DCIT, Central Circle-2, Jaipur, Central circle-2 Jaipur V. Shri Prakash Chand Sharma, C-42, Gokul Path Vaishali Nagar, Jaipur, Jaipur

ITA 778/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6446 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 24-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Search and seizure; Principle of natural justice; Question of law; Initiation of penalty proceedings; Reasonable cause; Tangible material; Wrong claim; Reassessment proceedings; Set aside
• Section: 271(1)(c); 143(3); 142(1); 153A; 274; 139(1); 73; 13; 22; 6; 132; 15; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH B, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A 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 NOS. 776, 777 & 778/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2010-11, 11-12 & 12-13. THE DCIT CENTRAL CIRCLE-2, JAIPUR. CUKE VS. SHRI PRAKASH CHAND SHARMA, C-42, GOKUL PATH, VAISHALI NAGAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AGMPS 2776 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI B.K. GUPTA (CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI PC PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09.01.2020. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 03/02/2020. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THESE THREE APPEALS BY THE REVENUE ARE DIRECTED AG AINST THE COMPOSITE ORDER OF LD. CIT (A)-4, JAIPUR DATED 27.03.2019 ARISING FROM THE PENALTY ORDERS PASSED UNDER SECTION 271(1)(C) OF THE IT ACT FOR THE ASSES SMENT YEARS 2010-11 TO 12-13 RESPECTIVELY. THE REVENUE HAS RAISED COMMON GROUND S EXCEPT THE QUANTUM OF PENALTY DELETED BY THE LD. CIT (A) IN THESE APPEALS . THE GROUNDS RAISED FOR THE ASSESSMENT YEAR 2010-11 ARE AS UNDER :- 1. WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE LD IT (A), WAS RIGHT IN DELETING THE PENALTY OF RS. 53,78 ,285/- IMPOSED U/S 271(1)(C) OF THE ACT IGNORING THE FACT THAT THE ASSESSEE HIMSELF DECLARED ADDITIONAL INCOME IN THE ROI FILED U/S 153A OF THE ACT AND THE ASSESSEE HAS DULY UNDERSTOOD AS TO WHAT WAS 2 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. THE PURPORT AND IMPORT OF THE NOTICE AND FURNISHED HIS REPLY BEFORE AO ON THE CHARGE OF CONCEALMENT OF INCOME. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT (A) IS JUSTIFIED IN HOLDING THAT THE PENALTY IM POSED BY THE AO IS NOT SUSTAINABLE BECAUSE THE ORDER PASSED U/S 143(3) R.W.S. 153A DOES NOT SPECIFY UNDER WHICH LIMB THE P ENALTY IS INITIATED. NOR DOES NOTICE U/S 274 DO SO. THE APPELLANT CRAVE, LEAVE OR RESERVING THE RIGHT T O AMEND MODIFY, ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. THE BRIEF FACTS LEADING TO THE CONTROVERSY ARE T HAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FINANCING AND IS A DIRECTOR IN M/S. SHUBHDEEP FINANCE CO. PVT. LTD. AND M/S. PRAKASH DEEP FINANCE CO. LTD. A SEARCH AN D SEIZURE OPERATION WAS CARRIED OUT UNDER SECTION 132 OF THE IT ACT IN THE CASE OF THE ASSESSEE AS WELL AS GROUP CONCERN ON 31 ST JULY, 2012. DURING THE COURSE OF SEARCH AND SEIZUR E ACTION CERTAIN DOCUMENTS WERE FOUND REVEALING THE NATURE OF FINANC E ACTIVITIES CARRIED OUT BY THE ASSESSEE KNOWN AS 100 DAYS FINANCING SCHEME. IN TH E STATEMENT RECORDED UNDER SECTION 132(4) OF THE IT ACT, THE ASSESSEE SURRENDE RED AN INCOME OF RS. 10 CRORES WHICH WAS SPREAD OVER TO VARIOUS ASSESSMENT YEARS A ND OFFERED TO TAX IN THE RETURNS OF INCOME FILED IN RESPONSE TO NOTICES ISSUED UNDER SECTION 153A OF THE IT ACT. THE AO WHILE COMPLETING THE ASSESSMENT UNDER SECTION 14 3(3) READ WITH SECTION 153A OF THE ACT MADE THE ADDITIONS TO THE TOTAL INCOME DECL ARED BY THE ASSESSEE ON ACCOUNT OF UNDISCLOSED INTEREST INCOME, ON ACCOUNT OF DISAL LOWANCE OF EXPENSES AND ON ACCOUNT OF DEPOSITS MADE IN THE BANK ACCOUNTS OF TH E EMPLOYEES OF THE ASSESSEE. THE DETAILS OF THE INCOME DECLARED BY THE ASSESSEE AND ADDITIONS MADE BY THE AO FOR THE ASSESSMENT YEARS 2010-11 TO 2012-13 ARE AS UNDER :- 3 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. A.Y. INCOME DECLARED ADDITION MADE BY THE AO 2010-11 1,30,94,390 26,84,725 + 29,75,859 2011-12 3,20,29,420 82,59,551 2012-13 3,00,06,860 69,54,913 ON FURTHER APPEAL IN THE QUANTUM PROCEEDINGS, THE L D. CIT (A) PARTLY DELETED THE ADDITIONS MADE BY THE AO AND CONSEQUENTLY THE MATTE R WAS CARRIED TO THIS TRIBUNAL IN CROSS APPEALS BY THE REVENUE AS WELL AS BY THE A SSESSEE. THIS TRIBUNAL VIDE COMPOSITE ORDER DATED 30 TH JULY, 2018 IN ITA NOS. 922, 923 & 924/JP/2016 AND ITA NOS. 935, 936 & 937/JP/2016 DELETED THE ADDITIONS M ADE BY THE AO AND SUSTAINED BY THE LD. CIT (A) ON ACCOUNT OF UNDISCLOSED INTERE ST INCOME AS WELL AS ON ACCOUNT OF DEPOSITS MADE IN THE BANK ACCOUNTS OF THE EMPLOYEES OF THE ASSESSEE WHEREAS THE ADDITIONS MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE WAS SET ASIDE TO THE RECORD OF THE AO FOR FRESH ADJUDICATION. IN THE MEANTIME, THE AO INITIATED THE PROCEEDINGS FOR LEVY OF PENALTY UNDER SECTION 271(1 )(C) AND LEVIED THE PENALTY OF RS. 53,78,285/-, RS. 1,31,42,199/- AND RS. 1,20,43,429/ - FOR THE ASSESSMENT YEARS 2010-11, 11-12 AND 12-13 RESPECTIVELY. THE ASSESSE E CHALLENGED THE LEVY OF PENALTY BEFORE THE LD. CIT (A) AND RAISED A GROUND OF VALID ITY OF INITIATION OF PENALTY AS THE AO HAS NOT SPECIFIED THE DEFAULT AGAINST WHICH THE PENALTY PROCEEDINGS WERE INITIATED BY THE AO. THE LD. CIT (A) DELETED THE P ENALTY LEVIED BY THE AO FOR ALL THESE YEARS ON THIS LEGAL ISSUE OF VALIDITY OF INIT IATION OF PENALTY PROCEEDINGS. AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE REVE NUE HAS FILED THESE APPEALS. 4 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. 3. BEFORE US, THE LD. D/R HAS SUBMITTED THAT THE UN DISCLOSED INCOME SURRENDERED BY THE ASSESSEE WAS BASED ON THE INCRIMINATING MATE RIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION AND FURTHER THE AO HAS ALSO MADE THE ADDITIONS DURING THE ASSESSMENT PROCEEDINGS BASED ON THE SEIZ URE MATERIAL ITSELF. THEREFORE, THE ISSUE OF VALIDITY OF INITIATION OF PROCEEDINGS UNDER SECTION 271(1)(C) DOES NOT ARISE WHEN THE ASSESSEE HIMSELF HAS SURRENDERED THE INCOME BEING UNDISCLOSED INCOME. THE LD. D/R HAS FURTHER CONTENDED THAT THE LD. CIT (A) HAS ADMITTED AN ADDITIONAL GROUND REGARDING VALIDITY OF INITIATION OF PENALTY PROCEEDINGS WITHOUT GIVING AN OPPORTUNITY OF HEARING TO THE AO. SINCE THE LD. CIT (A) HAS NOT ADJUDICATED THE MATTER ON MERITS BUT DELETED THE PE NALTY ONLY ON THE LEGAL ISSUE AND THAT TOO WITHOUT GIVING AN OPPORTUNITY TO THE AO, T HEREFORE, THERE IS A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND RULE 46A OF THE I T RULES. THUS THE LD. CIT/DR HAS CONTENDED THAT THE MATTER MAY BE REMANDED TO THE RE CORD OF THE LD. CIT (A) TO DECIDE THE SAME AFRESH AFTER GRANTING AN OPPORTUNIT Y OF HEARING TO THE AO. THE LD. D/R HAS FURTHER CONTENDED THAT EVEN OTHERWISE WHEN THE ASSESSEE HAS NOT RAISED THIS ISSUE BEFORE THE AO, THEN THE SAME CANNOT BE R AISED BEFORE THE LD. CIT (A). IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE D ECISION OF DELHI BENCHES OF THE TRIBUNAL IN CASE OF VIJAY AGGARWAL VS. DCIT, 109 TA XMANN.COM 175 (DELHI TRIB.) AS WELL AS THE DECISION OF HONBLE MADRAS HIGH COURT I N CASE OF SUNDARAM FINANCE LTD. VS. ACIT, 403 ITR 407 (MADRAS). THUS THE LD. D/R H AS SUBMITTED THAT THE DELHI BENCHES OF THE TRIBUNAL IN CASE OF VIJAY AGGARWAL V S. DCIT (SUPRA) AFTER FOLLOWING THE DECISION OF HONBLE MADRAS HIGH COURT IN CASE O F SUNDARAM FINANCE LTD. (SUPRA) HAS HELD THAT THE QUESTION WHETHER CORRECT LIMB HAS BEEN APPLIED IS A QUESTION OF FACT AND NOT A QUESTION OF LAW AND, THEREFORE, THE SAID QUESTION CANNOT BE RAISED 5 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. FIRST TIME BEFORE THE APPELLATE AUTHORITY. THE LD. D/R HAS THEN RELIED UPON THE DECISION DATED 22 ND MAY, 2019 OF CHENNAI BENCHES OF THE TRIBUNAL IN CA SE OF ITO VS. SHRI RAJAN KALIMUTHU IN ITA NO. 2900/CHNY/2018 AND SUBMITTED THAT THE TRIBUNAL HAS DECIDED THE ISSUE OF VALIDITY OF INITIATION OF PENALTY PROCEEDINGS IN FAVOUR OF THE REVENUE AFTER CONSIDERING THE DECISION OF HONBLE K ARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KAR.). THUS RELYING UPON THE ABOVE SAID DECISION, THE LD. D/R HAS CONTE NDED THAT ONCE THE AO HAS ISSUED THE SHOW CAUSE NOTICE TO THE ASSESSEE AND TH E ASSESSEE HAS DULY RESPONDED TO THE SHOW CAUSE NOTICE, THEN THERE IS NO VIOLATIO N OF PRINCIPLES OF NATURAL JUSTICE SO FAR AS THE OPPORTUNITY OF HEARING WAS GIVEN TO THE ASSESSEE. THE ASSESSEE