Shree Khodal Steel Ltd., RAJKOT-GUJARAT V. The Asstt. Commr. of Income Tax, Cir.-5, RAJKOT-GUJARAT

ITA 738/RJT/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9059 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2000-2001
• Appeal Filed On: 15-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Keywords: Unexplained expenditure; Income from undisclosed sources; Opportunity of being heard; Principle of natural justice; Source of fund; Initiation of penalty proceedings
• Section: 69C; 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E - COURT AT AHMEDAB A D) BEFORE SHRI MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI MANISH BORAD , ACCOUNTANT MEMBER ./ ITA NO.738 / RJT/2014 / ASSTT. YEAR: 20 0 0 - 20 01 SHREE KHODSAL STEEL LTD., C/O D.R ADHIA, OM SHRI PADMALAYA, BESIDE TRIKAMRAIJI HAWELI, OPP. HOTEL IMPERIAL PALACE, 16 JAGNATH PLOT, DR.YAGNIK ROAD, RAJKOT PAN:AACCS9894F VS . ACIT, CIRCLE - 5, RAJKOT (APPLICANT) (RESPONENT) ASSESSEE BY : WRITTEN SUBMISSION REVENUE BY : SHRI AVINASH KUMAR , SR. DR / DATE OF HEARING : 1 9 / 04 / 201 7 / DATE OF PRONOUNCEMENT: 24 / 04 /201 7 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER THIS APPEAL OF ASSESSEE FOR A.Y. 2000 - 01 IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISS IONER OF INCOME TAX (APPEALS) - IV , RAJKOT (IN SHORT LD.CIT(A)) DATED 09/10 /2014 ARISING OUT OF ORDER U/S.271(1 ) (C) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS ACT) FRAMED ON 21/03/2012 BY ACIT, CIRCLE - 5, RAJKOT. I TA NO.738/RJT/2014 ASSTT. YEAR 2000 - 01 2 2. ASSESSEE HAS RAISED 10 GROUNDS OF APPEALS B UT THE SOLE GRIEV ANCE IS CHALLENGING THE LD.CIT(A)S ORDER CONFIRMING THE PENALTY U/S.271(1)(C) OF T HE ACT AT RS.6,21,400/ - AND LEGALITY OF NOTICE ISSUED U/S.274 R . W . S 271(1)(C) OF THE ACT. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECORDS ARE THA T ASSESSEE IS A LIMITED COMPANY AND IT FILED ITS RETURN OF INCOME DECLARING NIL INCOME ON 28/11/2000. ASSESSMENT U/S. 143(3) WAS FRAMED ON 17/02/2003 DETERMINING INCOME AT RS.1 6,13,928/ - AFTER MAKING ADDITION OF RS.16,06,992/ - U/S.69C OF THE INCOME TAX ACT, 1961 (IN SHORT REFERRED AS ACT) AS UNEXPLAINED EXPENDITURE AND ADDITION OF RS.6,936/ - TOWARDS EXCESS STOCK FOUND DURING THE COURSE OF SURVEY. ADDITION TOWARDS UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT WAS MADE ON THE BASIS OF NEGATIVE CASH BALANCE OF RS.16,02,992/ - ON 11/08/1999 IN THE ASSESSEES CASH BOOKS. IT WAS CONTENDED BY THE ASSESSEE BEFORE LEARNED ASSESSING OFFICER (IN SHORT LD.AO) THAT THE ALLEGED AMOUNT OF RS.16, 06,992/ - REPRESENTS SHARE APPLICATION MONEY COLLECTED FROM THE DIRECTORS BUT NOT CREDITED IN THE BOOKS OF ACCOUNT. 4. IN THE QUANTUM APPEAL ASSESSEE DID NOT CONTESTE D THE ADDITION OF RS.6,936/ - HOWEVER ADDITION U/S.69C OF THE ACT AT RS,16,06,992/ - WHICH WAS CONFIRMED BY LD.CIT(A). SUBSEQUENTLY, POST ORDER OF CIT(A) DISMISSING ASSESSEES APPEAL , PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WERE INITIATED AND ORDER IMPOSING PENALTY OF RS. 6,21,400/ - WAS PASSED ON 21/03/2012. 5. AGGRIEVED ASSESSEE FILED APPEA L BEFORE LD.CIT(A) AGAINST THE PENALTY IMPOSED U/S.271(1)(C) OF THE ACT BUT FAILED TO SUCCEED AS LD.CIT(A) CONFIRMED THE PENALTY U/S.271(1)(C) OF THE ACT BY OBSERVING AS FOLLOWS: I TA NO.738/RJT/2014 ASSTT. YEAR 2000 - 01 3 6. I HAVE CONSIDERED CAREFULLY, THE SUBMISSIONS MADE BY THE APPELLANT AND THE ORDER PASSED BY THE ASSESSING OFFICER. AS CAN BE SEEN FROM THE SUBMISSIONS MADE BY AUTHORIZED REPRESENTATIVE, WHICH IS REPRODUCED SUPRA, THE ONLY ARGUMENT THAT IS ADVANCED BY THE AU THORIZED REPRESENTATIVE IS THAT THE ADDITION MADE AT RS.16,06,992/ - ON ACCOUNT OF NEGATIVE CASH BALANCE IS A DEBATABLE ONE. AS REGARDS TO THE OTHER ADDITION OF RS.6,939/ - IT IS SUBMITTED THAT THE SAID ADDITION WAS MADE AS A RESULT OF NON - ACCEPTANCE OF THE APPELLANT'S EXPLANATION DURING PENALTY PROCEEDINGS. THE TWO ADDITIONS MADE IN THE QUANTUM ORDER WERE BASED ON THE MATERIAL EVIDENCE FOUND DURING THE COURSE OF SURVEY ACTION MOUNTED ON APPELLANT COMPANY ON 03/03/2000. THE ASSESSING OFFICER HAS DISCOVERED TH AT THERE WAS A NEGATIVE CASH BALANCE AT RS. 16,06,992/ - IN THE BOOKS MAINTAINED. AS THE APPELLANT FAILED TO GIVE CREDIBLE EXPLANATION ON NEGATIVE CASH BALANCE, THE SAME WAS ADDED BACK TO THE INCOME RETURNED AS UNEXPLAINED EXPENDITURE U/S. 69C OF THE IT ACT, 1961. THEREFORE, THIS ADDITION IS BASED ON THE ACCOUNTING ENTRIES IN THE CASH BOOK, WHICH SHOWS THAT THE APPELLANT HAS INCURRED EXPENDITURE TO THE TUNE OF RS. 16,06,992/ - FROM UNDISCLOSED SOURCES OF INCOME. THE SECOND ADDITION OF RS. 6,936/ - IS ALSO BASED ON THE EVIDENCE FOUND DURING SURVEY I.E. EXCESS STOCK FOUND DURING SURVEY ACTION. AS HELD BY APEX COURT IN THE CASE OF M/S. DHARMENDRA TEXTILE PROCESSORS (2007) 212 CTR (SC) 432 THAT METIS REA IS NOT AN ESSENTIAL INGREDIENT FOR A LEVY OF PENALTY U/S. 271( L)(C) OF THE IT ACT, 1961 SINCE THE SAME REPRESENTS A CIVIL LIABILITY. ALSO, AS HELD BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES (2001) 249 ITR 125 (GUJ.), THE FACTS AND CIRCUMSTANCES OF THE CASE SHOW THAT THERE WAS A CONSCIOUS CONCEALME NT BY THE ASSESSEE AS EVIDENT BY THE ACCOUNTING ENTRIES IN THE CASH BOOK MAINTAINED AND ALSO STOCK PHYSICALLY FOUND DURING SURVEY ACTION. SINCE THE APPELLANT HAS FAILED TO EXPLAIN THESE DISCREPANCIES, BASED ON WHICH, THE IMPUGNED ADDITIONS ARE MADE, THE AC TION OF THE ASSESSING OFFICER IN LEVYING PENALTY AT RS. 6,21,400/ - U/S. 271(L)(C) OF THE IT ACT, 1961 APPEARS TO BE JUSTIFIED. THE EXPLANATION GIVEN BY THE AUTHORIZED REPRESENTATIVE DURING APPELLATE PROCEEDINGS LACKS CREDENCE, NO COGNIZANCE OF WHICH CAN BE TAKEN. HENCE, I DECLINE TO INTERFERE WITH THE PENALTY LEVIED AT RS. 6,21,4007 - U/S. 271(L)(C) OF THE IT ACT, 1961. THE SAME STANDS CONFIRMED. ALL THE GROUNDS RAISED BY THE APPELLANT ARE DISMISSED . 6. AGGRIEVED ASSESSEE I N NOW IN APPEAL BEFORE TRIBUNAL. N ONE APPEAR ED AT ASSESSEE S BEHEST , HOWEVER, WRITTEN SUBMISSION HAS BEEN PLACED ON RECORD, CONTENDING LEGALITY OF THE NOTICE ISSUED U/S.271 R.W.S 271(1)(C) OF THE ACT DATED 17/02/2013. IT HAS BEEN FURTHER SUBM ITTED THAT ALLEGED NOTICE DOES NOT SPECIFY AS TO WHETHER IT IS ISSUED FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IT IS UN CLEAR FROM THE NOTICE AND FURTHER IN THE I TA NO.738/RJT/2014 ASSTT. YEAR 2000 - 01 4 PENALTY ORDER U/S.271(1)(C) ASSESSEE HAS BEEN PENALIZED FOR WILLFULLY FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING PARTICULARS OF INCOME. IT HAS BEEN FURTHER SUBMITTED THAT IN THE SERIES OF JUDGMENTS MORE PARTICULARLY IN THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT - 359 ITR 565 (KARN.) IN THE CASE OF MANJUNATH COTTON & GINNING FACTORY WHEREIN IT IS HEL D THAT NOTICE IS NOT SPECIFYING THE PARTICULAR CHARGE FOR WHICH PROCEEDINGS ARE INITIATED THAN , SUCH NOTICE IS ILLEGAL AND BAD IN LAW AND ALL SUBSEQUENT ACTIONS TAKEN THEREO N ARE VOID AND INITIO . RELIANCE HAS ALSO BEEN PLACED BY ASSESSEE ON THE FOLLOWINGS JUDGMENTS AND DECISIONS ADJ UDICATING SIMILAR ISSUE DECIDED IN FAVOUR OF ASSESSEE. : 1. HON. ITAT, RAJKOT E - BENCH - ITA NO. 542/RJT./2012 DATED 20 - 2 - 2017 IN THE CASE OF SHRI PARASKUMAR V. KATARIYA . 2. HON. ITAT, KOLKATA - ITA NO. 1303/KOL./2010 DATED 6 - 11 - 2015 IN THE CASE OF SUVAPRASANNA BHATACHARYA. 3. HON. ITAT, RAJKOT - ITA NO. 203 & 204/RJT./2013 DATED 24 - 3 - 2017 IN THE CASE OF SURESHBHAI MAKANSI GADESHA. 4. HON. ITAT, RAJKOT - ITA NO. 368/RJT./2015 DATED 24 - 3 - 2017 IN THE CASE OF HARIDAS DHONDIRAM KATKAR. 5. HON. KARNATAKA HIGH COURT - 359 ITR 565 (KARN.) IN THE CASE OF MANJUNATH COTTON & GINNING FACTORY . 7 . ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESENTATIVE (IN SHORT LD.DR) VEHEMENTLY ARGUED SUPPORTING THE ORDER OF LOWER AUTHORITIES. 8. WE HAVE HEARD THE LD.DRS CONTENTIONS, PERUSED TH E RECORD PLACED BEFORE US AND GONE THROUGH THE DECISIONS AND JUDGMENTS CITED BY THE LD.CO UNSEL IN HIS WRITTEN SUBMISSION. S OLE GRIEVANCE OF THE ASSESSEE IS AGAINST I TA NO.738/RJT/2014 ASSTT. YEAR 2000 - 01 5 THE ORDER OF LD.CIT(A) CONFIRMING PENALTY U/S.271(1)(C) OF THE ACT OF RS.6,21,400/ - ASSESSEE HAS ALSO CHALLENGE D THE LEGALITY OF NOTICE U/S.274 R.W.S 271(1)(C) OF THE ACT THROUGH ITS WRITTEN SUBMISSION . WE OBSERVE THAT PENALTY OF RS.6,21,400/ - HAS BEEN LEVIED ON UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT AT RS.16,06,992/ - IN THE NATURE OF NEGATIVE CASH BALANCE AP PEARING IN THE CASH BOOK OF THE ASSESSEE AND ON THE ADDITION OF RS.6 ,939/ - TOWARDS EXCESS STOCK WHICH WERE UNEARTHED DURING THE COURSE OF SURVEY U/S.133A OF THE ACT CONDUCTED ON 03/03/2000. 9. WE WILL FIRS TAKE UP ALTERNATE PLEA RAISED BY THE ASSESSEE CH ALLENGING THE LEGALITY OF NOTICE ISSUED U/S.274 R.W.S 271(1)(C) OF THE ACT ON THE PERUSAL OF IMPUGNED NOTICE DATED 17/02/2003 , WE NOTICE THAT LD.AO HAS MERELY TICKED THE FOLLOWING PHRASE: HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR . .. FUR NISHED INACCURATE PARTICULARS OF INCOME. FROM THE ABOVE, IT SEEMS THAT LD.AO HAS NOT ST R UCK OF F EITHER OF ONE REASON AND HAS ISSUED NOTICE TAKING BOTH THE BASIS OF IMPOSING PENALTY BY ALLEGING THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AS WELL AS FURNISHING INACCURATE OF INCOME. FURTHER IN THE PENALTY ORD ER FRAMED U/S.271(1)(C) OF ACT LD.AO HAS AGAIN QUOTED BOTH THE REASONS I,E CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME FOR PENALIZING THE ASSESSEE U/S.271(1)(C) OF THE ACT . FROM THE ABOVE FACTS IT CAN BE INFERRED THAT LD.AO WAS UNABLE TO MAKE COMPLETE APPLICATION OF MIND TO ASSESS THE BASIS OF IMPOSING THE PENALTY . FURTHER REVENUE , HAS BEEN UN ABLE TO PROVE THAT THE IMPUGNED NOTICE IS NOT IMPAIRED OR PREJUDICE TO THE RIGHT OF ASSESSEE FOR PROVIDING REASONABLE OPP ORT UNITY OF BEING HEARD IN ORDER TO DEFEND IT S CASE FOR THE SPECIFIC REASON FOR WHICH PENALTY IS IMPOSED . I TA NO.738/RJT/2014 ASSTT. YEAR 2000 - 01 6 10. WE FURTHER OBSERVE THAT IN THE IMPUGNED PENALTY ORDER U/S.271(1)(C) LD.AO HA S MENTIONED IN PARA 9 WHICH READS AS FOLLOWS: IN THE GIVEN FACTS, IT CAN VERY WELL BE HELD THAT THE ASSESSEE HAS WILFULLY FURNIS HED THE INACCURATE PARTICULARS OF INCOME AND HAS CONCEALED PARTICULARS OF INCOME WITH AN INTENTION TO EVADE TAX. 10.1 FROM THE PERUSAL OF THE ABOVE FINDINGS IT IS CRYSTAL CLEAR THAT PENALTY PROCEEDINGS WERE INITIATED ON EITHER OF THE TWO REASONS WHEREAS PENALTY ORDER SHOWS THAT ASSESSEE WAS GUILTY FOR BOTH THE REASONS I.E CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. WE FURTHER OBSERVE THAT SIMILAR ISSUES DEALING WITH THE LEGALITY OF NOTICE U/S.274 W R.W.S 271(1)(C) OF THE ACT HAVE BEEN ADJUDICATED BY THE CO - ORDINATE BENCH IN THE CASE OF SURESHBHAI MAKANSHI GADESHA V/S. ITO (SUPRA) DECIDING THE ISSUE IN FAV OUR OF ASSESSEE BY FOLLOWING THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT - 359 ITR 565 (KARN.) IN THE CASE OF C IT V/S MANJUNATH COTTON & GINNING FACTORY WHICH HAS BEEN FURTHER UPHELD BY HONBLE APEX COURT. FINDINGS OF THE TRIBUNAL READ AS UNDER: 5. WE HAVE CAREFULLY PERUSED THE MATERIAL PAPERS ON RECORD IN THE LIGHT OF THE STATEMENTS MADE ON BEHALF OF THE ASSESSEE INCLUDING THE JUDGMENT RELIED UPON BY HIM IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY, 359 ITR 565 (KAR). VIDE PARAGRAPH 60, THE HONBLE KARNATAKA HIGH COURT HAS HELD AS FOLLOWS : - 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE I TA NO.738/RJT/2014 ASSTT. YEAR 2000 - 01 7 OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER 4 ITA NO. 41/RJT/2015 SHRI K.C. VARG HESE CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUN DS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY O N THE GROUNDS ON WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS M AY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. THIS WAS FOLLOWED BY TH E HONBLE KARNATAKA HIGH COURT IN THE DECISION IN THE CASE OF CIT VS M/S. MAGANUR BUILDERS IN ITA NO. 616/2015 DATED 28.7.2016. THE HONBLE JURISDICTIONAL HIGH COURT CONSIDERED THIS ISSUE IN I TA NO.738/RJT/2014 ASSTT. YEAR 2000 - 01 8 THE CASE OF JYOTI LTD. (SUPRA), WHITEFORD INDIA LTD. (SUPRA), NEW SORATHIA ENGG. CO. (SUPRA) AND MANU ENGINEERING WORKS (SUPRA). FINDING OF THE ASSESSING OFFICER AS EXTRACTED IN PARA 6 OF JYOTI LTD. (SUPRA) IS SIMILAR TO THE ORDER IN THIS CASE, AND IT IS AS FOLLOWS : - IN VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT THE ASSESSEE CONCEALED INCOME/FURNISHED INACCURATE PARTICULARS OF INCOME. I, THEREFORE, CONSIDER IT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C). 6. ON A CAREFUL READING OF THE DECISIONS RELIED UPON BY THE ASSESSEE, IT IS, THEREFORE, CLEAR THAT DR AWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY OF EITHER ONE OR OTHER CANNOT BE SUSTAINED IN LAW. IN THIS CASE ALSO THE ASSESSMENT ORDER READS THAT PENALTY PROCEEDINGS WERE INITIATED FO R FURNISHING INACCURATE PARTICULARS OF INCOME, WHEREAS THE PENALTY ORDER SHOWS THAT THE ASSESSEE WAS GUILTY OF CONCEALMENT OF PARTICULARS OF INCOME/FURNISHING INACCURATE PARTICULARS OF INCOME. ACCORDING TO THE BINDING PRECEDENTS REFERRED TO ABOVE, SUCH A C OURSE IS BAD IN LAW AND CANNOT BE SUSTAINED. WE, THEREFORE, PROCEED TO QUASH THE PENALTY PROCEEDINGS AS THEY CANNOT BE SUSTAINED UNDER LAW. 10.2 SIMILARLY IN ANOTHER DECISION OF CO - ORDINATE BENCH IN THE CASE OF SHRI PARAS KUMAR V KATARIA VS. ITO, WARD - 1(3), RAJKOT, IT WAS OBSERVED AS FOLLOWS: 16. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS. AT THE OUTSET, WE TAKE NOTE OF THE LEGAL ARGUMENTS RAISED ON BEHALF OF THE ASSESSEE THAT APPROPRIATE CHARGE HAS NOT BEEN SPECIFIED IN THE SHOW - CAUSE NOTICE I TA NO.738/RJT/2014 ASSTT. YEAR 2000 - 01 9 ISSUED TO THE ASSESSEE. A PERUSAL OF NOTICE ISSUED UNDER S.274 READ WITH S.271(1)(C) SHOWS THAT THE RELEVANT PART OF THE NOTICE HAS NOT BEEN STRUCK OFF. THUS, IT CAN BE INFERRED THAT THERE IS LACK OF APPLICATION OF MIND BY THE AO. THE VAGUENESS AND AMBIGUITY IS CLAIMED TO HAVE PREVENTED THE ASSESSEE OF REASONABLE OPPORTUNITY TO DEFEND ITS CASE. THUS, DEFINITE PREJUDICE HAS CAUSED TO THE ASSESSEE. IT IS THE REQUISITE OF LAW THAT THE NOT ICE TO THE ASSESSEE SHOULD BE SPECIFIC. THE REVENUE HAS NOT BEEN ABLE TO POINT OUT THAT THE SO - CALLED AMBIGUOUS NOTICE HAS NOT IMPAIRED OR PREJUDICED THE RIGHT OF THE ASSESSEE TO REASONABLE OPPORTUNITY OF BEING HEARD. IT THEREFORE MUST FOLIOW THAT THE NOTI CES ISSUED PROPOSING PENALTY WERE ILLUSORY AND THE ASSESSEE WAS INCAPACITATED TO DEFEND ITS CASE. THE DECISIONS QUOTED ON BEHALF OF THE ASSESSEE IN THE CASE OF SAMSON PERINCHERY (BOMBAY) & MANJUNATHA COTTON (KARNATAKA) [SUPRA] ARE APPLICABLE TO THE FACTS O F THE CASE. THE PENALTY NOTICES, THUS, ISSUED ARE RENDERED INVALID AND CANNOT BE SUSTAINED. 11. RESPECTFULLY, FOLLOWING THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT AS CON FIRMED BY HONBLE APEX COURT, OTHER DECISIONS OF TRIBUNAL AND OUR DISCUSSIONS ABOVE, WE A RE OF THE CONSIDERED OPINION THAT NOTICE ISSUED U/S.274 R.W.S 271(1)(C) OF THE ACT, ISSUED IN THE CASE OF ASSESSEE WAS ILLEGAL AND BAD IN LAWS A S IT IS NOT SPECIFYING PARTICULAR CHARGE ON WHICH THE PENALTY HAS BEEN IMPOSED I.E FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS ON INCOME AND IS THEREFORE LIABLE TO BE QU ASHED. IN THE RESULT WE ALLOW THE ASSESEE ALTERNATE PLEA CHALLENGING THE VALIDITY OF NOTICE U/S.274 R.W.S 271(1)(C) OF THE ACT. AS REGARD TO GROUND RAISED ON MERITS SAME BECOMES INFRUCTUOUS AS WE HAVE ALREADY QUASHED THE PENALTY PROCEEDINGS U/S.271(1)(C) O F THE ACT. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . I TA NO.738/RJT/2014 ASSTT. YEAR 2000 - 01 10 O RDER PRONOUNCED IN THE COURT ON 24 TH APRIL , 2017 AT AHMEDABAD. SD/ - SD/ - ( MAHAVIR PRASAD ) JUDICIAL MEMBER (MANISH BORA D ) ACCOUNTANT MEMBER TRUE COPY A HMEDABAD; DATED 24 / 04 /2017 MANISH / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, 6. / GUARD FILE .