Midas Construction Co. Pvt. Ltd., , Kolkata V. DCIT, Circle - 10(1), Kolkata , Kolkata

ITA 766/KOL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8427 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 12-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANISH TIWARI
• Keywords: Unexplained cash credit; Business income; Principle of natural justice; Initiation of penalty proceedings
• Section: 271(1)(c); 143(3); 68

Judgement Text

ITA NO. 766/KOL/2019 ASSESSMENT YEAR: 2012-2013 MIDAAS CONSTRUCTIONS CO. PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 766/KOL/2019 ASSESSMENT YEAR: 2012-2013 MIDAAS CONSTRUCTIONS CO. PVT. LIMITED,............. ......................APPELLANT P-74, RAMSWAROOP KHETTRI ROAD, NEW ALIPORE, KOLKATA-700 053 [PAN: AAGCM 3244 F] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. ................RESPONDENT CIRCLE-10(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI MANISH TIWARI, C.A., FOR THE APPELLANT SHRI SANKAR HALDER, JCIT, SR. D.R , FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : MAY 17, 2019 DATE OF PRONOUNCING THE ORDER : JULY 17, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ):- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATA DAT ED 29.03.2019 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE IMPOSITION OF PENALTY OF RS.18.18 CRORES UNDER SECTION 271(1)(C) OF THE INCO ME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND OTHER ALLIED ACTIVITIES AS WELL AS LETTING OUT OF HEAVY MACHINERY. THE RETURN OF INCOM E FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 30.09.2012 DECLARI NG TOTAL INCOME OF RS.74,43,596/-. IN THE ASSESSMENT COMPLETED UNDER S ECTION 143(3) VIDE ITA NO. 766/KOL/2019 ASSESSMENT YEAR: 2012-2013 MIDAAS CONSTRUCTIONS CO. PVT. LIMITED 2 AN ORDER DATED 30.03.2015, THE INCOME OF THE ASSESS EE FROM CIVIL CONSTRUCTION WAS DETERMINED BY THE ASSESSING OFFICE R ON ESTIMATED BASIS AT RS.1,33,89,565/- BY APPLYING A NET PROFIT RATE O F 8%. HE ADDED OTHER INCOME OF RS.2,60,949/- TO THE BUSINESS INCOME SO E STIMATED AND ALSO MADE A FURTHER ADDITION OF RS.2.10 CRORES BY TREATI NG THE SHARE CAPITAL INCLUDING SHARE PREMIUM AMOUNT RECEIVED BY THE ASSE ESSEE DURING THE YEAR UNDER CONSIDERATION AS UNEXPLAINED CASH CREDIT UNDER SECTION 68. THE TOTAL INCOME OF THE ASSESSEE THUS WAS DETERMINE D BY THE ASSESSING OFFICER AT RS.3,46,50,520/- AS AGAINST THE TOTAL IN COME OF RS.74,43,596/- DECLARED BY THE ASSEESSEE-COMPANY IN ITS RETURN OF INCOME. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) WERE ALSO INITI ATED BY THE ASSESSING OFFICER BUT SINCE THE APPEAL FILED BY THE ASSESSEE IN THE QUANTUM PROCEEDINGS CHALLENGING THE ADDITIONS MADE TO ITS T OTAL INCOME WAS PENDING BEFORE THE LD. CIT(APPEALS), THE PENALTY PR OCEEDINGS WERE KEPT IN ABEYANCE BY THE ASSESSING OFFICER. 3. THE APPEAL FILED BY THE ASSESSEE IN THE QUANTUM PROCEEDINGS CHALLENGING THE ADDITIONS MADE BY THE ASSESSING OFF ICER TO ITS TOTAL INCOME IN THE ASSESSMENT COMPLETED UNDER SECTION 14 3(3) CAME TO BE DISPOSED OF BY THE LD. CIT(APPEALS) VIDE ITS APPELL ATE ORDER DATED 31.07.2018, WHEREIN HE NOT ONLY CONFIRMED THE ADDIT ION OF RS.2.10 CRORES MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE C APITAL AND SHARE PREMIUM AMOUNT BY TREATING THE SAME AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 BUT ALSO ENHANCED THE SAME TO RS.6.06 CR ORES BY HOLDING THAT THE AMOUNT OF RS.3.96 CRORES RECEIVED FROM OTHER TW O COMPANIES, NAMELY M/S. KHETRAPATI VINIMAY (P) LTD. AND M/S. BPMK ENER GY SYSTEM PVT. LIMITED ON ACCOUNT OF SHARE CAPITAL AND SHARE PREM IUM WAS ALSO LIABLE TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNE XPLAINED CASH CREDIT UNDER SECTION 68. HE ALSO INITIATED PENALTY PROCEED INGS UNDER SECTION 271(1)(C) IN RESPECT OF THE SAID ADDITION OF RS.6.0 6 CRORES MADE TO THE TOTAL INCOME UNDER SECTION 68 AND SINCE THERE WAS N O EXPLANATION OFFERED BY THE ASSESSEE IN RESPONSE TO THE SHOW-CAUSE NOTIC E ISSUED BY HIM ITA NO. 766/KOL/2019 ASSESSMENT YEAR: 2012-2013 MIDAAS CONSTRUCTIONS CO. PVT. LIMITED 3 DURING THE COURSE OF PENALTY PROCEEDINGS, THE LD. C IT(APPEALS) IMPOSED THE PENALTY OF RS.18.18 CRORES UNDER SECTION 271(1) (C) OF THE ACT VIDE HIS ORDER DATED 29.03.2019. AGGRIEVED BY THE ORDER OF T HE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE T RIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. BESIDES POIN TING OUT THE MISTAKE COMMITTED BY THE LD. CIT(APPEALS) IN COMPUTING THE AMOUNT OF PENALTY UNDER SECTION 271(1)(C) WRONGLY AT RS.18.18 CRORES, THE LD. COUNSEL FOR THE ASSESSEE HAS RAISED A PRELIMINARY ISSUE BEFORE US CHALLENGING THE VERY INITIATION OF THE PENALTY PROCEEDINGS BY THE AUTHOR ITIES BELOW UNDER SECTION 271(1)(C) ON THE GROUND THAT IN THE ABSENCE OF ANY SPECIFIC MENTION IN THE SHOW-CAUSE NOTICE ISSUED UNDER SECTI ON 274 OF THE ACT FOR THE YEAR UNDER CONSIDERATION BY THE AUTHORITIES BEL OW AS TO WHETHER THE ASSEESSEE IS GUILTY OF HAVING FURNISHED INACCURATE PARTICULARS OF INCOME OR OF HAVING CONCEALED PARTICULARS OF SUCH INCOME , THE INITIATION OF PENALTY PROCEEDINGS ITSELF WAS BAD IN LAW AND THE P ENALTY ORDER PASSED IN PURSUANCE THEREOF IS LIABLE TO BE QUASHED BEING INV ALID. HE HAS INVITED OUR ATTENTION TO THE RELEVANT PENALTY NOTICES TO PO INT OUT THAT THE IRRELEVANT PORTION, VIZ. FURNISHED INACCURATE PART ICULARS OF INCOME OR CONCEALED PARTICULARS OF SUCH INCOME WAS NOT STRU CK OFF EITHER BY THE ASSESSING OFFICER OR EVEN BY THE LD. CIT(APPEALS). IT IS OBSERVED THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SU VAPRASANNA BHATTACHARYA VS.- ACIT (IN ITA NO. 1303/KOL/2010) CITED BY THE LD. COUNSEL FOR THE ASSESSEE HAD AN OCCASION TO CONSIDE R A SIMILAR ISSUE IN THE IDENTICAL FACT SITUATION AND THE ORDER PASSED BY TH E ASSESSING OFFICER IMPOSING PENALTY UNDER SECTION 271(1)(C) WAS HELD T O BE INVALID BY THE TRIBUNAL RELYING ON THE DECISION OF THE HONBLE KAR NATAKA HIGH COURT IN THE CASE OF CIT & ANOTHER VS.- MANJUNATHA COTTON & GINNING FACTORY REPORTED IN 359 ITR 565 AFTER DISCUSSING THE PROPOS ITION LAID DOWN THEREIN IN GREAT DETAIL IN PARAGRAPH NO. 8 TO 8.2 O F ITS ORDER DATED 06.11.2015, WHICH READ AS UNDER:- ITA NO. 766/KOL/2019 ASSESSMENT YEAR: 2012-2013 MIDAAS CONSTRUCTIONS CO. PVT. LIMITED 4 8. THE NEXT ARGUMENT THAT THE SHOW CAUSE NOTICE U /S.274 OF THE ACT WHICH IS IN A PRINTED FORM DOES NOT STRIKE OUT AS TO WHETHER THE PENALTY IS SOUGHT TO BE LEVIED ON THE FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR C ONCEALING PARTICULARS OF SUCH INCOME. ON THIS ASPECT WE FIND THAT IN THE SHOW CAUSE NOTIC E U/S.274 OF THE ACT THE AO HAS NOT STRUCK OUT THE IRRELEVANT PART. IT IS THEREFORE NOT SPELT OUT AS TO WHETHER THE PENALTY PROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOME. 8.1 THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KARN), HAS HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING P ROPOSED TO BE IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT HAS FURTHER LAID DOWN THAT CERTAIN PRINTED FO RM WHERE ALL THE GROUNDS GIVEN IN SECTION 271 ARE GIVEN WOULD NOT SATISFY THE REQUIRE MENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PENALTY PROCEEDINGS ON ONE LIMB AND FIND THE ASSESSEE GUILTY IN ANOTHER LIMB IS BAD IN LAW. IT WAS SUBMITTED THAT IN THE PRESENT CASE, THE AFORESAID DECISION WILL SQUARELY APPLY AND ALL THE ORDERS IMPOSING PENALTY HAVE TO B E HELD AS BAD IN LAW AND LIABLE TO BE QUASHED. 8.2 THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS LAID DOWN THE FOLL OWING PRINCIPLES TO BE FOLLOWED IN THE MATTER OF IMPOSING PENALTY U/S.271(1)(C) OF THE ACT . NOTICE UNDER SECTION 274 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDING S CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXISTENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CO NTAINS THE SATISFACTION OF THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF T HE EXISTENCE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 OR IN EXPLANATION-1(B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, IN FACT, IT I S PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED I N SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSI NG PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGH T TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF TH E DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT E XIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPARTMENT SENDING A P RINTED FARM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SA TISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE TO BE HELD TO BE STRICTLY CONSTRUED , NOTICE ISSUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPE CIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTIC E IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASS ESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, TH AT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CAS ES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF TH E PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCE EDINGS FOR ONE OFFENCE AND FINDING ITA NO. 766/KOL/2019 ASSESSMENT YEAR: 2012-2013 MIDAAS CONSTRUCTIONS CO. PVT. LIMITED 5 THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING H IM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(1 )(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALL Y STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO ANSWER. I T IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON T HE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAIN ED. 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 PENALT Y PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, T HE IMPOSITION OF PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUS T BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HAND S OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASSED AND FU RTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALI DATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE AC T TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDIN GS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF T OTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF I NCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FU RNISHING 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 FURNISHING INACCURAT E PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN T HE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING 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 I NVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATEL Y MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ST ANDARD PRO FORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE A S TO NON-APPLICATION OF MIND. THE FINAL CONCLUSION OF THE HONBLE COURT WAS AS FO LLOWS:- 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EME RGES IS AS UNDER: A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIAB ILITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSI NG PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDI ENT FOR ATTRACTING CIVIL LIABILITY. D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 2 71(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271 . E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISC ERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORITY OR REVISI ONAL AUTHORITY. ITA NO. 766/KOL/2019 ASSESSMENT YEAR: 2012-2013 MIDAAS CONSTRUCTIONS CO. PVT. LIMITED 6 F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOU LD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BECAUSE OF DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE AS SESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 271 (L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDINGS BECA USE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMISSIONER. I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORD ER OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TAX AND INTEREST THAT BY ITSE LF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, IT IS O N ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITTED AND IF NOT IT WOULD H AVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT O RDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPL ANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THAT THE EXPLANATION OFFERED IS NOT BONA FIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUB STANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONA FIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY S ATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS, IN APPEA L, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY. P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPEC IFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTI ONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE H AS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDE D. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AN D FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE A SSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EMANAT E FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SEPARATE ASPECT O F THE PROCEEDINGS. ITA NO. 766/KOL/2019 ASSESSMENT YEAR: 2012-2013 MIDAAS CONSTRUCTIONS CO. PVT. LIMITED 7 U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEED INGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORRECT PARTICULARS ' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSES SEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS. (EMPHASIS SUPPLIED) IT IS CLEAR FROM THE AFORESAID DECISION THAT ON THE FACTS OF THE PRESENT CASE THAT THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT IS DEFECTIVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS SOUGHT TO BE IMPOSED. FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT, WE HOLD THAT THE ORDERS IMPOSING PENALTY IN ALL THE ASSESSMENT YEARS HAVE TO BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPOSED IS CANC ELLED. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT LEVY OF P ENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED. WE THEREFORE CANCEL THE ORDERS IMPOSING PENALTY ON THE ASSESSEE AND ALLOW THE APPEAL BY THE ASSESSEE. 5. IN OUR OPINION, THE DECISION OF THE COORDINATE B ENCH OF THIS TRIBUNAL RENDERED IN THE CASE OF SUVAPRASANNA BHATT ACHARYA VS.- ACIT RENDERED VIDE ITS ORDER DATED 06.11.2015 IN ITA NO. 1303/KOL/2010 BY RELYING ON THE DECISION OF THE HONBLE KARNATAKA HI GH COURT IN THE CASE OF CIT & ANOTHER VS.- MANJUNATHA COTTON & GINNING FAC TORY REPORTED IN 359 ITR 565 IS SQUARELY APPLICABLE IN THE PRESENT CASE. IT IS ALSO NOTED THAT A SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL CIT VS.- BIJOY KR. AGARWAL (ITAT NO. 272 OF 2017 DATED 02.04.2019), WHEREIN THE DECISION OF THE TRIBUNAL C ANCELLING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) WAS UPHELD BY THE H ONBLE JURISDICTIONAL HIGH COURT HOLDING THAT THE NOTICE ISSUED UNDER SEC TION 271(1)(C) WITHOUT SPECIFYING WHICH OF THE TWO CONTRAVENTIONS, THE ASS ESSEE IS GUILTY OF WAS DEFECTIVE AND THE PENALTY IMPOSED IN PURSUANCE OF S UCH DEFECTIVE NOTICE WAS NOT SUSTAINABLE. TO ARRIVE AT THIS CONCLUSION, HONBLE CALCUTTA HIGH COURT RELIED ON THE DECISION OF AMRIT FOODS VS.- C OMMISSIONER OF CENTRAL EXCISE UP REPORTED IN (2005) 13 SCC 419 AS WELL AS THEIR OWN DECISION IN THE CASE OF PRINCIPAL CIT VS. DR. MURARI MOHAN KOL EY (ITAT NO. 306 OF 2017 DATED 18.07.2018). THE ISSUE RAISED BY THE ASS ESSEE IN THIS APPEAL THUS IS SQUARELY COVERED BY THE SAID JUDICIAL PRONO UNCEMENTS INCLUDING ITA NO. 766/KOL/2019 ASSESSMENT YEAR: 2012-2013 MIDAAS CONSTRUCTIONS CO. PVT. LIMITED 8 THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT AND RESPECTFULLY FOLLOWING THE SAME, WE CANCEL THE PENALTY IMPOSED U PON THE ASSESSEE UNDER SECTION 271(1)(C) AND ALLOW THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 17, 201 9. SD/- SD/- (SATBEER SINGH GODARA) (P.M. JA GTAP) JUDICIAL MEMBER V ICE-PRESIDENT(KZ) KOLKATA, THE 17 TH DAY OF JULY, 2019 COPIES TO : (1) MIDAAS CONSTRUCTIONS CO. PVT. LIMITED, P-74, RAMSWAROOP KHETTRI ROAD, NEW ALIPORE, KOLKATA-700 053 (2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-10(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKAT A, (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.