WAS VERY MUCH AWARE AND KNEW ABOUT THE DEFAULT AS THE ENTIRE ADDITION AND DISCLOSURE OF INCOME IS BASED ON THE SEARCH AND SEIZURE ACTION UN DER SECTION 132 OF THE ACT. THEREFORE, IT CANNOT BE A CASE OF ILLEGALITY IN THE SHOW CAUSE NOTICE ISSUED BY THE AO. AS REGARDS THE MERITS OF THE CASE, THE LD. D/R HAS SUBMITTED THAT SINCE IT IS A CASE OF SEARCH AND SEIZURE ACTION CARRIED OUT UNDER SECTION 132 OF THE ACT, CONSEQUENTLY THE EXPLANATION 5A TO SECTION 271(1)(C ) IS APPLICABLE IN THE CASE OF THE ASSESSEE. THE AO HAS APPLIED THE EXPLANATION 5A IN THE CASE OF THE ASSESSEE. HE HAS RELIED UPON THE PENALTY ORDER PASSED UNDER SECT ION 271(1)(C) BY THE AO. 4. ON THE OTHER HAND, THE LD. A/R OF THE ASSESSEE H AS SUBMITTED THAT THE AO HAS ISSUED IDENTICAL SHOW CAUSE NOTICES DATED 13.03.201 5 WHICH ARE VERY VAGUE AND SHOWING A NUMBER OF ALLEGED DEFAULTS FOR NOT FURNIS HING RETURN OF INCOME, NOT COMPLYING WITH THE NOTICE ISSUED UNDER SECTION 22(4 )/23(2), 142(1)/143(2) OF THE ACT AS WELL AS THE CONCEALMENT OF PARTICULARS OF IN COME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THUS THE AO HAS ISSUED SHOW CAUSE NOTICE UNDER SECTION 274 6 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. READ WITH SECTION 271 OF THE IT ACT FOR VARIOUS DEF AULTS WITHOUT STRIKING OFF THE IRRELEVANT PART OF THE SAID NOTICE. THUS THE AO WA S NOT SURE ABOUT THE CHARGES FOR WHICH THE PENALTY PROCEEDINGS WERE PROPOSED TO BE I NITIATED. HE HAS FURTHER CONTENDED THAT NEITHER IN THE SHOW CAUSE NOTICE THE AO HAS SHOWN ABOUT THE CHARGES FOR LEVY OF PENALTY NOR IN THE PENALTY ORDE R PASSED UNDER SECTION 271(1)(C) THE AO HAS GIVEN A DEFINITE FINDING. HE HAS REFER RED TO THE CONCLUDING PARA OF THE ORDER DATED 11.08.2017 PASSED UNDER SECTION 271(1)( C) OF THE ACT AND SUBMITTED THAT THE AO HAS AGAIN STATED THAT THE PENALTY IS LE VIED UNDER SECTION 271(1)(C) FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME TO THE EXTENT OF THE RESPECTIVE AMOUNTS FOR EACH YEAR. THEREFORE, THE AO HAS GIVEN AN IDENTICAL FINDING FOR ALL THESE YEARS WHEREBY IT IS CLEAR THAT THE AO WAS NOT SURE EVEN AT THE TIME OF PASSING THE PENALTY OR DER WHAT DEFAULT THE ASSESSEE HAS COMMITTED. THE LD. A/R HAS RELIED UPON THE DECISIO N OF HONBLE JURISDICTIONAL HIGH COURT DATED 6 TH DECEMBER, 2016 IN CASE OF SHEVETA CONSTRUCTION CO. PVT. LTD. VS. ITO IN DB IT APPEAL NO. 534/2008. HE HAS ALSO RELI ED UPON THE DECISION OF THIRD MEMBER DECISION OF AMRITSAR BENCH OF THE TRIBUNAL I N CASE OF HPCL MITTAL ENERGY LTD. VS. ACIT, 169 DTR 1 AND SUBMITTED THAT THE TRI BUNAL HAS HELD THAT EVEN IF THE AO WAS NOT SURE AT THE STAGE OF INITIATION OF PENAL TY PROCEEDINGS OF THE PRECISE CHARGE AS TO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE AO IS REQUIRED TO GIVE A DEFINITE FINDING AND A CONCLUSIVE DEFAULT AT THE TIME OF PASSING THE PENALTY ORDER. IN THE ABSENCE OF SUCH DEFINITE FINDING OF THE AO IN THE PENALTY ORDER, THE SAME IS INVALID. HENCE THE LD. A/R HAS SUBMITTED THAT THE INITIATION OF PENALTY PROCEEDING S ITSELF IS VERY VAGUE AND IN UNCERTAIN TERMS, EVEN DOES NOT SPECIFY UNDER WHICH SUB-SECTION OF SECTION 271 OF 7 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. THE IT ACT THE AO PROPOSED TO INITIATE THE PENALTY PROCEEDINGS. HENCE HE HAS SUPPORTED THE FINDINGS OF THE LD. CIT (A) ON THIS A CCOUNT. 4.1. AS REGARDS THE MERITS OF THE ISSUE, THE LD. A/ R HAS SUBMITTED THAT THE TRIBUNAL HAS ALREADY DELETED THE ADDITIONS MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INTEREST INCOME AS WELL AS DEPOSITS MADE IN THE BANK ACCOUNT S OF THE EMPLOYEES OF THE ASSESSEE, THEREFORE, THE PENALTY LEVIED BY THE AO I N RESPECT OF SUCH ADDITIONS IS NOT SUSTAINABLE. FURTHER, THE TRIBUNAL HAS ALSO SET A SIDE THE ISSUE OF DISALLOWANCE OF EXPENDITURE AND CONSEQUENTLY THE PENALTY LEVIED BY THE AO IN RESPECT OF THE SAID ADDITION WOULD ALSO NOT SURVIVE. 4.2. AS REGARDS THE PENALTY LEVIED AGAINST INCOME S URRENDERED BY THE ASSESSEE AND OFFERED TO TAX IN THE RETURNS OF INCOME, THE AO HAS APPLIED EXPLANATION 5A TO SECTION 271(1)(C). HOWEVER, IN THE ABSENCE OF MAKIN G ANY REFERENCE TO THE SEIZED MATERIAL DISCLOSING SUCH UNDISCLOSED INCOME, THE EX PLANATION 5A IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. ONCE THE EXPLANATION 5A TO SECTION 271(1)(C) IS NOT ATTRACTED TO THE CASE OF THE ASSESSEE, THEN THE PEN ALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED WHEN THE ASSESSEE HAS DECLARED THE SAID INCOME IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED UNDER SEC TION 153A OF THE IT ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THOUGH THE LD. CIT (A) HAS NOT DEALT WITH THE MERITS OF THE LEVY OF PENALTY BUT DELETED THE SAME ON THE GROUND OF VALIDITY OF I NITIATION OF PENALTY PROCEEDINGS AS THE AO HAS NOT SPECIFIED A DEFAULT/CHARGE IN THE SH OW CAUSE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT AND FU RTHER NO DEFINITE FINDING IS GIVEN 8 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. BY THE AO IN THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C). HOWEVER, SO FAR AS THE PENALTY LEVIED BY THE AO IN RESPECT OF THE ADDI TIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE, THIS TRIBUNAL IN THE QUANTUM APPEAL V IDE ORDER DATED 30 TH JULY, 2018 HAS EITHER DELETED THE SAID ADDITION MADE BY THE AO OR SET ASIDE THE SAME TO THE RECORD OF THE AO. THE RELEVANT FINDINGS OF THE TRI BUNAL IN ITA NOS. 922, 923 & 924/JP/2016 AND ITA NOS. 935, 936 & 937/JP/2016 AR E IN PARA 9, 22, 35 AND 39 ARE AS UNDER :- 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT PRIOR TO 19/6/2009, NO EVI DENCE WAS FOUND DURING THE SEARCH AND SEIZURE ACTION REGARDING ANY INCOME ON A CCOUNT OF INTEREST FROM 100 DAYS FINANCE SCHEME. THOUGH, THE ASSESSEE HAS NOT D ISPUTED THE FACT THAT THE ASSESSEE HAS BEEN CARRYING OUT THIS ACTIVITY SINCE LONG TIME AND ALSO SHOWN THE INCOME IN THE BOOKS OF ACCOUNT, HOWEVER, THE INCOME SHOWN IN THE BOOKS OF ACCOUNT IS NOT MATCHING WITH THE ENTRIES FOUND IN T HE SEIZED MATERIAL. THE ASSESSING OFFICER HAS ESTIMATED THE INCOME BY TAKING THE OPEN ING BALANCE OF CAPITAL AT RS. 8.00 CRORES AS ON 01/4/2006, WHICH WAS NOT DISPUTED BY T HE ASSESSEE. HOWEVER, THE ASSESSEE CONTENDED THAT DUE TO ILL HEALTH OF THE AS SESSEE DURING THE SAID PERIOD, AS THE ASSESSEE WAS SUFFERING FROM TUBERCULOSIS AND TH EREFORE, WAS NOT ABLE TO DO ANY BUSINESS ACTIVITY. HENCE, THE ASSESSEES CLAIM THAT THE INCOME DECLARED BY THE ASSESSEE OF RS. 13,36,237/- FOR THE YEAR UNDER CONS IDERATION IS JUSTIFIED AND EVEN THE TOTAL INCOME DECLARED BY THE ASSESSEE FOR THE THREE ASSESSMENT YEARS I.E. A.Y. 2007- 08 TO 2009-10 AND PART OF THE A.Y. 2010-11 UP TO 17 /6/2009 IS MATCHING WITH THE APPLICATION OF INCOME. THE ASSESSEE HAS PRODUCED FU ND FLOW STATEMENT SHOWING THE INCOME AND APPLICATION OF INCOME FOR ALL THESE YEAR S. THE LD. CIT(A) HAS ANNEXED THE FUND FLOW CHART TO THE IMPUGNED ORDER. IT IS PERTIN ENT TO NOTE THAT THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER U/S 143(3) READ WIT H SECTION 153A FOR THE A.Y. 2007- 08 TO 2009-10 ARE FALLING IN THE CATEGORY OF REASSE SSMENT AS ORIGINAL ASSESSMENT AS ON THE DATE OF SEARCH WERE NOT PENDING AND THEREFOR E, IN ABSENCE OF ABETMENT OF ASSESSMENTS THE ORDERS PASSED BY THE ASSESSING OFFI CER ARE IN THE NATURE OF REASSESSMENT PURSUANT TO THE SEARCH AND SEIZURE ACT ION U/S 132 OF THE ACT. IT IS 9 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. SETTLED PROPOSITION OF LAW THAT IN THE REASSESSMENT PROCEEDINGS U/S 153A OF THE ACT, THE ASSESSING OFFICER CAN ASSESSEE AN INCOME BASED ON SEIZED MATERIAL. IN ABSENCE OF ANY SEIZED MATERIAL REGARDING THE INTEREST INCOM E FOR THE YEAR UNDER CONSIDERATION, NO ADDITION CAN BE MADE ON ESTIMATED BASIS. IT IS AN UNDISPUTED FACT THAT THE MATERIAL FOUND DURING THE SEARCH AND SEIZU RE ACTION CONTAINS THE ENTRIES W.E.F. 19/6/2009 AND THEREFORE, PRIOR TO THE SAID P ERIOD, NO RECORD OR MATERIAL WAS FOUND TO DISCLOSE OR INDICATE ANY INCOME ON ACCOUNT OF INTEREST ON THE SCHEME. ONLY FACT WHICH CAN BE ASCERTAINED FROM THE DOCUMENTS IS THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS ACTIVITY OF FINANCE UNDER THE SCHEM E KNOWN AS 100 DAYS SCHEME. HOWEVER, IN ABSENCE OF ANY SEIZED MATERIAL, THE ASS ESSING OFFICER CANNOT MAKE AN ADDITION ON ESTIMATE BASIS. THE ASSESSEE ALREADY DE CLARED AND SURRENDERED AN AMOUNT OF RS. 10 CRORES ON ACCOUNT OF CASH, INVESTM ENT AND INTEREST INCOME. HENCE, HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAS ACCEPTED THE FACT THA T THE ASSESSEE WAS SUFFERING FROM THE AILMENT AND WAS UNDERGOING THE TREATMENT OF TUB ERCULOSIS DURING THE PERIOD UNDER CONSIDERATION THEN THE ESTIMATION MADE BY THE ASSESSING OFFICER AS WELL AS THE CONFIRMED BY THE LD. CIT(A) WITHOUT ANY PROPER AND REASONABLE BASIS AND PARTICULARLY IN THE REASSESSMENT PROCEEDINGS U/S 15 3A IS NOT PERMITTED. EVEN THE ASSESSING OFFICER HAS NOT WORKED OUT THE INCOME ON BASIS OF THE FUNDS AVAILABLE WITH THE ASSESSEE AND EMPLOYED IN THE BUSINESS ACTIVITY BY CONSIDERING THE CORRESPONDING APPLICATION OF INCOME WHICH WAS FOUND DURING THE CO URSE OF SEARCH AND SEIZURE ACTION AS WELL AS RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFORE, WHEN THE ASSESSING OFFICER HAS NOT FOUND ANY SIGNIFICANT DISCREPANCY IN THE INCOME OFFERED BY THE ASSESSEE AND CORRESPONDING APPLICATION OF IN COME THEN THERE IS NO REASON FOR NOT ACCEPTING THE INCOME OFFERED BY THE ASSESSEE. A CCORDINGLY, IN FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ADDITION WAS MAD E BY THE ASSESSING OFFICER PURELY ON AD HOC ESTIMATION AND WITHOUT ANY TANGIBL E MATERIAL, THE SAME IS NOT SUSTAINABLE AND CONSEQUENTLY IS LIABLE TO BE DELETE D. HENCE WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) ON THIS ACCOUNT. ACCORDINGLY, GROUND NO. 1 OF THE ASSESSEES APPEAL IS ALLOWED AND GROUND NO. 1 OF THE REVENUES APPEAL IS DISMISSED. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WE LL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 13,26,600/- ON ACCOUNT OF CASH DEPOSITS IN THE BANK ACCOUNT OF THREE PERSONS NAMELY SHRI RAJENDRA JAIN, SHRI 10 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. ASHOK SHARMA AND SHRI MAHAVEER PRASAD SHARMA. THE A SSESSING OFFICER TREATED THE DEPOSITS MADE IN THE BANK ACCOUNTS OF THESE PERSONS AS UNDISCLOSED INCOME OF THE ASSESSEE ON THE BASIS OF SIGNED CHEQUES OF THESE PE RSONS WERE FOUND DURING THE SEARCH AND SEIZURE ACTION AT THE PLACE OF THE ASSES SEE. THOUGH, THE SIGNED CHEQUE BOOK FOUND WITH THE ASSESSEE CAN BE A GROUND FOR FU RTHER INVESTIGATION AND INQUIRY REGARDING ANY UNDISCLOSED INCOME OF THE ASSESSEE BY USING THE ACCOUNTS OF THESE PERSONS, HOWEVER, THE CHEQUE BOOK ITSELF CANNOT BE CONSIDERED AS AN EVIDENCE FOR UNDISCLOSED INCOME. THE ASSESSING OFFICER HAS PICKE D UP THE ENTRIES IN THE BANK ACCOUNTS OF THESE PERSONS WHERE THE CASH WAS DEPOSI TED. ALL OTHER ENTRIES IN THESE BANK ACCOUNTS WERE ACCEPTED BY THE ASSESSING OFFICE R AS CARRIED OUT BY THESE PERSONS AND NOT BY THE ASSESSEE, THEREFORE, IT IS N OT A CASE OF THE ASSESSING OFFICER THAT THESE ACCOUNTS WERE FULLY OPERATED BY THE ASSE SSEE. THE ASSESSEE HAS CONTENDED THAT THE CHEQUE BOOKS WERE TAKEN FROM THE SE PERSONS TO PROTECT THE ASSESSEES INTEREST AS THESE PERSONS WERE WORKING W ITH THE ASSESSEE AND HANDLING THE CASH AND THEREFORE, IN ORDER TO PROTECT ANY LOS S DUE TO MISAPPROPRIATION OF FUND BY THESE PERSONS, THE ASSESSEE HAS TAKEN SIGNED CHE QUES OF THESE PERSONS. WE FURTHER NOTE THAT THE ASSESSEE PRODUCED RETURN OF I NCOME OF ALL THESE THREE PERSONS WHEREIN THE INCOMES WERE DECLARED FOR THE A.Y. 2007 -08 AND 2008-09. THE LD. CIT(A) WHILE REJECTING THE CONTENTION OF THE ASSESSEE HAS OBSERVED THAT THE INCOME DECLARED BY THESE PERSONS IS ONLY EQUAL TO THE AMOU NT DEPOSIT IN THE BANK AND THEREFORE, IT CANNOT BE ACCEPTED THAT THOSE DEPOSIT S WERE MADE FROM THE DECLARED INCOME OF THESE PERSONS AS THERE MUST BE SOME HOUSE HOLD EXPENSES BY THESE PERSONS. THUS, THE EXPLANATION AND SUPPORTING EVIDE NCE PRODUCED BY THE ASSESSEE WAS NOT ACCEPTED BY THE AUTHORITIES BELOW ON THE GR OUND THAT THE INCOME DECLARED BY THESE PERSONS IN THEIR RETURN OF INCOME IS ONLY MATCHING WITH THE DEPOSITS AND THEREFORE, THE ENTIRE SOURCE OF DEPOSIT IS NOT EXPL AINED. IT IS PERTINENT TO NOTE THAT THE ASSESSMENT UNDER CONSIDERATION IS REASSESSMENT U/S 153A OF THE ACT AND THEREFORE, THE ADDITION OF INCOME CAN BE MADE ONLY ON THE BASIS OF SEIZED MATERIAL. THE CHEQUE BOOKS FOUND DURING THE SEARCH AND SEIZUR E ACTION IS NOT AN EVIDENCE TO DISCLOSE ANY UNDISCLOSED INCOME OF THE ASSESSEE IN THE FORM OF DEPOSITS OF CASH IN THE BANK ACCOUNTS OF THESE PERSONS. ONLY INFERENCE WHICH CAN BE DRAWN FROM THE AVAILABILITY OF CHEQUE BOOKS WITH THE ASSESSEE IS T HAT THE ASSESSEE MIGHT HAVE USED THE BANK ACCOUNTS OF THESE PERSONS. HOWEVER, IN ABS ENCE OF ANY DOCUMENTARY EVIDENCE OF OPERATING OF THE BANK ACCOUNTS BY THE A SSESSEE, THE MERE AVAILABILITY OF 11 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. CHEQUE BOOKS WITH THE ASSESSEE CANNOT BE AN EVIDENC E FOR MAKING ADDITION OF THE CASH DEPOSITS IN THE ACCOUNTS OF THESE PERSONS SPEC IFICALLY WHEN ALL THESE PERSONS ARE REGULARLY ASSESSED TO INCOME TAX. THE ASSESSEE FILED THE RETURN OF INCOME IN SUPPORT OF EXPLANATION. FURTHER THE STATEMENT OF ON E OF THESE PERSONS NAMELY SHRI MAHAVEER PRASAD SHARMA WAS RECORDED BY THE SEARCH P ARTY U/S 132(4) OF THE ACT AND NO SUCH QUESTION WAS ASKED FROM THE SAID PERSON REGARDING THE DEPOSITS IN THE BANK ACCOUNT. THEREFORE, WHEN THE ASSESSEE HAS DISC HARGED ITS ONUS BY PRODUCING THE RETURN OF INCOME OF THESE PERSONS WHEREIN THE D ECLARED INCOME WAS SUFFICIENT TO COVER THE DEPOSITS MADE IN THE BANK ACCOUNTS, THEN IN THE ABSENCE OF ANY DIRECT EVIDENCE OR TANGIBLE MATERIAL TO DISCLOSE THE FACT THAT THE CASH DEPOSIT IN THE BANK ACCOUNTS OF THESE PERSONS BELONGS TO THE ASSESSEE, THE ADDITION MADE BY A.O. IS NOT SUSTAINABLE. THE SAID DEPOSIT IS SUBJECT MATTER OF ASSESSMENT IN THE HANDS OF THESE PERSONS, ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCE S OF THE CASE, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ACCO UNT. 35. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON THE RECORD. THERE IS NO DISPUTE THAT T HE AMOUNT OF EXPENDITURE AS CLAIMED BY THE ASSESSEE AGAINST THE UNDISCLOSED INC OME FOR THESE THREE ASSESSMENT YEARS I.E. 2010-11 TO 2012-13 WERE FOUND RECORDED I N THE SEIZED MATERIAL. THE UNDISCLOSED INCOME OFFERED BY THE ASSESSEE IS ALSO BASED ON THE SAME SEIZED MATERIAL AND THEREFORE, ONCE THE INCOME AND EXPENDI TURE BOTH ARE RECORDED IN THE SAME MATERIAL, WHICH IS FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION THEN THE ENTIRE RECORD AND ENTRIES FOUND IN THE SEIZED MATERIAL HAS TO BE TAKEN INTO CONSIDERATION AND NOT A PART OF THE SEIZ ED MATERIAL IS ACCEPTED AND PART CAN BE REJECTED. THUS, THE SEIZED MATERIAL CANNOT B E CONSIDERED OR ACCEPTED IN PIECEMEAL BUT THE EVIDENCE WHICH IS THE BASIS OF UN DISCLOSED INCOME HAS TO BE CONSIDERED AS A WHOLE. HOWEVER, THE QUESTION ARISES WHETHER THE EXPENSES FOUND RECORDED IN THE SEIZED MATERIAL IS ALREADY TAKEN IN TO ACCOUNT AS PART OF THE EXPENSES RECORDED IN THE BOOKS OF ACCOUNT OR NOT. NEITHER TH E ASSESSING OFFICER NOR THE LD. CIT(A) HAS EXAMINED THE RELEVANT RECORD AND DETAILS TO FIND OUT THIS FACT THAT THE EXPENDITURE WHICH IS FOUND RECORDED IN THE SEIZED M ATERIAL IS ALSO PART OF THE EXPENDITURE CLAIMED IN THE REGULAR BOOKS OF ACCOUNT . ON THE DIRECTION OF THE BENCH, THE ASSESSEE HAS FILED A COMPLETE AND COMPARATIVE D ETAILS OF ALL THE EXPENDITURE FOUND RECORDED IN THE BOOKS OF ACCOUNT AS WELL AS T HE EXPENDITURE WHICH IS RECORDED IN THE SEIZED MATERIAL. THE YEAR WISE COMPARATIVE S TATEMENT SHOWS THAT THE SOME OF 12 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. THE EXPENDITURE FOUND RECORDED UNDER COMMON HEAD IN BOTH I.E. THE BOOKS OF ACCOUNT AS WELL AS SEIZED MATERIAL. HOWEVER, MANY I TEMS WHICH WERE RECORDED IN THE SEIZED MATERIAL ARE NOT CLAIMED IN REGULAR BOOKS OF ACCOUNT. THEREFORE, IT IS EVIDENT FROM THE COMPARATIVE DETAILS OF THE EXPENDITURE THA T THE ENTIRE EXPENDITURE WHICH IS RECORDED IN THE SEIZED MATERIAL HAS NOT BEEN CLAIME D IN THE BOOKS OF ACCOUNT. WE FIND THAT ABOUT 50% OF THE ITEMS WHICH ARE RECORDED IN THE SEIZED MATERIALS ARE NOT RECORDED IN THE BOOKS OF ACCOUNT. HOWEVER, THE REMA INING ITEMS WHICH ARE RECORDED IN BOTH SEIZED MATERIAL AS WELL AS BOOKS OF ACCOUNT ARE UNDER COMMON HEADS, THEREFORE IT REQUIRES THE VERIFICATION AND EXAMINAT ION OF FURTHER DETAILS OF EACH AND EVERY SUB-HEAD OF EXPENDITURE UNDER A PARTICULAR HE AD. HENCE, WE FIND THAT THE DISALLOWANCE OF THE ENTIRE CLAIM OF THE EXPENDITURE BY THE AUTHORITIES BELOW IS CONTRARY TO THE RECORD AND THEREFORE UNCALLED FOR, THOUGH THE POSSIBILITY OF SOME OF THE EXPENDITURE FOUND IN THE SEIZED MATERIAL MAY AL SO BE CLAIMED IN THE REGULAR BOOKS OF ACCOUNT CANNOT BE RULED OUT. THEREFORE, TO THE EXTENT OF THE EXPENDITURE, WHICH IS NOT CLAIMED IN THE BOOKS OF ACCOUNT AND FO UND RECORDED IN THE SEIZED MATERIAL, THE SAME IS AN ALLOWABLE CLAIM AND CANNOT BE DENIED. REMAINING CLAIM OF EXPENDITURE WHICH IS RECORDED UNDER COMMON HEADS IS REQUIRED FURTHER EXAMINATION AND VERIFICATION. ACCORDINGLY IN THE FACTS AND CIRC UMSTANCES, WE SET ASIDE THIS ISSUE TO THE RECORD OF ASSESSING OFFICER FOR CONDUCTING A PROPER ENQUIRY OF THE DETAILS OF THE EXPENDITURE AND TO FIND OUT WHETHER ANY PART OF THE EXPENDITURE WHICH IS FOUND IN THE SEIZED MATERIAL HAS BEEN CLAIMED IN THE BOOK S OF ACCOUNT AND THEN ONLY TO THAT EXTENT THE CLAIM OF THE ASSESSEE CAN BE DISALL OWED. NEEDLESS TO SAY THAT THE ASSESSEE TO BE GIVEN AN APPROPRIATE OPPORTUNITY OF HEARING BEFORE DECIDING THIS ISSUE. 39. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WE LL AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE SALE BILLS OF JEWELLERY WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE ACTION AND SEIZED AS A NNEXURE-AS-39, THEREFORE, IT IS A SEIZED MATERIAL AND CANNOT BE HELD AS A BOGUS CLAIM OR DOCUMENT MANIPULATED OR MANUFACTURED BY THE ASSESSEE BEING AFTERTHOUGHT COO KED STORY. THEREFORE, WHEN THE SALE OF JEWELLERY IS FOUND AS PER THE BILLS SEI ZED DURING THE SEARCH THEN THE TRANSACTION OF SALE CANNOT BE DISPUTED BY THE DEPAR TMENT. THE SALE PROCEEDS OF THE JEWELLERY WAS ALSO UNDISPUTEDLY RECEIVED BY CHEQUE AND CREDITED IN THE BANK ACCOUNT OF MOTHER IN LAW OF THE ASSESSEE. THE ONLY DOUBT WHICH IS RAISED BY THE ASSESSING OFFICER IS THAT IT IS BEYOND HUMAN PROBAB ILITY THAT SHE WOULD NOT GIVE 13 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. ANYTHING TO OTHER DAUGHTERS AND SON AND HAD GIVEN E NTIRE HER BELONGINGS TO THE ASSESSEE. EVEN IF, THIS APPREHENSION OF THE ASSESSI NG OFFICER IS TURNED OUT TO BE CORRECT THE ISSUE IS ONLY WHETHER THE ASSESSEE HAS MISCHIEVOUSLY TAKEN THE ENTIRE AMOUNT OF HIS MOTHER IN LAW FROM THE BANK ACCOUNT B Y USING THE SIGNED CHEQUE BOOK WITH THE ASSESSEE. THUS, THIS ITSELF WILL NOT CHANG E THE CHARACTER OF INCOME AND SOURCE OF THAT AMOUNT WHICH WAS FOUND CREDITED IN T HE BANK ACCOUNT OF MOTHER IN LAW AS A SALE PROCEEDS OF JEWELLERY. THE MOTHER IN LAW OF THE ASSESSEE ALREADY EXPIRED ON 18/8/2009 AND EVEN IF SHE HAD NEVER FILE D RETURN OF INCOME OR WEALTH TAX, THE SAME WOULD NOT IMPUTE THE TAX LIABILITY IN THE HANDS OF THE ASSESSEE WHEN THIS IS NOT THE INCOME OF THE ASSESSEE BUT ONLY THE AMOUNT WHICH WAS TRANSFERRED FROM THE BANK ACCOUNT OF THE MOTHER IN LAW TO THE ACCOUNT OF THE ASSESSEE. THE NONSHARING OF THIS AMOUNT WITH OTHER DAUGHTERS AND SON CAN BE A F AMILY DISPUTE AND CAN BE SETTLED MUTUALLY BETWEEN THEMSELVES AND HAS NO BEARING ON T HE TAXABILITY OF THE INCOME IN THE HANDS OF THE RECIPIENTS. THEREFORE, ONCE THE AM OUNT WAS FOUND DULY CREDITED IN THE BANK ACCOUNT OF SMT. SARASWATI DEVI SHARMA AND SUBSEQUENTLY IT WAS TRANSFERRED IN THE ACCOUNT OF THE ASSESSEE THEN THE TRANSACTION CANNOT BE DOUBTED. EVEN THE SOURCE OF CREDIT IN THE ACCOUNT OF MOTHER IN LAW IS FOUND DURING THE SEARCH AND SEIZURE ACTION. THE ASSESSEE EXPLAINED THAT DURING THE LAST DAYS OF HER LIFE, SHE WAS RESIDING WITH THE ASSESSEE AND HER DAUGHTER SMT. KA LAWATI SHARMA, WIFE OF ASSESSEE AND THUS IT IS NATURAL THAT ALL HER BELONGINGS AND VALUABLES WOULD BE AT THE PLACE OF ASSESSEE. ACCORDINGLY, IN VIEW OF THE ABOVE FACTS A ND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT WHEN THE SEIZED MATERIAL ITSELF SHOWS THE SOURCE OF AMOUNT DEPOSITED IN THE BANK ACCOUNT OF SMT. SAR ASWATI DEVI SHARMA BY CHEQUE AND SUBSEQUENT TRANSFER FROM HER ACCOUNT TO THE ACC OUNT OF ASSESSEE, THE SAME CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSE SSEE. ACCORDINLGY, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ACCO UNT. IN VIEW OF THE ORDER OF THE TRIBUNAL IN QUANTUM APP EALS, THE ADDITIONS MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INTEREST INCOME AND DE POSITS MADE IN THE BANK ACCOUNT OF THE EMPLOYEES STAND DELETED. THEREFORE, THE PENALTY LEVIED BY THE AO IN RESPECT OF SUCH ADDITIONS IS NOT SUSTAINABLE AND LI ABLE TO BE DELETED. 14 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. 5.1. AS REGARDS THE ADDITION MADE BY THE AO ON ACCO UNT OF DISALLOWANCE OF CERTAIN EXPENSES, SINCE THIS ISSUE HAS BEEN SET ASIDE BY TH E TRIBUNAL TO THE RECORD OF THE AO, THEREFORE THE ADDITION ITSELF IS NO MORE IN EXI STENCE AND CONSEQUENTLY THE PENALTY LEVIED UNDER SECTION 271(1)(C) IN RESPECT O F SUCH ADDITION WOULD NOT SURVIVE. THEREFORE, THE PENALTY LEVIED BY THE AO AGAINST THE ADDITIONS MADE TO THE TOTAL INCOME IS OTHERWISE LIABLE TO BE DELETED. 5.2. NOW WE TAKE UP THE ISSUE OF VALIDITY OF INITIA TION OF PROCEEDINGS FOR LEVY OF PENALTY. AT THE OUTSET, WE NOTE THAT THE AO HAS IS SUED SHOW CAUSE NOTICES DATED 13.03.2015 FOR THESE THREE YEARS WHICH ARE IDENTICA L IN NATURE AND REPRODUCED AS UNDER :- NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME-TAX ACT, 1961. PIN AGMPS 2776 H OFFICE OF THE ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, JAIPUR. DATE : 13-03-2015. TO, SHRI PRAKASH CHAND SHARMA C-42, GOKUL PATH, VAISHALI NAGAR, JAIPUR. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2010-11 IT APPEARS TO ME THAT YOU : - *HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTI CE GIVEN UNDER SECTION 22(1)/22(2)/34 OF THE INDIAN INCOME-TAX ACT , 1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 139(1) O R BY A NOTICE GIVEN UNDER SECTION 139(2)/148/143(3) OF THE INCOME-TAX A CT, 1961, NO._____ DATED _____ OR HAVE WITHOUT REASONABLE CAU SE FAILED TO FURNISH IT WITHIN THE TIME ALLOWED AND TO THE MANNE R REQUIRED BY THE SAID SECTION 139(1) OR SUCH NOTICE. *HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WIT H A NOTICE UNDER SECTION 22(4)/23(2) OF THE INDIAN INCOME-TAX ACT, 1922 OR UNDER 15 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. SECTION 142(1)/143(2) OF THE INCOME-TAX ACT, 1961 N O._____ DATED 06.06.2012. *HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR__ ____ FURNISHED INACCURATE PARTICULARS OR SUCH INCOME. PE NALTY U/S 271(1)(C) INITIATE FOR UNDISCLOSED INCOME OF THE SPECIFIED PR EVIOUS YEAR. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 11. 00 AM ON 15-05-2015 AND SHOW CAUSE WHY AN ORDER IMPOSING PEN ALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271 OF THE INCOME- TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNI TY OF BEING HEARD IN PERSON OR THROUGH YOUR AUTHORIZED REPRESENTATIVE YO U MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271. SD/- (PRAVEEN KUMAR MITTAL) ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, JAIPUR. NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME-TAX ACT, 1961. PIN AGMPS 2776 H OFFICE OF THE ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, JAIPUR. DATE : 13-03-2015. TO, SHRI PRAKASH CHAND SHARMA C-42, GOKUL PATH, VAISHALI NAGAR, JAIPUR. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2011-12 IT APPEARS TO ME THAT YOU : - *HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTI CE GIVEN UNDER SECTION 22(1)/22(2)/34 OF THE INDIAN INCOME-TAX ACT , 1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 139(1) O R BY A NOTICE GIVEN UNDER SECTION 139(2)/148/143(3) OF THE INCOME-TAX A CT, 1961, NO._____ DATED _____ OR HAVE WITHOUT REASONABLE CAU SE FAILED TO FURNISH IT WITHIN THE TIME ALLOWED AND TO THE MANNE R REQUIRED BY THE SAID SECTION 139(1) OR SUCH NOTICE. *HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WIT H A NOTICE UNDER SECTION 22(4)/23(2) OF THE INDIAN INCOME-TAX ACT, 1922 OR UNDER 16 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. SECTION 142(1)/143(2) OF THE INCOME-TAX ACT, 1961 N O._____ DATED 06.06.2012. *HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR__ ____ FURNISHED INACCURATE PARTICULARS OR SUCH INCOME. PE NALTY U/S 271(1)(C) INITIATE FOR UNDISCLOSED INCOME OF THE SPECIFIED PR EVIOUS YEAR. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 11. 00 AM ON 15-05-2015 AND SHOW CAUSE WHY AN ORDER IMPOSING PEN ALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271 OF THE INCOME- TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNI TY OF BEING HEARD IN PERSON OR THROUGH YOUR AUTHORIZED REPRESENTATIVE YO U MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271. SD/- (PRAVEEN KUMAR MITTAL) ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, JAIPUR. NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME-TAX ACT, 1961. PIN AGMPS 2776 H OFFICE OF THE ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, JAIPUR. DATE : 13-03-2015. TO, SHRI PRAKASH CHAND SHARMA C-42, GOKUL PATH, VAISHALI NAGAR, JAIPUR. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2012-13 IT APPEARS TO ME THAT YOU : - *HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTI CE GIVEN UNDER SECTION 22(1)/22(2)/34 OF THE INDIAN INCOME-TAX ACT , 1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 139(1) O R BY A NOTICE GIVEN UNDER SECTION 139(2)/148/143(3) OF THE INCOME-TAX A CT, 1961, NO._____ DATED _____ OR HAVE WITHOUT REASONABLE CAU SE FAILED TO FURNISH IT WITHIN THE TIME ALLOWED AND TO THE MANNE R REQUIRED BY THE SAID SECTION 139(1) OR SUCH NOTICE. *HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WIT H A NOTICE UNDER SECTION 22(4)/23(2) OF THE INDIAN INCOME-TAX ACT, 1922 OR UNDER 17 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. SECTION 142(1)/143(2) OF THE INCOME-TAX ACT, 1961 N O._____ DATED 06.06.2012. *HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR__ ____ FURNISHED INACCURATE PARTICULARS OR SUCH INCOME. PE NALTY U/S 271(1)(C) INITIATE FOR UNDISCLOSED INCOME OF THE SPECIFIED PR EVIOUS YEAR. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 11. 00 AM ON 15-05-2015 AND SHOW CAUSE WHY AN ORDER IMPOSING PEN ALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271 OF THE INCOME- TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNI TY OF BEING HEARD IN PERSON OR THROUGH YOUR AUTHORIZED REPRESENTATIVE YO U MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271. SD/- (PRAVEEN KUMAR MITTAL) ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, JAIPUR. IN THE SAID SHOW CAUSE NOTICE THE AO HAS MENTIONED IN THE CAPTION AS NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCO ME-TAX ACT, 1961. FURTHER, IN THE BODY OF THE SAID NOTICE THE AO HAS ALLEGED VARIOUS DEFAULTS FOR NOT FILING THE RETURN OF INCOME, NOT COMPLYING THE NOTI CE ISSUED UNDER SECTION 22(4)/23(2), 142(1)/143(2) OF THE IT ACT AND THE CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. THE AO HAS ALSO GIVEN THE DATE OF THE NOTICES ISSUED UNDER SECTION 142(1) /143(2) AS 06.06.2012. IT IS MANIFEST FROM THESE SHOW CAUSE NOTICES THAT THIS DA TE OF 06.06.2012 HAS NO CONNECTION WITH THE ASSESSMENT PROCEEDINGS OF THE A SSESSEE WHEN NOTICE UNDER SECTION 153A ITSELF WAS ISSUED ON 10.03.2013. A BA RE READING OF THE SHOW CAUSE NOTICE CLEARLY SHOWS THAT IT WAS ISSUED BY THE AO W ITHOUT APPLICATION OF MIND AND EVEN WITHOUT STRIKING OFF THE IRRELEVANT PART OF SA ID SHOW CAUSE NOTICE. ALTHOUGH THE SHOW CAUSE NOTICE WAS NOT IN THE PRINTED PROFORMA B UT IT WAS TAKEN AS A PRINT OUT 18 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. SPECIFICALLY IN THE NAME OF THE ASSESSEE. THUS GIV ING THE PARTICULARS OF THE ASSESSEE ALONG WITH THE PAN OF THE ASSESSEE IN THE SHOW CAUS E NOTICE CLEARLY SHOWS THAT THIS NOTICE WAS SPECIFICALLY ISSUED TO THE ASSESSEE, HOW EVER, THE AO HAS GROSSLY FAILED TO EVEN INDICATE FOR WHAT DEFAULT THE SHOW CAUSE NOTIC E WAS ISSUED TO THE ASSESSEE. THEREFORE, THE SHOW CAUSE NOTICE ITSELF SUFFERS FRO M ILLEGALITY OF NOT SPECIFYING THE DEFAULT/CHARGES FOR WHICH THE PENALTY PROCEEDINGS W ERE PROPOSED TO BE INITIATED BY THE AO. ONCE THE AO HAS NOT INDICATED THE DEFAULT/ BREACH OF THE ASSESSEE AND THE INITIATION OF THE PROCEEDINGS UNDER WHICH OF THE SU B-SECTION OF SECTION 271 OF THE IT ACT, THEN IN OUR CONSIDERED VIEW THE SHOW CAUSE NOT ICE SUFFERS FROM PATENT ILLEGALITY AND NOT IRREGULARITY. WE FURTHER NOTE THAT EVEN IN THE PENALTY ORDER, THE AO HAS LEVIED THE PENALTY IN RESPECT OF THE AMOUNT SURREND ERED BY THE ASSESSEE AS WELL AS ADDITIONS MADE BY THE AO IN THE ASSESSMENT PROCEEDI NGS AND THEREBY CONCLUDED AS UNDER :- IN VIEW OF THE ABOVE, A PENALTY OF RS. 53,78,285/ - IS HEREBY LEVIED U/S 271(1)(C) OF THE I.T. ACT, 1961 FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME TO THE EXTENT OF RS. 1,58,23,140/-. THUS EVEN IN THE CONCLUDING PART THE AO WAS NOT SUR E ABOUT THE CHARGE AND DEFAULT OF THE ASSESSEE FOR WHICH THE PENALTY WAS LEVIED UN DER SECTION 271(1)(C) OF THE ACT. IN CASE OF SURRENDER OF THE INCOME, THERE CANNOT BE ANY UNCERTAINTY AND THE AO OUGHT TO HAVE GIVEN A SPECIFIC CHARGE FOR LEVY OF P ENALTY. SIMILARLY, WHEN THE AO HAS MADE THE ADDITIONS TO THE TOTAL INCOME OF THE A SSESSEE, THEN THE AO WAS UNDER OBLIGATION TO SPECIFY THE CHARGE AND MAKE THE ASSES SEE KNOWN FOR WHAT DEFAULT THE 19 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. PENALTY WAS TO BE LEVIED AND HAS BEEN LEVIED. THE AO HAS FAILED ON BOTH THE COUNTS AS NEITHER AT THE TIME OF INITIATION OF PENALTY PRO CEEDINGS NOR AT THE TIME OF PASSING THE PENALTY ORDER HAS SPECIFIED THE CHARGE. THE HO NBLE JURISDICTIONAL HIGH COURT IN CASE OF SHEVETA CONSTRUCTION CO. PVT. LTD. VS. ITO (SUPRA) WHILE CONSIDERING AN IDENTICAL ISSUE HAS HELD IN PARA 5 TO 10 AS UNDER : - 5. COUNSEL FOR THE APPELLANT RELIED UPON THE DECI SION OF ANDHRA PRADESH HIGH COURT IN CASE OF CHENNAKESAVA PHARMACE UTICALS VS. COMMISSIONER OF INCOME TAX REPORTED IN (2012) 3 49 ITR 196, WHEREIN IT HAS BEEN HELD AS UNDER :- IN RELIANCE PETRO PRODUCTS PVT. LTD.S CASE (1 SU PRA), THE SUPREME COURT ALSO HELD THAT IMPOSITION OF PENA LTY IS UNWARRANTED WHEN THERE IS NO FINDING IN THE ASSESSM ENT ORDER THAT DETAILS SUPPLIED BY THE ASSESSEE WERE FO UND TO BE FALSE. THIS INDICATES THAT THE VIEW TAKEN BY THE DELHI HIGH COURT IN RAM COMMERCIAL ENTERPRISES LTD.S CAS E (6 SUPRA) WHICH HAS BEEN APPROVED IN DILIP N. SHROFFS CASE (10 SUPRA) CONTINUES TO BE VALID AND THIS PART OF T HE JUDGMENT IN DILIP N. SHROFFS CASE (10 SUPRA) HAS N OT BEEN OVER RULED AND CONTINUES TO BE GOOD LAW. MOREO VER THE DECISION OF THE DELHI HIGH COURT IN RAM COMMERC IAL ENTERPRISES (6 SUPRA) WAS ALSO FOLLOWED BY THE SAME HIGH COURT IN COMMISSIONER OF INCOME TAX V. M.K. SHARMA (9SUPRA) AND SLP (C) NO. 17591 OF 2008 FILED AGAINS T THE SAID DECISION WAS DISMISSED BY THE SUPREME COURT ON 18.7.2008. APPLYING THE ABOVE PRINCIPLE THAT THE ASSESSING OFF ICER SHOULD RECORD IN THE ASSESSMENT ORDER HIS SATISFACT ION THAT THE ASSESSEE HAD EITHER CONCEALED THE INCOME O R FURNISHED INACCURATE PARTICULARS OF INCOME IN HIS R ETURN BEFORE IMPOSING PENALTY, WE NOTICED THAT IN THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER F OR THE ASSESSMENT YEAR 198283 (WHICH IS THE SUBJECT MATTER OF I.T.T.A. NO.29 OF 2000) AND FOR THE ASSESSMENT YEAR 198384 (WHICH IS SUBJECT MATTER OF I.T.T.A. NO. 33 OF 2000), NO SUCH SATISFACTION IS RECORDED. 20 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. 6. ANOTHER DECISION OF SUPREME COURT IN CASE OF DIL IP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX & ANR. (2007) 291 ITR 519 (SC) IT HAS BEEN HELD AS UNDER : IT IS OF SOME SIGNIFICANCE THAT IN THE STANDARD P ROFORMA USED BY THE ASSESSING OFFICER IN ISSUING A NOTICE D ESPITE THE FACT THAT THE SAME POSTULATES THAT INAPPROPRIAT E WORDS AND PARAGRAPHS WERE TO BE DELETED, BUT THE SA ME HAD NOT BEEN DONE. THUS, THE ASSESSING OFFICER HIMS ELF WAS NOT SURE AS TO WHETHER HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HE HAD FURNISHED INACCURATE PARTICULARS. EVEN BEFORE U S, THE LEARNED ADDITIONAL SOLICITOR GENERAL WHILE PLACING THE ORDER OF ASSESSMENT LAID EMPHASIS THAT HE HAD DEALT WITH BOTH THE SITUATIONS. THE IMPUGNED ORDER, THEREFORE, SUFFERS FROM NON- APPLICATION OF MIND. IT WAS ALSO BOUND TO COMPLY WI TH THE PRINCIPLES OF NATURAL JUSTICE. THE INCOME TAX OFFICER HAD MERELY HELD THAT THE ASSESSEE IS GUILTY OF FURNISHING OF INACCURATE PART ICULARS AND NOT OF CONCEALMENT OF INCOME; WHICH FINDING WAS ARRIVED AT ALSO BY THE COMMISSIONER OF INCOME TAX A ND THE INCOME TAX APPELLATE TRIBUNAL. IN THE FACTS AN D CIRCUMSTANCES OF THE CASE, THERE ARE ENOUGH MATERIA L TO SHOW THAT THE ACTION ON THE PART OF THE APPELLANT M AY NOT BE SAID TO BE SUCH WHICH WOULD ATTRACT THE PEAL PRO VISION UNDER S. 271(1)(C). FOR THE REASONS AFOREMENTIONED, THE IMPUGNED JUDGMENT CANNOT BE SUSTAINED. 7. HE CONTENDED THAT WHILE CONCLUDING THE ASSESSMEN T ORDER THE OFFICER MUST BE CLEAR WHETHER IT IS THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE DETAIL. HE CANNOT HAVE BO TH THE THINGS. 7.1. HOWEVER, MR. SINGHI APPEARING FOR THE DEPARTME NT SUBMITS THAT A PERUSAL OF THE ORDER OF PENALTY MAKES IT AMPLY CL EAR THAT BOTH THE THINGS ARE FULFILLED. IN THAT VIEW OF THE MATTE R THE VIEW TAKEN BY THE TRIBUNAL IS REQUIRED TO BE ACCEPTED. 8. WE HAVE HEARD MR. PRAKUL KHURANA AND MR. ANURO OP SINGHI. 9. TAKING INTO CONSIDERATION THE DECISION OF THE AN DHRA PRADESH HIGH COURT WHICH VIRTUALLY CONSIDERED THE SUBSEQUEN T LAW AND THE LAW WHICH WAS PREVAILING ON THE DATE THE DECISI ON WAS 21 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. RENDERED ON 27.08.2012. IN VIEW OF THE OBSERVATIONS MADE IN THE SAID JUDGMENT, WE ARE OF THE OPINION THAT THE C ONTENTION RAISED BY THE APPELLANT IS REQUIRED TO BE ACCEPTED AND IN THE FINDING OF ASSESSING OFFICER IN THE ASSESSMENT ORDE R IT IS HELD THAT THE AO, HAS TO GIVE A NOTICE AS TO WHETHER HE PROPOSES TO LEVY PENALTY FOR CONCEALMENT OF INCOME OR FURNISHIN G INACCURATE PARTICULARS. HE CANNOT HAVE BOTH THE CONDITIONS AN D 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. THUS IT IS MANDATORY REQUIREMENT THAT THE AO HAS TO SPECIFY THE DEFAULT/CHARGE WHETHER HE PROPOSE TO INITIATE THE PROCEEDINGS FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. EVEN I N THE STANDARD PROFORMA USED BY THE AO, THE AO IS REQUIRED TO DELETE THE IRRELEVANT AND INAPPROPRIATE WORD IN THE PARAGRAPH. SIMILARLY, THE THIRD MEMBER DECISION OF AMRITSAR BENCH OF THE TRIBUNAL IN CASE OF HPCL MITTAL ENERGY LTD. VS. ACIT (SUPRA) HA S CONSIDERED THIS ISSUE AND GIVEN THE CONCLUDING FINDING IN PARA 21 AS UNDER :- 21. APART FROM THE ABOVE THREE SITUATIONS IN WHICH THE AO HAS CLEAR-CUT SATISFACTION, THERE CAN BE ANOTHER FOURTH SITUATION AS WELL. IT M AY BE WHEN IT IS DEFINITELY A CASE OF UNDER-REPORTING OF INCOME BY THE ASSESSEE FOR WHICH AN ADDITION/DISALLOWANCE HAS BEEN MADE, BUT THE AO IS NOT SURE AT THE STAGE OF I NITIATION OF PENALTY PROCEEDINGS OF THE PRECISE CHARGE AS TO CONCEALMENT OF PARTICULAR S OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN SUCH CIRCUMST ANCES, HE MAY USE SLASH BETWEEN THE TWO EXPRESSIONS AT THE TIME OF INITIATION OF PE NALTY PROCEEDINGS. HOWEVER, DURING THE PENALTY PROCEEDINGS, HE MUST GET DECISIVE, WHIC H SHOULD BE REFLECTED IN THE PENALTY ORDER, AS TO WHETHER THE ASSESSEE IS GUILTY OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. UNCERTAIN CHARGE AT THE TIME OF INITIATION OF PENALTY, MUST NECESSARILY BE SUBSTITUTED WITH A CONCLUSIVE DEFAULT AT THE TIME OF PASSING THE PENALTY ORDER. I F THE PENALTY IS INITIATED WITH DOUBT 22 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. AND ALSO CONCLUDED WITH A DOUBT AS TO THE CONCEALME NT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME ETC., THE PENALTY ORDER IS VITIATED. IF ON THE OTHER HAND, IF THE PENALTY IS INITIATED W ITH AN UNCERTAIN CHARGE OF CONCEALMENT OF PARTICULARS OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCOME ETC., BUT THE ASSESSEE IS ULTIMATELY FOUND TO BE GU ILTY OF A SPECIFIC CHARGE OF EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHI NG OF INACCURATE PARTICULARS OF INCOME, THEN NO FAULT CAN BE FOUND IN THE PENALTY ORDER. THEREFORE, UNCERTAIN CHARGE AT THE TIME OF INITIATI ON OF PENALTY PROCEEDINGS MUST NECESSARILY BE SUBSTITUTED WITH A CONCLUSIVE DEFAUL T AT THE TIME OF PASSING THE PENALTY ORDER. IF THE AO HAS INITIATED THE PENALTY WITH DOUBT AND ALSO CONCLUDED WITH A DOUBT, THEN THE PENALTY ORDER SUFFERS FROM I LLEGALITY AND LIABLE TO BE QUASHED. THE LD. CIT (A) HAS DECIDED THIS ISSUE BY FOLLOWING VARIOUS DECISIONS AS HELD IN PARA 5.5 TO 6 AS UNDER :- 5.5 THUS, PERUSAL OF THE NOTICES INDICATES THAT THE LIMB UNDER WHICH PENALTY U/S 271(1)(C) IS PROPOSED TO BE IMPOSED IS NOT CATEGORI CAL. IN OTHER WORD THE NOTICE IS NOT SPECIFIC IN MAKING A CHARGE AGAINST THE APPE LLANT FOR WHICH PENALTY U/S 271(1)(C) IS PROPOSED TO BE IMPOSED. AS INDICATED E ARLIER, EVEN THE ASSESSMENT ORDER IS ALSO NOT SPECIFIC IN POINTING OUT THAT UND ER WHICH LIMB OF SECTION U/S 271(1)(C) THE PENALTY IS INITIATED [I.E. WHETHER PE NALTY INITIATED FOR CONCEALMENT T OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME.] 5.6 HON'BLE RAJASTHAN HIGH COURT IN THE JUDGMENT OF SWETA CONSTRUCTION (ITA 534/2008) HAS MADE OBSERV 9. TAKING INTO CONSIDERATION THE DECISION OF THE AN DHRA PRADESH HIGH COURT WHICH VIRTUALLY CONSIDERED THE SUBSEQUENT LAW AND THE LAW WHICH WAS PREVAILING ON THE DATE THE DECISION WAS RENDERED ON 27.08.2012. IN VI EW OF THE OBSERVATIONS MADE IN THE SAID JUDGMENT, WE ARE OF THE OPINION THAT THE C ONTENTION RAISED BY THE APPELLANT IS REQUIRED TO BE ACCEPTED AND IN THE FINDING OF AS SESSING OFFICER IN THE ASSESSMENT ORDER IT IS HELD THAT THE AO, HAS TO GIVE A NOTICE AS TO WHETHER HE PROPOSES TO LEVY PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INA CCURATE PARTICULARS. HE CANNOT 23 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. 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. IN THIS REGARD, I HAVE PERUSED THE SAID PARAS 59 TO 61 OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNI NG FACTORY (SUPRA) AND THE SAME READ AS UNDER: '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 C ONDITIONS MENTIONED IN SECTION271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS O N WHICH THEY INTEND IMPOSING PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE F ULL OPPORTUNITY TO MEET THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPARTMENT SENDING A PRINTED FORM HERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIRE MENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INIT IAL 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 SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDE D IF THE SHOW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, TH AT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENC ES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE 24 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFEN CES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSE E GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INI TIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOS E GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO A NSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOS E PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. O THERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE TH E BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUN D ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. TH E VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE IN FORMATION, FACTS ARID MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING TH E PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUEN T TO THE IMPOSITION OF PENALTY CANNOT VALIDATE 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 A NY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF TOTAL INCOME UNDER CLAUSE (C).CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COUR T IN THE CASE OF ASHOK PAL REPORTED IN 292 ITR 11 AGE 19 HAS HELD THAT CONCEA LMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY D IFFERENT CONNOTATIONS. THE GUJRAT HIGH COURT IN THE CASE OF MANU ENGINEERING R EPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE O VIRGO MARKET ING REPORTED IN 171 TAXMN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE F IRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIM ILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROF ORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NO N-APPLICATION OF MIND.' 25 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. 5.7 FURTHER, THE HON'BLE KARNATAKA HIGH COURT IN TH E CASE OF CIT VS. SSA EMERALD MEADOWS (ITA NO. 380/2015) HAS FOLLOWED THE AFORESAID DECIS ION HOLDING THAT THE NOTICE ISSUED BY THE AO UNDER SECTION 274 R.W.S. U/S 271(1)(C) TO BE BAD IN LAW AS IT DOES NOT SPECIFY WHICH LIMB OF SECTION U/S 271(1)(C) OF THE ACT UNDER WHICH IT IS INITIATED. THE HON'BLE SUPREME COURT IN CIT VS. SSA'S EMERALD MEADOWS HAS DISMISSED THE SLP (73 TAXMANN.COM 248). 5.8 FURTHER, SIMILAR VIEW HAS BEEN ADOPTED BY VARIO US COURTS WHEREIN RELIEF HAS BEEN GRANTED TO THE APPELLANT IN CASE THE PENALTY NOTICE U/S 271 (1)(C) IS VAGUE AND NOT SPECIFIC IN POINTING OUT THE LIMB UNDER WHICH PENALTY I PROPOSED TO BE I MPOSED. SOME OF THE SUCH DECISIONS, INCLUDING THOSE BY THE HON'BLE ITAT JAIPUR ARE : 1) SH SAMSON PERINCHERRY VS. CIT (ITA NO 1154 OF 2014) (M M) 2) SHANKAR LAL KHANDELWALVS DCIT [ITA 878/_IP/2013] 3) SHRI MURARI LAL MITTAL [334/JP/2015] 4) NARAYANA HEIGHTS & POWERS VS ITO [ ITA NO. 1033/JP/ 2016] 5) SAI VENKATA CONSTRUCTION VS. ADDL CIT ( ITA 994 & 995/2013)( PUNE) 6) SANJOG TARACHAND LODHA VS. ITO (ITA NO 688 & 6 89 OF 2014)( PUNE) 7) SANGHAVI SAVALA COMMODITIES BROKERS VS. ACIT (IT A 1746/MUM/2011) 8) DEEPAK UMAR PATWARI VS. ACIT (ITA 616 TO 618/KOL /2013) CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE BINDING DECISION OF HON'BLE RAJASTHAN HIGH COURT AND JURISD ICTIONAL HON'BLE ITAT THERE CANNOT BE OTHER VIEW TO TAKE BUT TO HOLD THAT PENALTY IMPOSED U/S 271(1)(C) IS BAD IN LAW. THE APPELLANT THUS SUCCEED ON LEGAL GROUND/CONTENTION R AISED. THE PENALTY IS THEREFORE DIRECTED TO BE DELETED. NO ADJUDICATION ON MERIT OF IMPOSITION OF PENALTY U/S 271(1)(C) IS CONSIDERED NECESSARY. 26 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE AS WELL AS VARIOUS BINDING PRECEDENTS, WE DO NOT FIND ANY ERRO R OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT (A). 5.3. AS REGARDS THE DECISION RELIED UPON BY THE LD. D/R, WE FIND THAT THE TRIBUNAL IN CASE OF VIJAY AGGARWAL VS. DCIT (SUPRA) HAS HELD IN PARA 16 AND 17 AS UNDER :- 16. COMING TO THE PLEA TAKEN FOR THE FIRST TIME BEFORE US THAT THE PENALTY NOTICE DID NOT SPECIFY UNDER WHICH LIMB OF THE SECT ION THE PENALTY PROCEEDINGS HAVE BEEN INITIATED. IN OUR CONSIDERED OPINION THIS ISSUE WAS NEVER RAISED BEFORE THE FIRST APPELLATE AUTHORITY AND HAS BEEN R AISED FOR THE FIRST TIME BEFORE THE TRIBUNAL. WE AGREE WITH THE DR THAT THE QUESTIO N WHETHER CORRECT LIMB HAS BEEN APPLIED IS A QUESTION OF FACT AND NOT A QUESTI ON OF LAW. FOR THIS PROPOSITION WE DRAW SUPPORT FROM THE DECISION OF TH E HON'BLE MADRAS HIGH COURT IN THE CASE OF SUNDARAM FINANCE LTD. V. ASSTT. CIT [2018] 93 TAXMANN.COM 250/403 ITR 407 WHEREIN THE HON'BLE HIGH COURT, INTERALIA HELD AS UNDER : '(II) THAT ON THE FACTS, EVEN ASSUMING THAT THERE W AS A DEFECT IN THE NOTICES, IT HAD CAUSED NO PREJUDICE TO THE ASSESSEE , WHICH HAD UNDERSTOOD THE PURPORT AND IMPORT OF THE NOTICES IS SUED UNDER SECTION 274 READ WITH SECTION 271. IN THE NOTICES THE RELEV ANT COLUMNS HAD BEEN MARKED, MORE PARTICULARLY, WHEN THE CASE AGAIN ST THE ASSESSEE WAS THAT THEY HAD CONCEALED PARTICULARS AND HAD FUR NISHED INACCURATE PARTICULARS OF INCOME. THE ISSUE WAS NOT A QUESTION OF FACT. THE ASSESSEE HAD, AT NO EARLIER POINT OF TIME, RAISED T HE PLEA BEFORE THE AUTHORITIES THAT ON ACCOUNT OF THE DEFECT IN THE NO TICES IT WAS PUT TO PREJUDICE. ALL VIOLATIONS DID NOT RESULT IN NULLIFY ING THE ORDERS PASSED BY THE STATUTORY AUTHORITIES.' 17 . THE HON'BLE HIGH COURT WHILE HOLDING THE ABOVE HA S CONSIDERED THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN CIT V. MANJUNATHA COTTON & GINNING FACTORY [2013] 35 TAXMANN.COM 250/218 TAXMAN 423/359 ITR 565 AND THE DECISION OF HON'BLE SUPREME COURT IN THE C ASE OF CIT V. SSA'S EMERALD MEADOWS [2016] 73 TAXMANN.COM 248/242 TAXMAN 180 . CONSIDERING THE JUDICIAL DECISIONS ( SUPRA ) WE DO NOT FIND ANY MERIT IN THE FRESH CLAIM OF TH E ASSESSEE. MOREOVER NEITHER THE ASSESSEE HAS MOVED A NY APPLICATION FOR RAISING ANY ADDITIONAL GROUND NOR HE HAS BEEN ABLE TO BRING OUT ANY QUESTION OF LAW WHICH CAN BE RAISED BEFORE THE APPELLATE AUTHORITY FOR THE FIRST TIME. IT IS CLEAR THAT THIS PLEA WAS RAISED BY THE ASSESS EE FIRST TIME BEFORE THE TRIBUNAL EVEN WITHOUT RAISING ANY ADDITIONAL GROUND AND, THE REFORE, THE TRIBUNAL BY FOLLOWING 27 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. THE DECISION OF HONBLE MADRAS HIGH COURT IN CASE O F SUNDARAM FINANCE LTD. VS. ACIT (SUPRA) HAS NOT ENTERTAINED SUCH PLEA. WE FUR THER NOTE THAT THE HONBLE MADRAS HIGH COURT IN CASE OF SUNDARAM FINANCE LTD. VS. ACIT (SUPRA) HAS OBSERVED IN PARA 16 AS UNDER :- 16. WE HAVE PERUSED THE NOTICES AND WE FIND THAT THE R ELEVANT COLUMNS HAVE BEEN MARKED, MORE PARTICULARLY, WHEN THE CASE AGAIN ST THE ASSESSEE IS THAT THEY HAVE CONCEALED PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. THEREFORE, THE CONTENTION RAISED BY THE ASS ESSEE IS LIABLE TO BE REJECTED ON FACTS. THAT APART, THIS ISSUE CAN NEVER BE A QUE STION OF LAW IN THE ASSESSEE'S CASE, AS IT IS PURELY A QUESTION OF FACT. APART FRO M THAT, THE ASSESSEE HAD AT NO EARLIER POINT OF TIME RAISED THE PLEA THAT ON ACCOU NT OF A DEFECT IN THE NOTICE, THEY WERE PUT TO PREJUDICE. ALL VIOLATIONS WILL NOT RESULT IN NULLIFYING THE ORDERS PASSED BY STATUTORY AUTHORITIES. IF THE CASE OF THE ASSESSEE IS THAT THEY HAVE BEEN PUT TO PREJUDICE AND PRINCIPLES OF NATURA L JUSTICE WERE VIOLATED ON ACCOUNT OF NOT BEING ABLE TO SUBMIT AN EFFECTIVE RE PLY, IT WOULD BE A DIFFERENT MATTER. THIS WAS NEVER THE PLEA OF THE ASSESSEE EIT HER BEFORE THE ASSESSING OFFICER OR BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE THE TRIBUNAL OR BEFORE THIS COURT WHEN THE TAX CASE APPEALS WERE FILED AND IT WAS ONLY AFTER 10 YEARS, WHEN THE APPEALS WERE LISTED FOR FINAL HEARI NG, THIS ISSUE IS SOUGHT TO BE RAISED. THUS ON FACTS, WE COULD SAFELY CONCLUDE THA T EVEN ASSUMING THAT THERE WAS DEFECT IN THE NOTICE, IT HAD CAUSED NO PREJUDIC E TO THE ASSESSEE AND THE ASSESSEE CLEARLY UNDERSTOOD WHAT WAS THE PURPORT AN D IMPORT OF NOTICE ISSUED UNDER SECTION 274 R/W, SECTION 271 OF THE ACT. THER EFORE, PRINCIPLES OF NATURAL JUSTICE CANNOT BE READ IN ABSTRACT AND THE ASSESSEE , BEING A LIMITED COMPANY, HAVING WIDE NETWORK IN VARIOUS FINANCIAL SERVICES, SHOULD DEFINITELY BE PRECLUDED FROM RAISING SUCH A PLEA AT THIS BELATED STAGE. THE HONBLE HIGH COURT HAS HELD THAT SINCE IT IS A QUESTION OF FACT AND WAS NEVER RAISED BEFORE THE AUTHORITIES BELOW AND FIRST TIME IT WAS RAISED BEFORE THE HONBLE HIGH COURT, THEREFORE, THE SAME PLEA WAS NOT ENTERT AINED BY THE HONBLE HIGH COURT ON ACCOUNT OF BELATED STAGE. ACCORDINGLY, THESE DE CISIONS ARE NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE WHEN THE ASSESSEE HAS CHA LLENGED THE PENALTY ORDER BEFORE THE LD. CIT (A) AND RAISED THIS ISSUE. SO FAR AS T HE VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AS RAISED BY THE LD. D/R, WE FIND THAT NO S UCH GROUND HAS BEEN RAISED BY THE 28 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. AO IN THESE APPEALS AND, THEREFORE, THE AO WAS NOT AGGRIEVED BY THE PROCEEDINGS OF THE LD. CIT (A) ADMITTING THE GROUND OF VALIDITY OF INITIATION OF PENALTY PROCEEDINGS. FURTHER IT IS ALSO UNDISPUTED FACT THAT THE AO ALWA YS RECEIVE THE NOTICE OF THE APPEAL PROCEEDINGS PENDING BEFORE THE LD. CIT (A) AND, THE REFORE, IT IS AT THE DISCRETION OF THE AO WHETHER TO APPEAR AND OBJECT THE APPEALS BEF ORE THE LD. CIT (A) OR NOT. ACCORDINGLY, WHEN THE ORDER ITSELF IS QUESTIONED BE FORE THE LD. CIT (A), THEN THE ASSESSEE IS FREE TO TAKE ALL THE GROUNDS BEFORE THE LD. CIT (A) AND THERE IS NO LEGAL BAR FOR RAISING THE ISSUE BEFORE THE LD. CIT (A) AS THE LD. CIT (A) IS HAVING THE COTERMINOUS POWER OF THE AO. 5.4. AS REGARDS THE MERITS OF THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) AGAINST THE ADDITIONAL INCOME OFFERED BY THE ASSESS EE TO TAX, WE FIND THAT THE AO HAS APPLIED EXPLANATION 5A TO SECTION 271(1)(C) AND GIVEN HIS FINDING IN PARA 3 TO 12 AS UNDER :- 3. I HAVE CONSIDERD THE SUBMISSIONS OF THE A/R OF THE ASSESSEE AND FOUND NOT ACCEPTABLE IN VIEW OF THE FACTS OF THE CASE AND ALSO IN VIEW OF THE PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT. 4. THE PENALTY U/S 271(1)(C) HAS BEEN INITIATED ON CONCEALMENT OF PARTICULARS OF INCOME TO THE EXTENT OF RS. 1,16,62,560/- BEING THE ADDITIONAL INCOME DISCLOSED IN THE RETURN OF INCOME FILED U/S 153A AND WHICH WA S NOT DECLARED IN THE RETURN OF INCOME FILED U/S 139 OF THE ACT. THE CONTENTION RAI SED BY THE ASSESSEE ON THIS ISSUE IS TO THE EFFECT THAT THE ADDITIONAL INCOME O F RS. 1,16,62,560/-DECLARED IN THE ROI FILED U/S 153A WAS MADE IN ORDER TO BUY PEA CE OF MIND AND AVOID PROLONGED LITIGATION. THE ASSESEE IS NOT FILED ANY REPLY ON THIS ISSUE. 5. IT IS CLEAR THAT THE ADDITIONAL INCOME OF RS. 1, 16,62,560/-DECLARED IN THE RETURN OF INCOME FILED U/S 153A OF THE ACT, IS NOT A LUMPSUM DECLARATION MADE BY THE ASSESSEE. IN FACT, ADDITIONAL INCOME UNDER A SP ECIFIC HEAD VIZ., OTHER SOURCES 29 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. WHICH WAS NOT DECLARED IN THE RETURN OF INCOME U/S 139 HAS BEEN DECLARED IN THE ROI U/S 153A. HAD THE ADDITIONAL INCOME BEEN DECLAR ED SIMPLY TO BUY PEACE OF MIND AND TO AVOID LITIGATION, SUCH ADDITIONAL INCOM E WOULD NOT HAVE BEEN BACKED UP BY SPECIFIC AND QUANTIFIED DIFFERENCE IN SPECIFI C HEADS OF INCOME. THE VERY FACT THAT SUCH ADDITIONAL INCOME WAS RELATED TO SPE CIFIC HEADS IN A QUANTIFIED MANNER PROVES THAT THE ADDITIONAL INCOME DECLARED I N THE RETURN OF INCOME U/S 153A WAS BASED ON PARTICULARS OF INCOME CONCEALED I N THE ROI U/S 139. THIS FACT ALSO PROVES THAT THE ADDITIONAL INCOME DECLARED U/S 153A WAS NOT TO BUY PEACE OF MIND AND TO AVOID LITIGATION. THE FUNDAMENTAL CONTE NTION RAISED BY THE ASSESSEE, THEREFORE, FAILS. CONSEQUENTLY, THE CASE LAWS CITED AND RELIED UPON BY THE ASSESSEE, ALSO DO NOT FIND APPLICATION IN THE INSTA NT CASE. 6. NOW, SO FAR AS THE LEGAL POSITION OF PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE CONCERNED, LET US FIRST EXAMINE THE RELEVANT ST ATUES BY WAY OF WHICH, PENALTY U/S 271(1)(C) IN THIS CASE CAN BE IMPOSED. EXPLAIN 5A TO SECTION 271(A)(C) IS CLEAR & CATEGORI CAL IN THIS REGARD. FOR THE SAKE OF IMMEDIATE REFERENCE, THE CONTENTS O F EXPLANATION 5A ARE REPRODUCED AS UNDER:- [EXPLANATION TO SECTION 271(1)(C)- WHERE, IN THE CO URSE OF SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE FT DAY OF JUNE, 2007, T HE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASS ESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR I N PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOU NT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE B OOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WH OLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND- (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR H AS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THE REIN; OR 30 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. (B) THE DUE DATE OF FILING THE RETURN OF INCOME FOR SUC H PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME.] 7. IT IS CLEAR FROM PLAIN READING OF THE EXPLANATIO N 5A TO SECTION 271(1)(C) THAT, THE RETURN OF INCOME ENVISAGED IN CLAUSE (A) OF SUCH EX PLANATION IS RETURN FILED U/S 139 OF THE ACT. 8. BE THAT AS IT MAY THEREFORE, IN A CASE WHERE A R ETURN OF INCOME HAS ALREADY BEEN FAILED U/S 139 OF THE ACT OR WHERE NO RETURN OF INC OME HAS BEEN FILED TILL THE DATE OF SEARCH, ANY ADDITIONAL INCOME DECLARED IN ANY RETURN OF INC OME FURNISHED ON AFTER THE DATE OF SEARCH, SHALL BE DEEMED TO BE THE CONCEALED INCOME OR INCOM E IN RESPECT OF WHICH PARTICULARS OF INCOME HAVE BEEN FURNISHED INACCURATELY. 9. THE DEEMING PROVISION OF EXPLANATION 5A TO SECTION 271(1)(C), THUS DEMONSTRABLY MANDATES A COMPARISON BETWEEN THE INCO ME DECLARED U/S 139 AND THE INCOME DECLARED SUBSEQUENT TO THE SEARCH, WHICH IN THE INSTANT CASE IS U/S 153A OF THE ACT. HENCE, FOR ANY ASSESSEE TO SAY THAT FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S 271(1)(C) IN A SEARCH ASSESSMENT, THE ORIGINAL RETU RN OF INCOME FILED U/S 139 CANNOT BE CONSIDERED, IS WHOLLY INCORRECT AND IS IN DIRECT CONTRADICTION TO THE MANDATE OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. 10. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT NO INCRIMINATING DOCUMENTS WAS FOUND AS A RESULT OF SEARCH INDICATING ANY UNDI SCLOSED INCOME NOR ANY EVIDENCE WAS BROUGHT ON RECORD DURING COURSE OF ASS ESSMENT FROM WHICH IT COULD BE ALLEGED THAT ASSESSEE WAS HAVING UNDISCLOSED INC OME, IT MUST BE SAID THAT THE BASIC THRUST OF SUCH CONTENTION IS TO LIMIT THE SCO PE OF PENALTY U/S 271(1)(C) TO THE FINDING OF INCRIMINATING DOCUMENTS DURING SEARC H. IN RAISING THIS CONTENTION, THE ASSESSEE IS ONLY PARTLY CORRECT TO THE LIMITED EXTENT OF CLAUSE (I) OF EXPLANATION 5A TO SECTION 271(1)(C).BUT, THE SAID E XPLANATION ALSO HAS A SECOND 31 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. LIMB TO IT AS CONTAINED IN CLAUSE (II). ACCORDING T O CLAUSE (II) OF EXPLANATION 5A TO SECTION 271(1)(C), IN CASES OF SEARCH CONDUCTED AFTER 01-06-2007, 'ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCO UNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOU NT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PARTY) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND WHERE - THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEE N FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN D ECLARED THEREIN THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN O F INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB- SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONC EALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME'. 11. THERE IS NO DISPUTE ON THE FACT THAT THE INSTANT CA SE IS SQUARELY COVERED BY PROVISIONS OF CLAUSE(II) OF EXPLANATION 5A TO SECTI ON 271(1)(C) OF THE ACT. THE RELEVANT STATUTE REPRODUCED ABOVE IS A DEEMING PROV ISION WHICH GETS AUTOMATICALLY APPLIED IN CIRCUMSTANCES ENVISAGED TH EREIN. IN THE INSTANT CASE EACH OF THE CIRCUMSTANCE ENVISAGED BY SUCH DEEMING PROVISIONS IS PRESENT AND HENCE THE APPLICATION OF THE PROVISION GETS ACTIVAT ED. THE CONTENTION OF THE ASSESSEE IS THUS FOUND UNACCEPTABLE AND REJECTED. 12. AS ANALYZED ABOVE, IT HAS CLEARLY EMERGED THAT EXPLANATION 5A TO SECTION 271(1)(C), NOT ONLY AUTHORIZES BUT ACTUALLY MANDATE S THE AO TO COMPARE THE RETURN FILED U/S 139 AND U/S 153A TO CONCLUDE THAT THE ASS ESSEE HAD CONCEALED OR FURNISHED INACCURATE PARTICULARS OF INCOME. WHILE CONSIDERING THE IMPOSITION OF PENALTY U/S 271(1)(C) IN A CASE WHERE ASSESSMENT IS MADE U/S 14 3(3) R.W.S. 153A, THE DEFAULT HAS TO BE VIEWED WITH REFERENCE TO THE INCOME DECLA RED U/S 139 VIS-A-VIS THE INCOME DECLARED/ASSESSED U/S 153A. EVEN WHEN THERE IS NO V ARIANCE BETWEEN THE INCOME RETURNED U/S 153A & THE INCOME ASSESSED U/S 153A, T HE DEEMING PROVISION OF EXPLANATION 5A TO SECTION 271(1)(C) MANDATES LEVY O F PENALTY IF THE INCOME DECLARED AND ASSESSED U/S 153A IS AT VARIANCE WITH INCOME RE TURNED U/S 139. THE ASSESSEE HAS DULY OBJECTED BEFORE THE AO REGARD ING APPLICABILITY OF EXPLANATION 5A AND PLEADED THAT SINCE THERE IS NO INCRIMINATING DOCUMENT FOUND AS A RESULT OF SEARCH INDICATING ANY UNDISCLOSED INCOME NOR ANY EV IDENCE WAS BROUGHT ON RECORD 32 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. DURING THE COURSE OF ASSESSMENT FROM WHICH IT COULD BE ALLEGED THAT THE ASSESSEE WAS HAVING UNDISCLOSED INCOME. THE AO WHILE COUNTE RING THESE CONTENTIONS OF THE ASSESSEE HAS JUST REFERRED TO CLAUSE (II) OF EXPLAN ATION 5A TO SECTION 271(1)(C). THEREFORE, THE AO HAS NOT DISPUTED THESE FACTUAL CO NTENTIONS OF THE ASSESSEE AND ALSO NOT REFERRED TO ANY INCRIMINATING MATERIAL EIT HER IN THE ASSESSMENT ORDER OR IN THE PENALTY PROCEEDINGS SO FAR AS THE ADDITIONAL IN COME OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME. IT IS PERTINENT TO NOTE THAT THE EXPLANATION 5A TO SECTION 271(1)(C) IS DEEMING FICTION WHICH CANNOT BE EXTEN DED BEYOND THE SCOPE OF THE SAID PROVISION. IT IS CLEAR FROM THE EXPLANATION 5A THA T ONCE ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS BUT THE ASSESSEE HAS NOT DECLARED THE SAID INCOME IN THE RETURN OF INCOME FI LED PRIOR TO THE DATE OF SEARCH, THEN EVEN IF SUCH INCOME IS DECLARED IN THE RETURN OF INCOME FILED POST SEARCH, THE ASSESSEE WOULD BE DEEMED TO HAVE CONCEALED THE PART ICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREF ORE, ONLY WHEN THE CONDITIONS PRESCRIBED UNDER EXPLANATION 5A AND PARTICULARLY TH E INCOME DISCLOSED BY THE ASSESSEE REPRESENTING THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUN T OR OTHER RECORD, THE SAME WOULD ATTRACT THE SAID EXPLANATION 5A AND ASSESSEE CANNOT ESCAPE FROM THE MISCHIEF OF THE PENALTY PROVISION UNDER SECTION 271(1)(C) ME RELY BECAUSE THE SAID INCOME IS DECLARED IN THE RETURN OF INCOME FILED AFTER SEARCH . IN THE CASE IN HAND, THE AO HAS EVEN NOT MADE ANY REFERENCE TO ANY INCRIMINATING MA TERIAL SO AS TO BRING THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FI LED IN RESPONSE TO NOTICE UNDER SECTION 153A IN THE AMBIT OF THE EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. 33 ITA NOS. 776, 777 & 778/JP/2019 SHRI PRAKASH CHAND SHARMA, JAIPUR. ACCORDINGLY, WHEN THE AO HAS FAILED TO EVEN MAKE AN Y REFERENCE TO ANY INCRIMINATING MATERIAL REPRESENTING THE UNDISCLOSED MATERIAL OR THE INCOME DECLARED BY THE ASSESSEE, THE EXPLANATION 5A TO SECTION 271( 1)(C) WOULD NOT BE APPLIED IN THE CASE OF THE ASSESSEE. HENCE IN THE FACTS AND CIRCU MSTANCES OF THE CASE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDE R OF THE LD. CIT (A). 6. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/02/2020 . SD/- SD/- FOE FLAG ;KNO FOT; IKY JKWO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03/02/2020. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-THE DCIT, CENTRAL CIRCLE-2, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT-SHRI PRAKASH CHAND SHARMA, 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. 776, 777 & 778/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR