RECORDED SATISFACTION QUA TH E THREE ITEMS OF DISALLOWANCE/ADDITIONS LEADING TO PENALTY, AS 'C ONCEALMENT OF INCOME' IN ALL THE ASSESSMENT ORDERS; INITIATED PEN ALTY IN ALL THE FOUR CASES BY TREATING THEM AS COVERED UNDER THE EX PRESSION 'CONCEALMENT OF PARTICULARS OF INCOME'; AND THEN FI NALLY PASSED PENALTY ORDERS ON THE ASSESSEES FINDING THEM GUILTY OF 'CONCEALMENT OF PARTICULARS OF INCOME/FURNISHING IN ACCURATE PARTICULARS OF SUCH INCOME'. AS AGAINST THAT, THE A CTUAL POSITION IS THAT ALL THE THREE ITEMS OF DISALLOWANCE/ADDITIONS FALL ONLY UNDER THE CATEGORY OF 'FURNISHING OF INACCURATE PARTICULA RS OF INCOME'. NOW THE QUESTION ARISES IF THE PENALTY IS SUSTAINAB LE IN SUCH CIRCUMSTANCES? ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 26 10. AT THIS JUNCTURE, IT IS PERTINENT TO NOTE THAT PEN ALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEE DINGS. MERELY BECAUSE AN ADDITION HAS BEEN MADE OR CONFIRMED IN T HE ASSESSMENT, DOES NOT, PER SE, LEAD TO IMPOSITION OF PENALTY U/S. 271(L)(C). PENALTY PROCEEDINGS ARE SEPARATELY INITI ATED ON CONCLUSION OF THE ASSESSMENT, IN WHICH THE ASSESSEE IS GIVEN AN OPPORTUNITY TO EXPLAIN HIS POSITION QUA THE IMPOSIT ION OF PENALTY ON THE ADDITIONS/DISALLOWANCES MADE IN THE ASSESSME NT. THE AO CONSIDERS THE EXPLANATION OF THE ASSESSEE AND THEN DECIDES IF THE PENALTY IS IMPOSABLE OR NOT. FURTHER, THE OPINION O F THE AO AS TO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME HAS TO BE SEEN WITH REFE RENCE TO THE DAY ON WHICH HE INITIATES/IMPOSES PENALTY. LATER EV ENTS, LIKE CONFIRMATION OR DELETION OF ADDITIONS/DISALLOWANCES IN QUANTUM APPEALS, ARE IRRELEVANT IN THIS CONTEXT. 11. IT TRANSPIRES FROM THE ABOVE DISCUSSION THAT, INSO FAR AS THE ISSUE BEFORE ME IS CONCERNED, THERE ARE BROADLY TWO DIFFERENT STAGES HAVING BEARING ON THE IMPOSITION OF PENALTY, NAMELY, ASSESSMENT AND PENALTY. AT THE ASSESSMENT STAGE, TH E AO HAS TO RECORD A SATISFACTION IN THE ASSESSMENT ORDER AS TO WHETHER THE ADDITIONS/DISALLOWANCES, ON WHICH PENALTY IS LIKELY TO BE IMPOSED, REPRESENT CONCEALMENT OF PARTICULARS OF INCOME OR F URNISHING OF INACCURATE PARTICULARS OF INCOME. THERE CAN BE TWO SUB-STAGES IN PENALTY PROCEEDINGS REQUIRING THE AO TO RECORD SUCH SATISFACTION, VIZ., AT THE TIME OF INITIATING THE PENALTY PROCEED INGS AND AT THE ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 27 TIME OF PASSING THE PENALTY ORDER. I WILL DEAL WITH SUCH TWO STAGES IN THE PRESENT CONTEXT. (A) RECORDING OF SATISFACTION AT THE ASSESSMENT STA GE. 12. IT HAS BEEN NOTICED HEREINABOVE THAT THE FIRST STA GE OF IMPOSITION OF PENALTY IS RECORDING OF SATISFACTION BY THE AO IN THE ASSESSMENT ORDER AS TO WHETHER THE ASSESSEE CONCEAL ED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME. THERE WAS A LOT OF LITIGATION ON THIS POINT . THE ASSESSEES WERE CONTENDING BEFORE THE APPELLATE COURTS THAT TH E AO HAD NOT RECORDED PROPER SATISFACTION IN THE ASSESSMENT ORDE R AND HENCE THE PENALTY SHOULD BE DELETED. ON THE OTHER HAND, T HE DEPARTMENT WAS CONTENDING THAT THE SATISFACTION WAS PROPERLY RECORDED. CONSIDERING THE MAGNITUDE OF LITIGATION O N THE POINT, THE FINANCE ACT, 2008, INSERTED SUB-SECTION (1B) TO SECTION 271, W.R.E.F. 1.4.1989, WHICH RUNS AS UNDER: 'WHERE ANY AMOUNT IS ADDED OR DISALLOWED IN COMPUTI NG THE TOTAL INCOME OR LOSS OF AN ASSESSEE IN ANY ORDER OF ASSES SMENT OR REASSESSMENT AND THE SAID ORDER CONTAINS A DIRECTIO N FOR INITIATION OF PENALTY PROCEEDINGS UNDER CLAUSE (C) OF SUB-SECT ION (1), SUCH AN ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE DEE MED TO CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FO R INITIATION OF THE PENALTY PROCEEDINGS UNDER THE SAID CLAUSE (C).' 13. THE EFFECT OF THIS INSERTION IS THAT WHEN AN AMOUN T IS ADDED OR DISALLOWED IN AN ASSESSMENT AND THE ORDER CONTAI NS A DIRECTION ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 28 FOR INITIATION OF PENALTY PROCEEDINGS U/S. 271(L)(C ), IT SHALL BE DEEMED TO CONSTITUTE SATISFACTION OF THE AO FOR INI TIATION OF THE PENALTY PROCEEDINGS. CRUX OF THE NEW PROVISION IS T HAT A MERE DIRECTION IN THE ASSESSMENT ORDER TO INITIATE PENAL TY PROCEEDINGS UNDER CLAUSE (C) IS SUFFICIENT TO CONCLUDE THAT THE AO RECORDED PROPER SATISFACTION AS TO WHETHER THE ADDITIONS/DIS ALLOWANCES ARE 'CONCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHI NG OF INACCURATE PARTICULARS OF INCOME' OR BOTH. IT IS INCORRECT TO ARGUE THAT EVEN AFTER THE INSERTION OF SUB-SECTION (1B), THE AO STI LL NEEDS TO SPECIFICALLY RECORD AS TO WHETHER EACH ITEM OF ADDITION/DISALLOWANCE IS A CASE OF CONCEALMENT OF P ARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. DEEMING 'SATISFACTION' UNDER CLAUSE (C) IN TERMS OF SUB-SEC TION (1B) MEANS DEEMING 'PROPER SATISFACTION' AND 'PROPER SATISFACT ION' MEANS GETTING SATISFIED AS TO WHETHER IT IS A CASE OF CON CEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF SUCH INCOME. IT CANNOT BE CONCEIVED THAT A DIRECTIO N TO INITIATE PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER IS ONLY 'SATISFACTION' AND NOT 'PROPER SATISFACTION'. THIS CONTENTION, IF TAKEN TO A LOGICAL CONCLUSION, WOULD MEAN THAT AFTER SUCH A DIRECTION IN THE ASSESSMENT ORDER CONSTITUTING HIS SATISFACTION, THE AO SHOULD ONCE AGAIN SPECIFICALLY RECORD SATISFACTION WITH RE FERENCE TO EACH ADDITION OR DISALLOWANCE AS TO WHETHER IT IS A CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. IT IS OBVI OUSLY AN ABSURD PROPOSITION AND GOES AGAINST THE UNAMBIGUOUS LANGUA GE OF THE PROVISION. THUS, IT IS OVERT THAT AFTER INSERTION O F SUB-SECTION (1B) TO SECTION 271, INVARIABLY, THE AO SHOULD BE DEEMED TO HAVE ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 29 RECORDED PROPER SATISFACTION WITH REFERENCE TO EACH ADDITION/DISALLOWANCE AS TO CONCEALMENT OR FURNISHI NG OF INACCURATE PARTICULARS, ONCE A DIRECTION IS CONTAIN ED IN THE ASSESSMENT ORDER TO INITIATE PENALTY U/S. 271(L)(C) OF THE ACT. REQUIRING THE RECORDING OF SEPARATE SATISFACTION, O NCE AGAIN, BY THE AO WOULD MILITATE AGAINST THE DEEMING PROVISION CONTAINED IN SUB-SECTION (1B). ADMITTEDLY, IN ALL THE FOUR APPEA LS UNDER CONSIDERATION, THE AO DIRECTED TO INITIATE PENALTY U/S. 271(L)(C) OF THE ACT IN THE ASSESSMENT ORDERS. THUS, THE REVENUE CAN BE SAFELY CONSIDERED TO HAVE SUCCESSFULLY PASSED OUT T HE FIRST STAGE. (B) RECORDING OF SATISFACTION AT THE PENALTY STAGE 14. IT HAS BEEN NOTED ABOVE THAT PENALTY PROCEEDINGS A RE SEPARATE FROM ASSESSMENT PROCEEDINGS, WHICH GET KIC KED WITH THE ISSUE OF NOTICE U/S. 274 AND CULMINATE IN THE PENAL TY ORDER U/S. 271(L)(C) OF THE ACT. MANY A TIMES, PENALTY INITIAT ED IN THE ASSESSMENT ORDER ON ONE OR MORE COUNTS BY MEANS OF NOTICE U/S. 274, IS NOT EVENTUALLY IMPOSED BY THE AO ON GETTING SATISFIED WITH THE EXPLANATION TENDERED BY THE ASSESSEE IN THE PEN ALTY PROCEEDINGS. IN ANY CASE, CONFRONTING THE ASSESSEE WITH THE CHARGE AGAINST HIM IS SINE QUA NON FOR ANY VALID PE NALTY PROCEEDINGS. IT IS ONLY WHEN THE ASSESSEE IS MADE A WARE OF SUCH A CHARGE AGAINST HIM THAT HE CAN PRESENT HIS SIDE. THUS PRESCRIBING THE CHARGE IN THE PENALTY NOTICE AND PE NALTY ORDER IS MUST. ABSENCE OF A CHARGE IN THE PENALTY NOTICE OR NOT FINDING THE ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 30 ASSESSEE GUILTY OF A CLEAR OFFENCE IN THE PENALTY O RDER, VITIATES THE PENALTY ORDER. 15. THE MOOT QUESTION IS THAT WHAT SHOULD BE THE NATUR E OF SPECIFICATION OF A CHARGE BY THE AO AT THE STAGE OF INITIATION OF PENALTY PROCEEDINGS AND AT THE TIME OF PASSING THE PENALTY ORDER. IS THE AO REQUIRED TO SPECIFY IN THE PENALTY NOTICE /ORDER AS TO WHETHER IT IS A CASE OF 'CONCEALMENT OF PARTICULARS OF INCOME'; OR 'FURNISHING OF INACCURATE PARTICULARS OF INCOME'; O R BOTH OF THEM, WHICH CAN BE EXPRESSED BY USING THE WORD 'AND' BETW EEN THE TWO EXPRESSIONS. WHEN THE AO IS SATISFIED THAT IT IS A CLEAR-CUT CASE OF CONCEALMENT OF PARTICULARS OF INCOME, HE MUST SPECI FY IT SO IN THE NOTICE AT THE TIME OF INITIATION OF PENALTY PROCEED INGS AND ALSO IN THE PENALTY ORDER. THE AO CANNOT INITIATE PENALTY O N THE CHARGE OF 'CONCEALMENT OF PARTICULARS OF INCOME', BUT ULTI MATELY FIND THE ASSESSEE GUILTY IN THE PENALTY ORDER OF 'FURNISHING INACCURATE PARTICULARS OF INCOME'. IN THE SAME MANNER, HE CANN OT BE UNCERTAIN IN THE PENALTY ORDER AS TO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY USING SLASH BET WEEN THE TWO EXPRESSIONS. WHEN THE AO IS SATISFIED THAT IT IS A CLEAR-CUT CASE OF 'FURNISHING OF INACCURATE PARTICULARS OF INCOME', H E MUST AGAIN SPECIFY IT SO IN THE NOTICE AT THE TIME OF INITIATI ON OF PENALTY PROCEEDINGS AND ALSO IN THE PENALTY ORDER. AFTER IN ITIATING PENALTY ON THE CHARGE OF 'FURNISHING OF INACCURATE PARTICUL ARS OF INCOME', HE CANNOT IMPOSE PENALTY BY FINDING THE ASSESSEE GU ILTY OF 'CONCEALMENT OF PARTICULARS OF INCOME'. AGAIN, HE C ANNOT BE UNCERTAIN IN THE PENALTY ORDER AS TO CONCEALMENT OR FURNISHING OF ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 31 INACCURATE PARTICULARS OF INCOME BY USING SLASH BET WEEN THE TWO EXPRESSIONS. WHEN THE AO IS SATISFIED THAT IT IS A CLEAR-CUT CASE OF IMPOSITION OF PENALTY U/S. 271(L)(C) OF THE ACT ON TWO OR MORE ADDITIONS/DISALLOWANCES, ONE OR MORE FALLING UNDER THE EXPRESSION 'CONCEALMENT OF PARTICULARS OF INCOME' AND THE OTHE R UNDER THE 'FURNISHING OF INACCURATE PARTICULARS OF INCOME', H E MUST SPECIFY IT SO BY USING THE WORD 'AND' BETWEEN THE TWO EXPRESSI ONS IN THE NOTICE AT THE TIME OF INITIATION OF PENALTY PROCEED INGS. IF HE REMAINS CONVINCED IN THE PENALTY PROCEEDINGS THAT T HE PENALTY WAS RIGHTLY INITIATED ON SUCH COUNTS AND IMPOSES PE NALTY ACCORDINGLY, HE MUST SPECIFICALLY FIND THE ASSESSEE GUILTY OF 'CONCEALMENT OF PARTICULARS OF INCOME' AND ALSO 'FU RNISHING OF INACCURATE PARTICULARS OF INCOME' IN THE PENALTY OR DER. IF THE CHARGE IS NOT LEVIED IN THE ABOVE MANNER IN ALL THE THREE CLEAR-CUT SITUATIONS DISCUSSED ABOVE IN THE PENALTY NOTICE AN D ALSO IN THE PENALTY ORDER, THE PENALTY ORDER BECOMES UNSUSTAINA BLE IN LAW. 16. THE HON'BLE KARNATAKA HIGH COURT IN CIT V. MANJUNA THA COTTON AND GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250 HAS HELD THAT A PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD B E MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSI NG PENALTY ON HIM AS SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPOR TUNITY TO MEET THE CASE OF THE DEPARTMENT AND SHOW THAT THE C ONDITIONS STIPULATED IN SECTION 271(L)(C) DO NOT EXIST AS SUC H HE IS NOT LIABLE TO PAY PENALTY. THE HON'BLE HIGH COURT WENT ON TO H OLD THAT: ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 32 'CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INAC CURATE PARTICULARS OF INCOME.... BUT DRAWING UP PENALTY PR OCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOT HER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW.. THUS ONCE THE PROCEEDINGS ARE I NITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON T HE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALT Y PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID'. 17. IN MANU ENGG. WORKS (SUPRA) PENALTY WAS IMPOSED BY NOTING: 'THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME '. STRIKING DOWN THE PENALTY, THE HON'BLE HIGH COURT HELD THAT: 'IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDIN G AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSE SSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME H AD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR-CUT FINDIN G WAS REACHED BY THE IAC AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE IAC WAS LIABLE TO BE STRUCK DOWN.' 18. IN PADMA RAM BHARALI (SUPRA), THE HON'BLE HIGH COU RT DID NOT SUSTAIN PENALTY LEVIED U/S. 271(L)(C) WHEN: 'TH E INITIATION OF THE PENALTY PROCEEDING WAS FOR CONCEALMENT OF THE P ARTICULARS OF INCOME. BUT THE TRIBUNAL FINALLY HELD THAT THE ASSE SSEE WOULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR TO HAVE FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 33 19. THUS IT IS EVIDENT THAT WHEN THE AO IS SATISFIED A T THE STAGE OF INITIATION OF PENALTY PROCEEDINGS OF A CLEAR-CUT CHARGE AGAINST THE ASSESSEE IN ANY OF THE THREE SITUATIONS DISCUSS ED ABOVE (SAY, CONCEALMENT OF PARTICULARS OF INCOME), BUT IMPOSES PENALTY BY HOLDING THE ASSESSEE AS GUILTY OF THE OTHER CHARGE (SAY, FURNISHING OF INACCURATE PARTICULARS OF INCOME) OR AN UNCERTAI N CHARGE (CONCEALMENT OF PARTICULARS OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCOME), THE PENALTY CANNOT BE SUSTA INED. 20. ANOTHER CRUCIAL FACTOR TO BE KEPT IN MIND IS THAT THE SATISFACTION OF THE AO AS TO A CLEAR-CUT CHARGE LEV ELED BY HIM IN THE PENALTY NOTICE OR THE PENALTY ORDER MUST CONCUR WITH THE ACTUAL DEFAULT. IF THE CLEAR-CUT CHARGE IN THE PENA LTY NOTICE OR THE PENALTY ORDER IS THAT OF 'CONCEALMENT OF PARTICULAR S OF INCOME', BUT IT TURNS OUT TO BE A CASE OF 'FURNISHING OF INACCUR ATE PARTICULARS OF SUCH INCOME' OR VICE-VERSA, THEN ALSO THE PENALTY O RDER CANNOT LEGALLY STAND. 21. APART FROM THE ABOVE THREE SITUATIONS IN WHICH THE AO HAS CLEAR-CUT SATISFACTION, THERE CAN BE ANOTHER FOURTH SITUATION AS WELL. IT MAY BE WHEN IT IS DEFINITELY A CASE OF UND ER-REPORTING OF INCOME BY THE ASSESSEE FOR WHICH AN ADDITION/DISALL OWANCE HAS BEEN MADE, BUT THE AO IS NOT SURE AT THE STAGE OF I NITIATION OF PENALTY PROCEEDINGS OF THE PRECISE CHARGE AS TO 'CO NCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS OF INCOME'. IN SUCH CIRCUMSTANCES, HE MAY USE SLASH BE TWEEN THE ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 34 TWO EXPRESSIONS AT THE TIME OF INITIATION OF PENALT Y PROCEEDINGS. HOWEVER, DURING THE PENALTY PROCEEDINGS, HE MUST GE T DECISIVE, WHICH SHOULD BE REFLECTED IN THE PENALTY ORDER, AS TO WHETHER THE ASSESSEE IS GUILTY OF 'CONCEALMENT OF PARTICULARS O F INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOM E'. UNCERTAIN CHARGE AT THE TIME OF INITIATION OF PENALTY, MUST N ECESSARILY BE SUBSTITUTED WITH A CONCLUSIVE DEFAULT AT THE TIME O F PASSING THE PENALTY ORDER. IF THE PENALTY IS INITIATED WITH DOU BT AND ALSO CONCLUDED WITH A DOUBT AS TO THE CONCEALMENT OF PAR TICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF S UCH INCOME ETC., THE PENALTY ORDER IS VITIATED. IF ON THE OTHER HAND , IF THE PENALTY IS INITIATED WITH AN UNCERTAIN CHARGE OF 'CONCEALMENT OF PARTICULARS OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF I NCOME' ETC., BUT THE ASSESSEE IS ULTIMATELY FOUND TO BE GUILTY OF A SPECIFIC CHARGE OF EITHER 'CONCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS OF INCOME', THEN NO FAULT CA N BE FOUND IN THE PENALTY ORDER. 22. IN MANU ENGINEERING WORKS (SUPRA), THE HON'BLE GUJ ARAT HIGH COURT NOTICED THAT THE CHARGE AT THE STAGE OF INITI ATION OF PENALTY PROCEEDINGS AS WELL IN THE PENALTY ORDER WAS UNCERT AIN AND THE EXPRESSION USED AT BOTH THE STAGES WAS CONCEALMENT OF PARTICULARS OF INCOME AND/OR FURNISHING OF INACCURA TE PARTICULARS OF SUCH INCOME. IT STRUCK DOWN THE PENALTY BY HOLDI NG THAT THE ASSESSEE MUST HAVE BEEN FOUND TO BE GUILTY OF A CER TAIN CHARGE IN THE PENALTY ORDER. IT, HOWEVER, DID NOT FIND ANYTHI NG AMISS WITH ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 35 THE INITIATION OF PENALTY ON SUCH UNCERTAIN CHARGE, WHICH IS VIVID FROM THE FOLLOWING OBSERVATIONS : 'WE FIND FROM THE ORDER OF THE IAC, IN THE PENALTY PROCEEDINGS, THAT IS, THE FINAL CONCLUSION AS EXPRESSED IN PARA. 4 OF THE ORDER: 'I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID T HAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FINISHE D INACCURATE PARTICULARS OF SUCH INCOME'. NOW, THE LANGUAGE OF ' AND/OR' MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER O R FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI-CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDIN G AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSE SSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME H AD BEEN FURNISHED BY THE ASSESSEE.' 23. IT IS THUS EVIDENT THAT UNCERTAIN CHARGE AT THE STAGE OF INITIATION OF PENALTY PROCEEDINGS CAN BE MADE GOOD WITH A CLEAR- CUT CHARGE IN THE PENALTY ORDER. IN ANY CASE, EXIST ENCE OF A CLEAR- CUT CHARGE IN PENALTY ORDER IS A MUST SO AS TO VALI DATE ANY PENALTY ORDER. 4.4 IN THE INSTANT CASE, THE ASSESSING OFFICER HAS RECORDED HIS SATISFACTION IN RESPECT OF THE FIVE ITEMS OF DISALL OWANCE/ADDITIONS INCLUDING UNDISCLOSED INVESTMENT ON CONSTRUCTION OF HOUSE AMOUNTING TO RS 938,800 LEADING TO PENALTY, AS 'CONCEALMENT OF I NCOME' IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R/W 15 3A, THEREAFTER INITIATED PENALTY BY ISSUANCE OF NOTICE U/S 274 R/W 271 DATED 21.30.2014 IN RESPECT OF ALL THE FIVE ITEMS OF DISA LLOWANCE/ADDITIONS BY ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 36 TREATING THEM AS COVERED UNDER THE EXPRESSION CONC EALMENT PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF IN COME AND THEN FINALLY PASSED THE IMPUNGED PENALTY ORDER U/S 271(1)(C) IN RESPECT OF UNDISCLOSED INVESTMENT ON CONSTRUCTION OF HOUSE AMO UNTING TO RS 134,025 (TO THE EXTENT SUSTAINED BY THE LD CIT(A) O UT OF RS 938,800) AND LEVIED PENALTY U/S 271(1)(C) AMOUNTING TO RS 45 ,555 BY STATING AS UNDER: 6. IN VIEW OF ABOVE STATED FACTS AND LEGAL POSITIO N, THE ASSESSEE UNDER CONSIDERATION IS, CLEARLY LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT IS IMPOSED UPON HIM AS PER FOLLOWING COMPUTATION:- TOTAL UNDISCLOSED/CONCEALED INCOME LIABLE TO PENALT Y U/S 271(1)(C) RS. 1,34,025 PENALTY IMPOSABLE (100% OF TAX SOUGHT TO EVADED) PENALTY IMPOSABLE (300% OF TAX SOUGHT TO EVADED) RS. 45,555/- RS. 1,36,665/- PENALTY LEVIED (100% OF THE TAX SOUGHT TO EVADED R S. 45,555/- IN VIEW OF THE ABOVE, A PENALTY OF RS. 45,555/- IS HEREBY LEVIED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. ISSUED D EMAND NOTICE. 4.5 IT IS THUS A CASE WHERE THE AO HAS RECORDED THE SATISFACTION IN THE ASSESSMENT ORDER STATING THAT THE ASSESSEE HAS CONCEALED HIS PARTICULARS OF INCOME WHEREBY THE ASSESSEE HAS NOT DISCLOSED HIS INVESTMENT IN CONSTRUCTION OF THE HOUSE TO THE EXTE NT OF EXPENDITURE INCURRED DURING THE PREVIOUS YEAR RELEVANT TO IMPUN GED ASSESSMENT YEAR. THEREFORE, THE NOTICE INITIATING THE PENALTY PROCEEDINGS IS UNCERTAIN WHERE HE USES THE EXPRESSION CONCEALMENT PARTICULARS OF ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 37 INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. HOWEVER, DURING THE PENALTY PROCEEDINGS, HE HAS GIVEN A DECISIVE FI NDING AS REFLECTED IN THE PENALTY ORDER THAT THE ASSESSEE IS GUILTY OF 'C ONCEALMENT OF PARTICULARS OF INCOME' BY NOT DISCLOSING THE INVEST MENT IN THE CONSTRUCTION OF HIS HOUSE. AS HELD BY THE COORDINA TE BENCH (SUPRA), THE UNCERTAIN CHARGE AT THE TIME OF INITIATION OF PENAL TY HAS BEEN MADE GOOD AND SUBSTITUTED WITH A CONCLUSIVE DEFAULT AT T HE TIME OF PASSING THE PENALTY ORDER AND THAT IN SUCH A CASE, NO FAULT CAN BE FOUND IN THE PENALTY ORDER. IN SUCH A CASE, WE DONOT SEE ANY I NFIRMITY IN THE PENALTY ORDER SO PASSED BY THE ASSESSING OFFICER AN D THE CONTENTIONS SO RAISED BY THE LD AR IN THIS REGARD ARE NOT ACCEPTED . 36. IN THE INSTANT CASE, EXPLANATION 7 TO SECTION 271(1)(C) HAS BEEN INVOKED BY THE AO AND SUBJECT TO FULFILLING THE REQ UISITE CONDITIONS, IT DEEMS THE ASSESSEE TO HAVE CONCEALED THE PARTICULAR S OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME SIM ILAR TO WHAT HAS BEEN PROVIDED IN CLAUSE (C) TO SECTION 271(1) OF THE ACT . IN CASES INVOLVING INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE ASSE SSEE, ANY TRANSFER PRICING ADJUSTMENTS WHERE ANY AMOUNT IS ADDED OR DI SALLOWED IN COMPUTING THE TOTAL INCOME, THE LEGISLATURE HAS THU S ENVISAGED APPLICABILITY OF ONE OR BOTH OF THESE CHARGES. DEEM ING FICTION SO PROVIDED DOESNT MEAN IN ALL CASES WHERE THE TRANSF ER PRICING ADJUSTMENT IS MADE AND FINALLY UPHELD, ITS A CASE OF AUTOMATIC LEVY OF PENALTY. EVEN IN SUCH CASES, THE AO HAS TO BRING O UT A SPECIFIC CHARGE IN TERMS OF EITHER CONCEALING THE INCOME OR FURNISH ING INACCURATE PARTICULARS OF INCOME IN RELATION TO A PARTICULAR I NTERNATIONAL TRANSACTION OR A GROUP OF SUCH INTERNATIONAL TRANSACTIONS. IT IS NOW A SETTLED ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 38 POSITION AS HELD BY CATENA OF JUDICIAL AUTHORITIES, AS WE HAVE NOTED ABOVE, THAT THE NOTICE INITIATING THE PENALTY PROCE EDINGS SHOULD SPECIFY THE CHARGE AGAINST THE ASSESSEE AND EVEN WHERE THE CHARGE IS UNCERTAIN AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS, S UBSEQUENTLY DURING THE PENALTY PROCEEDINGS, THE AO MUST GET DECISIVE, WHIC H SHOULD BE REFLECTED IN THE PENALTY ORDER, AS TO WHETHER THE A SSESSEE IS GUILTY OF 'CONCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHI NG OF INACCURATE PARTICULARS OF SUCH INCOME'. IN SHEVETA CONSTRUCTIO NS (SUPRA), THE HONBLE RAJASTHAN HIGH COURT HAS HELD THAT THE AO HAS TO GIVE A NOTICE AS TO WHETHER HE PROPOSES TO LEVY PENALTY FOR CONCE ALMENT 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. 37. IN THE INSTANT CASE, WE FIND THAT THE NOTICE IN ITIATING THE PENALTY PROCEEDINGS IS UNCERTAIN WHERE THE AO USES THE EXPR ESSION CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. EVEN, DURING THE PENALTY PR OCEEDINGS, THE AO HAS NOT GIVEN A DECISIVE AND CLEAR FINDING AS REFLE CTED IN THE PENALTY ORDER WHERE HE SAYS THROUGHOUT THE BODY OF THE ORDE R THAT IT IS A CASE OF CONCEALMENT AND/OR FURNISHING INACCURATE PARTICU LARS OF INCOME AND PROVISIONS OF EXPLANATION 7 TO SECTION 271(1)(C) AR E APPLICABLE. AS WE HAVE STATED ABOVE, EVEN WHERE THE AO IS INVOKING TH E DEEMING PROVISIONS OF EXPLANATION 7, THE AO HAS TO GET DECI SIVE AT THE TIME OF PASSING THE PENALTY ORDER AS TO WHETHER IT IS A CAS E OF DEEMED CONCEALMENT OF INCOME OR DEEMED FURNISHING INACCURA TE PARTICULARS OF ITS INCOME. HOWEVER, IN THE INSTANT CASE, EVEN WHI LE CONCLUDING THE ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 39 PENALTY PROCEEDINGS, IN PARA 20 OF THE PENALTY ORDE R AS REPRODUCED BELOW WHERE THE AO GAVE HIS CONCLUSIVE FINDINGS, TH E SAID FINDINGS DOESNT BRING OUT A CLEAR-CUT CHARGE AGAINST THE AS SESSEE IN TERMS OF CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME: 20. IN VIEW OF THE ABOVE, IT IS ESTABLISHED BEYO ND DOUBT THAT THE ASSESSEE HAS FURNISHED INACCURATE AND/OR CONCEALED PARTICULARS OF ITS INCOME TO THE EXTENT OF THE ADDITION CONFIRMED BY T HE HONBLE ITAT, JAIPUR BENCH, JAIPUR OF RS. 4,68,40,099/- RELATING TO TP ADJUSTMENT. THEREFORE, FOLLOWING THE LEGAL PROPOSITION AS DISCU SSED ABOVE AND IN LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE, WE AG REE WITH THE CONTENTION OF THE LD AR THAT IN THE ABSENCE OF ANY SPECIFIC CHARGE AGAINST THE ASSESSEE IN THE PENALTY NOTICE AND SUBS EQUENTLY IN THE PENALTY ORDER, CONSEQUENT PENALTY IMPOSED BY AO IS ILLEGAL AND BAD IN LAW. 38. NOW, COMING TO MERITS OF THE CASE, IN THE CONTE XT OF EXPLANATION 7 TO SECTION 271(1)(C), WHAT NEEDS TO BE EXAMINED I S WHETHER THE ALP OF THE INTERNATIONAL TRANSACTIONS WAS COMPUTED BY T HE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 92C AND IN THE MANNER PRESCRIBED UNDER THAT SECTION, IN GOOD FAITH AND WITH DUE DILIGENCE AND ACCORDINGLY, FALLS UNDER THE EXCEPTIO N CARVED OUT IN THE SAID EXPLANATION FOR NON-IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. THAT IS, WHETHER THE ASSESSEE HAS ACTED HONESTLY AN D ITS ACTION IS DONE WITH AS MUCH CARE AS ANY PRUDENT PERSON WOULD DO IN SIMILAR CIRCUMSTANCES TO ENSURE THAT THE ALP WAS DETERMINED IN ACCORDANCE WITH THE SCHEME OF SECTION 92C AND IN THE MANNER PR ESCRIBED IN THE ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 40 RULES AND IF THE ANSWER TO THE SAME IS IN AFFIRMATI VE, DEEMING FICTION UNDER EXPLANATION 7 CANNOT BE INVOKED. 39. IN THE PRESENT CASE, THE ASSESSEE APPLIED CUP M ETHOD AS PER CLAUSE (A) OF SECTION 92C(1) WHICH WAS NOT DISTURBE D OR REJECTED BY THE TPO. THUS, IT IS CLEAR THAT THE ASSESSEES APPLICA TION OF CUP METHOD IN RESPECT OF THE SUBJECT INTERNATIONAL TRANSACTION OF ADVANCING LOANS TO ITS AES IS IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 92C OF THE ACT. THE ONLY DISPUTE RELATES TO DETERMINATION OF APPROPRIATE ALP (RATE OF INTEREST) WHICH THE ASSESSEE WOULD HAV E EARNED ON ADVANCING LOANS TO ITS AES. 40. IN THE TRANSFER PRICING REPORT SO SUBMITTED BY THE ASSESSEE BEFORE THE TPO, IT HAS BEEN STATED THAT THE ARMS LENGTH NATURE OF THESE KIND OF TRANSACTIONS COULD BE BENCHMARKED EITHER COMPARI NG THE EXTERNAL OR INTERNAL COMPARABLE TRANSACTIONS. THE EXTERNAL COMP ARABLE TRANSACTIONS ARE DIFFICULT TO IDENTIFY, AS THE CIRCUMSTANCES IN ASSESSEES CASE ARE UNIQUE AND THEREFORE, ARE NOT COMPARABLE. FURTHER, WE HAVE BEEN GIVEN TO UNDERSTAND THAT, THE COMPANY HAS NOT PROVIDED AN Y LOANS OR INTEREST FREE LOANS TO NON ASSOCIATE ENTERPRISES. THEREFORE, STRICTLY SPEAKING, THE INTERNAL COMPARABLES ARE ALSO NOT AVAILABLE FOR DET ERMINING THE ARM'S LENGTH NATURE OF THE LOAN TRANSACTION. IT IS PERTIN ENT TO NOTE THAT, THE COMPANY HAS PROVIDED THE LOANS TO ALL FOUR ASSOCIAT ED ENTERPRISES, FREE OF INTEREST AND HENCE, THIS CAN TO A LIMITED EXTENT BE CONSIDERED AS INTERNAL COMPARABLE TRANSACTION. THEREFORE, BASED O N THE ABOVE, CUP METHOD WOULD BE CONSIDERED AS MOST APPROPRIATE METH OD. VGL IS HOWEVER, ADVISED TO KEEP ALL ITS RECORDS IN PLACE R ELATING TO LOAN TRANSACTIONS TO JUSTIFY FORWARDING OF LOANS FREE OF INTEREST. IN THE ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 41 PRESENT CASE, THE LOANS THAT HAVE BEEN GIVEN TO ASS OCIATED ENTERPRISES WERE OUT OF THE PROCEEDS RECEIVED BY VGL IN THE PRE VIOUS YEARS FROM GDR ISSUE AND PRIVATE PLACEMENT OF SHARES. THUS, TH ERE IS NO COST ASSOCIATED TO THE FUNDING OF THE SAID LOANS. SECOND LY THE SAID LOANS HAVE BEEN PROVIDED TO MEET THE LONG TERM WORKING CA PITAL REQUIREMENTS, CAPACITY EXPANSION AS WELL AS STARTIN G OF NEW BUSINESS LINES I.E., RETAIL STORES AND TV SHOPPING CHANNELS OF THE SUBSIDIARIES. SUCH PROVIDING OF LOANS WAS IN THE NATURE OF QUASI- EQUITY AND TOWARDS THE FURTHERANCE OF BUSINESS OF SUBSIDIARIES/ASSOCIA TES IN TURN HAS BENEFITED VGL AS VGL IS ONE OF THE IMPORTANT SOURCI NG POINT FOR GROUP REQUIREMENTS OF PRODUCT AT ITS TV SHOPPING CHANNELS & RETAIL STORES. THEREFORE, BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE EXPLAINED ABOVE, THE TRANSACTIONS OF PROVIDING LOANS WITHOUT CHARGING ANY INTEREST IS SAID TO BE AT ARMS LENGTH. 41. HOWEVER, AS PER THE TPO, IT IS VERY DIFFICULT TO GET OTHER TAX PAYERS IN THE SIMILAR CIRCUMSTANCE. SO, THE INTERES T RATE THAT WOULD HAVE BEEN CHARGED IN SIMILAR CIRCUMSTANCES OR THE INTERE ST RATE THAT THE TAX PAYER COULD HAVE GOT BY LENDING SUCH MONEY TO PRIVA TE PERSONS IN INDIA OR INTEREST RATE THE COMPANY COULD HAVE GOT FROM IN DEPENDENT THIRD PARTY IN INDIA BY LENDING SUCH SURPLUS MONEY UNDER COMPARABLE CIRCUMSTANCES I.E. WITHOUT ANY SECURITY AND MARGIN MONEY IS CONSIDERED. THE BASIC PRINCIPLE, TO BE FOLLOWED, IS THAT THE CURRENCY IN WHICH THE LOAN HAS ORIGINATED MUST BE CONSIDERED AL ONG WITH THE COUNTRY OF ORIGIN FOR E.G., IF THE INDIAN PARENT IS LENDING TO ANOTHER PARTY, IMPORTANT CONSIDERATION WOULD BE THE INTERES T RATE EXPECTED BY THE LENDER, WHICH WOULD BE THE INTEREST PREVALENT I N INDIA OR OPPORTUNITY COST OF SUCH FUNDS IF THEY WERE INVESTE D EITHER IN THE ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 42 BUSINESS, OR OTHER FORMS OF INVESTMENT. THUS, ONE N EEDS TO FIND A CUP RATE BASED ON COST OF FUNDS OR OPPORTUNITY COST OF FUNDS BLOCKED IN SUCH INTRA-GROUP LOANS. IF ANY INDIAN ENTITY HAD INVESTE D SUCH SUMS IN INDIA WITH BANKS, THEN THE DEPOSIT RATE WOULD BE THAT FRO M INDIA. IF THE SAME WERE INVESTED IN ANY OTHER INVESTMENT E.G. STOCKS, MUTUAL FUNDS OR REAL ESTATE, THE RETURN WOULD STILL BE WITH REFERENCE TO INTEREST RATES IN INDIA. IF THE INDIAN ENTITY DID NOT HAVE SUFFICIENT SURPLU S FUNDS TO LEND, IT MAY BORROW SUCH FUNDS FROM BANKS OR OTHERS, THEN COST O F BORROWINGS IN INDIA WOULD ALSO BE RELEVANT. ALSO IF THE SURPLUS F UNDS WERE TO BE INVESTED IN EXISTING BUSINESS OR EXPANSION INTO NEW BUSINESSES, THE RETURN ALSO WOULD BE LINKED WITH DOMESTIC INTEREST RATES. SO, THE ENTIRE COST TO THE INDIAN ENTITY OR OPPORTUNITY COST TO TH E INDIAN ENTITY WILL ALWAYS BE WITH REFERENCE TO THE INTEREST RATES PREV AILING IN INDIA. THE CUP THEREFORE BEING USED IS THE PRIME LENDING RATE OF SBI TO WHICH 300 BASIS POINTS IS BEING ADDED TO TAKE INTO ACCOUNT TH E VARIOUS FACTORS/RISKS AS ALREADY DISCUSSED ABOVE. 42. THE ALP HAS THUS BEEN DETERMINED BY THE TPO @ 14.88% (SBI PRIME LENDING RATE PLUS 300 BASIS POINT) WHICH WAS FOUND REASONABLE AND APPLIED BY THE TPO AND AS AGAINST THAT, THE COO RDINATE BENCH HAS UPHELD THE ALP AT LIBOR +2% AND THEREAFTER, THE HON BLE HIGH COURT HAS FURTHER RESTRICTED THE ALP TO AVERAGE LIBOR RAT E WHICH COMES TO 0.79%. THEREFORE, WE FIND THAT AT EACH APPELLATE LE VEL, THE REASONABILITY OF RATE OF INTEREST HAS BEEN DEBATED AND FINALLY, T HE HONBLE HIGH COURT HAS UPHELD RATE OF INTEREST OF 0.79% AS AGAINST NIL ALP DETERMINED BY THE ASSESSEE. IT IS THEREFORE AN HONEST DIFFERENCE OF OPINION REGARDING WHAT SHOULD BE THE REASONABLE RATE OF INTEREST BETW EEN THE ASSESSEE AND THE REVENUE AND SUCH MINOR ALP DIFFERENCES OF E VEN LESS THAN 1% ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 43 CAN NEVER BE A BASIS FOR LEVY OF PENALTY, AND LACK OF GOOD FAITH AND DUE DILIGENCE THEREFORE CANNOT BE INFERRED ON PART OF T HE ASSESSEE. 43. FURTHER, MERE FACT THAT THE ADDITION HAS BEEN C ONFIRMED IN THE QUANTUM PROCEEDINGS DOESNT AUTOMATICALLY LEAD TO I MPOSITION OF PENALTY AND THE SAID CONTENTIONS OF THE REVENUE CAN NOT BE ACCEPTED. THE COORDINATE BENCH IN CASE OF MITSUI PRIME ADVANCED COMPOSITES (SUPRA) HAS HELD AS UNDER (HEAD NOTES): THE MERE FACT THAT AN ADDITION HAS BEEN MADE OR CO NFIRMED DOES NOT PER SE LEADS TO IMPOSITION OF PENALTY U/S 271(1)(C) . IT IS SIMPLE AND PLAIN THAT BOTH THE ASSESSMENT AND PENALTY PROCEEDI NGS ARE DISTINCT FROM EACH OTHER. IF THE CONTENTION OF THE LD. DR TH AT THE ACCEPTANCE OF ADDITION OR CONFIRMATION OF ADDITION IN QUANTUM PRO CEEDINGS WOULD AUTOMATICALLY JUSTIFY IMPOSITION OF PENALTY IS TAKE N TO A LOGICAL CONCLUSION, THEN, THERE WAS NO NEED TO HAVE SEPARAT E PENALTY PROCEEDINGS. THE VERY FACT THAT THE LEGISLATURE HAS NOT MADE PENALTY AUTOMATIC OF THE ADDITION OR ITS CONFIRMATION IN TH E APPELLATE PROCEEDINGS AND HAS CREATED SEPARATE PENALTY PROCEE DINGS DURING WHICH THE ASSESSEE IS GIVEN DUE OPPORTUNITY TO PUT FORTH HIS POINT OF VIEW FOR NON-IMPOSITION OF PENALTY NOTWITHSTANDING THE SUSTE NANCE OF ADDITION, AMPLY GOES TO SHOW THAT PENALTY IS NOT AUTOMATIC OF ADDITION. NECESSARY CRITERIA FOR IMPOSITION OR NON-IMPOSITION OF PENALT Y IS NOT THE SURRENDER OR NON-SURRENDER OF INCOME, ACCEPTANCE OR NON-ACCEP TANCE OF ADDITION, AND CONFIRMATION OR DELETION OF ADDITION IN QUANTUM PROCEEDINGS. IN FACT, IT IS THE EVALUATION OF THE CIRCUMSTANCES LEA DING TO THE SURRENDER/ADDITION OR CONFIRMATION OF ADDITION, WHI CH DECIDES THE FATE OF PENALTY. WHERE A SURRENDER OR AN ADDITION IS MADE D UE TO ABSENCE OF ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 44 BONA FIDE IN THE CONDUCT OF THE ASSESSEE, IT MAY BE A GOOD CASE FOR IMPOSITION OF PENALTY. ON THE OTHER HAND, IF A SURR ENDER OR AN ADDITION IS MADE DUE TO FAILURE OF THE ASSESSEE TO ESTABLISH HI S CASE TO THE SATISFACTION OF THE AO DESPITE THE GENUINENESS OF T HE EXPLANATION, IT WILL NOT CALL FOR IMPOSITION OF PENALTY, NOTWITHSTANDING SUCH AN ADDITION HAVING BEEN CONFIRMED IN APPEALS. FURTHER, AN HONES T DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE REVENUE CAN NE VER BE A CAUSE FOR IMPOSITION OF PENALTY. UNDER SUCH CIRCUMSTANCES , THE CONTENTION OF THE LD. DR THAT THE FACTUM OF THE ASSESSEE NOT ASSA ILING THE ADDITION IN QUANTUM PROCEEDINGS SHOULD BE CONSIDERED AS FATAL, IN OUR CONSIDERED OPINION, IS DEVOID OF MERITS. IF THE CONTENTION OF THE DEPARTMENT REPRESENTATIVE THAT ADDITION ON ACCOUNT OF TP ADJUS TMENT INVARIABLY MEANS ABSENCE OF GOOD FAITH AND DUE DILIGENCE, THEN , EACH AND EVERY CASE INVOLVING TP ADJUSTMENT WOULD CALL FOR IMPOSIT ION OF PENALTY U/S 271(1)(C). THE PROPOSITION SO PROPOUNDED ON BEHALF OF THE REVENUE IS TOO WIDE AND CLEARLY UNACCEPTABLE INASMUCH AS THE I NTENTION OF THE LEGISLATURE IS TO IMPOSE PENALTY DUE TO ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT ONLY WHEN GOOD FAITH AND DUE DIL IGENCE ARE LACKING AND NOT BECAUSE OF A GENUINE AND VALID DIFFERENCE O F OPINION IN THE DETERMINATION OF ALP OF AN INTERNATIONAL TRANSACTIO N. IN VIEW OF THE FOREGOING DISCUSSION, THE ASSESSEE HAS SATISFIED AL L THE REQUISITE CONDITIONS AS STIPULATED IN THE EXCEPTION CRAFTED I N EXPLAN. 7 GRANTING IMMUNITY AND HENCE, IT CANNOT BE VISITED WITH PENAL TY U/S 271(1)(C) OF THE ACT. EX CONSEQUENTI, THE IMPUGNED ORDER IS SET ASIDE AND THE PENALTY IS DELETED. ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 45 44. IN THE PRESENT CASE, THE ASSESSEE HAS DISCLOSED ALL MATERIAL FACTS AND PROVIDED REQUISITE INFORMATION IN FORM 3CEB DIS CLOSING THE INTERNATIONAL TRANSACTIONS RELATING TO ADVANCING LO ANS TO ITS AES AND HAS SUBMITTED DETAILED TRANSFER PRICING STUDY REPORT PR EPARED BY EXTERNAL EXPERTS THROUGH WHICH IT HAS SUBSTANTIATED THE ARM S LENGTH PRICE DETERMINED BY IT AT NIL IN ACCORDANCE WITH TRANSFER PRICING REGULATIONS WHICH AGAIN REITERATES THE BONAFIDE AND DUE DILIGEN CE ON PART OF THE ASSESSEE. THE COORDINATE BENCH IN CASE OF MASTEK LTD (SUPRA) HAS HELD AS UNDER: 7. .THERE IS HARDLY ANY DISPUTE BY NOW THAT THE ASSESSEE HAD DULY PLACED ON RECORD ALL FACTUAL PARTICULARS IN THE COU RSE OF QUANTUM ASSESSMENT IN ITS TRANSFER PRICING REPORT I.E. FORM 3 CEB. THE REVENUE FURTHER FAILS TO REBUT THE FACT THAT ITS A TRANSFE R PRICING ADJUSTMENT AND NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS SINCE THE TRANSFER PRICING AUTHORITY HAD TO COMPUTE ARMS LENGTH PRICE OF THE IMPUGNED LOAN TRANSACTIONS. WE OBSERVE IN THESE PECULIAR FAC TS THAT ONCE THE ASSESSEE HAS INCLUDED ALL THE RELEVANT PARTICULARS, THE MERE FACT THAT IT DID NOT BENCHMARK ITS LOAN TRANSACTIONS AT ARMS LE NGTH RESULTING IN THE IMPUGNED UPWARD ADJUSTMENT WOULD NOT FORM THE SOLE GROUND TO INVOKE THE IMPUGNED PENALTY PROVISION IN ABSENCE OF ANY EX ERCISE BY THE LOWER AUTHORITIES IN QUANTUM PROCEEDINGS FINDING THE SAME TO BE INACCURATE. WE THUS FIND NO REASON TO INTERFERE IN THE CIT(A)S FINDING UNDER CHALLENGE AS EXTRACTED IN PRECEDING PARAGRAPHS. THI S LATER SUBSTANTIVE GROUND IN BOTH APPEALS IS ALSO DECLINED ACCORDINGLY . 45. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF T HE CASE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO BASIS FOR LEVY OF PENALTY UNDER ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 46 SECTION 271(1)(C) READ WITH EXPLANATION 7 THEREOF A ND THE SAME IS HEREBY DIRECTED TO BE DELETED. 46. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ITA NO. 731/JP/18 47. AT THE OUTSET, THE LD. AR REQUESTED FOR PERMISS ION TO RAISE THE FOLLOWING ADDITIONAL GROUND OF APPEAL WHICH READS A S UNDER:- THAT THE LD. ASSESSING OFFICER IS WRONG AND BAD IN LAW IN AS MUCH AS THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE IT ACT, 1961 TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMP OF SECTION 271 (1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E . WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 48. THE LD. AR HAS SUBMITTED THAT THE ADDITIONAL GR OUND IS PURELY A LEGAL GROUND AND IT GOES TO THE ROOT OF THE MATTER, THE SAME SHOULD BE ADMITTED IN THE INTEREST OF JUSTICE. IN SUPPORT, RE LIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF NA TIONAL THERMAL POWER CORPORATION LTD. VS. CIT 229 ITR 383. AFTER H EARING BOTH THE PARTIES, THE ADDITIONAL GROUND BEING A PURELY LEGAL GROUND, THE SAME IS BEING ADMITTED FOR ADJUDICATION. 49. UNDISPUTEDLY, THE FACTS AND CIRCUMSTANCES OF TH E CASE ARE EXACTLY IDENTICAL AS IN ITA NO. 730/JP/18 AND SIMILAR CONTE NTIONS HAVE BEEN RAISED BY BOTH THE PARTIES. THEREFORE, OUR FINDING S AND DIRECTIONS CONTAINED IN ITA NO. 730/JP/18 SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL AS WELL. ITA NO. 730 & 731 /JP/2018 VAIBHAV GLOBAL LTD. VS. ACIT 47 50. IN THE RESULT, THE PENALTY IS DIRECTED TO BE D ELETED AND APPEAL OF THE ASSESSEE IS ALLOWED. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESS EE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/12/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19/12/2018. * SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- VAIBHAV GLOBAL LTD., JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-5, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 730 & 731/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR.