NARESHKUMAR MALHOTRA, MUMBAI V. ACIT CIR 19(1), MUMBAI

ITA 7953/MUM/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1042 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 18-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief

Judgement Text

ITA NO.7953/M/2010 NARESH KUMAR MALHOTRA 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, MU MBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.7953/MUM/2010 FOR ASSESSMENT YEAR: 2004-05 NARESH KUMAR MALHOTRA, C/O KPMG, 1 ST FLOOR, LODHA EXCELUS, APOLLO MILLS COMPOUND, N.M. JOSHI MARG, MUMBAI -400061 VS. ACIT, CENTRAL CIRCLE- 19(1) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE REPRESENTED BY S/SH. NARESH KUMAR, PARAS SAVLA AND MS. SHARDDHA SWARUP - ARS REVENUE REPRESENTED BY SH. SUMAN KUMAR -DR DATE OF HEARING 17.04.2017 DATE OF ORDER 28.04.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH JUDICIAL MEMBER ; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF COMMISSIONER (APPEALS) DATED 2 9 SEPTEMBER 2010 FOR ASSESSMENT YEAR 2004- 05. THE ASSESSEE HAD CHALLENG ED THE VALIDITY OF ORDER PASSED BY LEARNED COMMISSIONER (APPEALS) IN SUSTAIN ING THE ORDER OF PENALTY LEVIED BY ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT. THOUGH, INITIALLY THE ASSESSEE HAD RAISED AS MANY AS SEVEN GROUNDS OF APPEAL, HOWEVER AS PER OUR CONSIDERED VIEW THE ONLY SUBSTANTIAL GRO UND OF APPEAL RAISED BY ASSESSEE IS AS UNDER; (I) WHETHER THE LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIRM ING THE PENALTY OF RS.55,08,744/-LEVIED BY ASSESSING OFFICE R UNDER SECTION 271(1)(C) OF THE ACT. REST OF THE GROUNDS OF APPEAL ARE ARGUMENTATIVE IN NATURE. THE ASSESSEE AGAIN VIDE APPLICATION DATED 6 TH APRIL 2017 RAISED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL; ITA NO.7953/M/2010 NARESH KUMAR MALHOTRA 2 (II) THAT LEARNED COMMISSIONER (APPEALS) ERRED IN UPHOL DING THE ACTION OF ASSESSING OFFICER WITHOUT APPRECIATING THAT THE ASS ESSING OFFICER FAILED TO STATE THE CHARGE OF PENALTY I.E. FURNISHING OF INAC CURATE PARTICULARS OR CONCEALMENT OF INCOME IN THE SHOW CAUSE NOTICE UNDE R SECTION 274 OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 21 OCTOBER 2004 DECLARI NG TOTAL INCOME IN LOSS OF RUPEES TERRIFIES 56953/-. THE ASSESSMENT WAS COMPLE TED UNDER SECTION 143 3 ON 31 OCTOBER 2006. THE ASSESSING OFFICER BESIDES THE OTHER ADDITION AND DISALLOWANCE MADE THE FOLLOWING ADDITION/DISALLOWAN CES; (I) DISALLOWANCE OF LOSS ON ACCOUNT OF BANK GUARANTEE O F RS. 68,50,000/-. (II) DISALLOWANCE OF LONG-TERM CAPITAL LOSS ON SALE OF S HARES OF N.M. HOSPITALITY PVT LTD OF RS. 97,31,466/-. (III) DISALLOWANCE OF LOAN WRITTEN OFF CLAIMED DEDUCTION UNDER SECTION 57(III) OF RS. 700,000/-. ON APPEAL BEFORE COMMISSIONER (APPEALS), THE DISALL OWANCE/ADDITIONS WERE UPHELD VIDE ORDER DATED 10 SEPTEMBER 2007. THE ASSE SSING OFFICER WHILE PASSING THE ASSESSMENT ORDER INITIATED PENALTY PROC EEDING UNDER SECTION 271(1)(C). THE PENALTY PROCEEDING WERE KEPT IN ABEY ANCE TILL THE DISPOSAL OF APPEAL BY COMMISSIONER (APPEALS). AFTER DISMISSAL O F THE APPEAL BY LD COMMISSIONER (APPEALS) IN QUANTUM ASSESSMENT THE AS SESSEE WAS AGAIN SERVED WITH NOTICE DATED 03 RD MARCH 2009 TO FURNISH HIS EXPLANATION FOR THE DEF AULT COMMITTED WITHIN THE MEANING OF SECTION 271(1)(C) O F THE ACT. THE ASSESSEE FILED HIS DETAILED REPLY VIDE REPLY DATED 13 MARCH 2009. THE EXPLANATION GIVEN IN THE REPLY BY ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFF ICER AND ASSESSING OFFICER LEVIED THE PENALTY @ 100% OF THE TAX SOUGHT TO BE E VADED. THE ASSESSING OFFICER WORKED OUT THE PENALTY OF RS.55,08,744/-. THE ASSESSEE FILED APPEAL AGAINST THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT BEFORE COMMISSIONER (APPEALS) AND THE SAME WAS DISMISSED V IDE ORDER IMPUGNED IN THE PRESENT APPEAL. FURTHER, AGGRIEVED BY THE ORDER OF COMMISSIONER (APPEALS) THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. ITA NO.7953/M/2010 NARESH KUMAR MALHOTRA 3 3. WE HAVE HEARD THE LEARNED AR OF THE ASSESSEE AND TH E LEARNED DR FOR REVENUE AND WITH THEIR ASSISTANCE PERUSED THE MATERIAL AVAI LABLE ON RECORD. IN SUPPORT OF APPLICATION FOR ADMISSION OF ADDITIONAL GROUNDS OF APPEAL THE LD AR OF THE ASSESSEE ARGUED THAT THE ASSESSEE HAS RAISED ALTERN ATIVE LEGAL PLEA BY RAISING ADDITIONAL GROUND OF APPEAL; THAT PENALTY ORDER PAS SED BY ASSESSING OFFICER IS VOID AB INITIO. THE LD AR FURTHER ARGUED THAT THE A DDITIONAL GROUNDS OF APPEAL RAISED BY ASSESSEE ARE PURELY LEGAL GROUND AND WOUL D BE ESSENTIAL FOR DISPENSATION OF SUBSTANTIAL JUSTICE. IT WAS ARGUED THAT NO ADDITIONAL FACT IS REQUIRED TO BE BROUGHT ON RECORD EXCEPT THE RELIANC E ON THE FACT AVAILABLE ON RECORD. THE LD AR IN SUPPORT OF HIS SUBMISSION RELI ED UPON THE DECISION OF NTPC VERSUS CIT 229 ITR 383(SC), JUTE CORPORATION O F INDIA LTD VERSUS CIT 187 ITR 688(SC), ALLAHABAD ELECTRICITY COMPANY LTD VERSUS CIT 199 ITR 351(BOMBAY) AND ALL CARGO GLOBAL LOGISTICS LTD VERS US DCIT 137 ITD 26(MUMBAI) (SB). ON THE OTHER HAND THE LD DR HAS AR GUED THAT NO SUCH GROUNDS OF APPEAL WAS RAISED BY ASSESSEE BEFORE COMMISSION ER (APPEALS) AS URGED/ RAISED IN ADDITIONAL GROUNDS OF APPEAL. HOWEVER, I N ALL FAIRNESS THE LD DR SUBMIT THAT HE HAS NO OBJECTION IF THE ADDITIONAL G ROUND OF APPEAL RAISED BY ASSESSEE IS CONSIDERED ALONG WITH THE OTHER GROUNDS OF APPEAL. 4. THE LEARNED AR OF ASSESSEE FURTHER ARGUED THAT THE ASSESSING OFFICER IN PARA 8, 12 AND 15 OF ASSESSMENT ORDER INITIATED THE PENALTY FOR FURNISHING INACCURATE PARTICULAR OF INCOME, HOWEVER THE ORDER UNDER SECTI ON 271(1)(C) THE PENALTY WAS LEVIED FOR CONCEALMENT OF INCOME. THE ASSESSING OFFICER WHILE ISSUING NOTICE UNDER SECTION 274 HAS NOT SPECIFIED THE SPEC IFIC CHARGE, BY STRIKING OUT THE RELEVANT PORTION OF THE NOTICE DATED 31 ST OCTOBER 2 006. THE NOTICE UNDER SECTION 274 DATED 31 OCTOBER 2006 IS PLACED ON RECO RD BY LEARNED AR FOR ASSESSEE DURING MAKING THE SUBMISSION. IN SUPPORT O F HIS SUBMISSION THE LEARNED AR OF THE ASSESSEE RELIED UPON THE DECISION OF BOMBAY HIGH COURT IN CIT VERSUS SH. SAMSON PERINCHARY DATED 05TH JANUARY 2017 IN ITA(S) NO. 1154 OF 2014, 953 OF 2014, 1097 OF 2014 AND 1226 OF 2014 , DECISION OF TRIBUNAL IN SAMSON PERINCHARY VERSUS ACIT IN ITA NO. 4625 TO 46 30/M/2013 DATED ITA NO.7953/M/2010 NARESH KUMAR MALHOTRA 4 11.102013 AND PRINCE CONSULTANCY P LIMITED VERSUS D CIT IN ITA NO. 6068/M/2016 DATED 13 TH JANUARY 2017. ON THE MERITS IT WAS ARGUED BY LEARN ED AR OF THE ASSESSEE THAT 1 ST DISALLOWANCE WAS MADE ON ACCOUNT OF BANK GUARANTEE FURTHER RS. 6 850000/-. ON APPEAL THE DIS ALLOWANCE WAS CONFIRMED BY LD COMMISSIONER (APPEALS). THE ASSESSEE IS NOT FILE FURTHER APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE WHILE FILING RETURN OF INCO ME RELIED UPON THE OPINION OF CHARTERED ACCOUNTANT, COPY OF OPINION OF SHRI S. RA MANUJAM CA DATED 1 OCTOBER 2003 IS PLACED ON RECORD IN THE FORM OF AT PAGE NO. 22 TO 26 PB. THE ASSESSEE HAS GIVEN CERTAIN PERSONAL GUARANTEE TO TH E BANKERS IN RESPECT OF THE COMPANIES IN WHICH THE ASSESSEE WAS ONE OF THE DIRE CTORS AND WAS HAVING HIS OWN SUBSTANTIAL STAKE. THE ASSESSEE BONAFIDE BELIEF AND ON LEGAL ADVICE MADE A CLAIM OF LOSS ON ACCOUNT OF BANK GUARANTEE. IN SUPP ORT OF HIS SUBMISSION LD AR FOR ASSESSEE RELIED UPON THE DECISION OF CIT VERSUS K.M. MODI 141 ITR 903(BOMBAY) AND IN PFIZER LTD VERSUS DCIT (2012) 78 DTR (MUMBAI)(TRIBUNAL) 239. THE SECOND DISALLOWANCE WAS IN RESPECT OF WRITE OFF OF LOANS. THE DISALLOWANCE WAS MADE BY ASSESSING OFFIC ER HOLDING THAT ASSESSEE WAS KNOWING THAT THE COMPANY TO WHOM THE LOAN WAS G IVEN WAS RUNNING IN LOSSES AND WAS NOT IN A POSITION TO GIVE AND INTERE ST ON THE LOAN. FURTHER IT WAS HELD THAT IT WAS NOT THE BUSINESS OF ASSESSEE. IN S UPPORT OF ITS SUBMISSION THE LD AR FOR ASSESSEE RELIED UPON THE DECISION OF CIT VER SUS PARAMOUNT PREMISES PRIVATE LIMITED (1991 ) 190 ITR 0259 (BOMBAY ) AND RECENT DECISION OF NAGPUR BENCH OF HONBLE BOMBAY HIGH COURT IN CENTRAL PROV INCES MANGANESE ORE COMPANY LTD VERSUS CIT IN ITA NO. 4 TO 7 OF 2002 DA TED 8 TH MARCH 2017. THE THIRD DISALLOWANCE WAS ON ACCOUNT OF LONG-TERM CAPI TAL LOSS ON SALE OF SHARES OF M/S N.M. HOSPITALITY PRIVATE LIMITED OF RS. 97,31,4 66/-. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT BY MISTAKE IN THE NUMBER OF SHARES 750000 INSTEAD OF 75000 AND THE VALUE WAS TAKEN AT RS. 75,00,000/- IN STEAD OF RS. 7,50,000 /-. THE ASSESSEE HAS CORRECTED THE MISTAKE WHEN IT WAS BROUGHT TO HIS NOTICE DURING THE ASSESSMENT ITSELF. AND IN SUPPORT OF HIS SUBMIS SION THE LD AR FOR THE ASSESSEE RELIED UPON THE DECISION OF PWC VS CIT [20 12] 348 ITR 0306 (SC). IT ITA NO.7953/M/2010 NARESH KUMAR MALHOTRA 5 WAS FURTHER ARGUED THAT THE ASSESSEE WOULD HAVE SUC CEEDED IN CASE THE MATTER WAS CARRIED IN APPEAL BEFORE THE TRIBUNAL. 5. ON THE OTHER HAND LEARNED DR FOR THE REVENUE ARGUED THAT ALL THE DISALLOWANCE WAS CONFIRMED BY FIRST APPELLATE AUTHORITY AND THE ASSESSEE HAS NOT FILE FURTHER APPEAL BEFORE TRIBUNAL. THE DISALLOWANCE MADE BY AS SESSING OFFICER ATTAINS THE FINALITY. THE ASSESSING OFFICER LEVIED THE PENALTY AFTER CONFIRMATION OF DISALLOWANCE BY COMMISSIONER (APPEALS). THE LEARNED DR FOR THE REVENUE FURTHER ARGUED THAT THE ASSESSEE WAS GIVEN FULL OPP ORTUNITY OF HEARING AS PROVIDED UNDER SECTION 274 OF THE ACT, BEFORE PASSI NG THE ORDER UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEE NEVER OBJECTED A BOUT THE INFIRMITY IN THE NOTICE UNDER SECTION 274 OF THE ACT. NO SUCH GROUND IN THE GROUNDS OF APPEAL WAS RAISED BY ASSESSEE BEFORE THE COMMISSIONER (APP EALS) WHILE CHALLENGING THE VALIDITY OF LEVY OF PENALTY. NO PREJUDICE WAS C AUSED TO THE ASSESSEE. IN SUPPORT OF HIS SUBMISSION THE LEARNED DR FOR THE RE VENUE RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN KAUSHALYA 216 ITR 660. 6. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE VARIOUS DECISIONS REFERRED AND RELIED BY LD REPRESE NTATIVE OF THE PARTIES. WE HAVE SEEN THE NOTICE UNDER SECTION 274 READ WITH SE CTION 271 OF INCOME TAX ACT DATED 31 OCTOBER 2006. A CAREFUL PERUSAL OF THE NOT ICE DATED 31 OCTOBER 2006 SHOWS THAT IT COULD HAVE BEEN ISSUED EITHER FOR FAI LURE TO FURNISH RETURN OF INCOME UNDER SECTION 139(1)/139(2)/148 OF THE ACT; FOR FAILURE TO COMPLY WITH A NOTICE ISSUED UNDER SECTION 142(1)/143(2) OF THE AC T FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER WHILE ISSUING THE NOTICE IN A STANDARD PERFORMA HAS NOT STRIKE OUT THE IRRELEVANT PORTIONS THEREIN. THERE WAS NO APPLICATION OF MIND WHILE ISSUING NOTICE UNDER S ECTION 274 RWS 271(1)(C) OF THE ACT. THE SAID NOTICE ONLY SPECIFY BY TICKING AT THE RELEVANT SPACE THAT IT IS BEING ISSUED FOR LEVY OF PENALTY UNDER SECTION 271( 1)(C) OF THE ACT. WE HAVE FURTHER SEEN THE ASSESSMENT ORDER DATED 30.10.2006, WHEREIN IN PARA 8 AND 12, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS FOR FURNISHING INACCURATE ITA NO.7953/M/2010 NARESH KUMAR MALHOTRA 6 PARTICULARS OF INCOME. HOWEVER, WHILE PASSING THE O RDER OF PENALTY, THE ASSESSING OFFICER LEVIED THE PENALTY FOR CONCEALMEN T OF INCOME FOR DISALLOWANCE OF BANK GUARANTEE, DEDUCTION OF CLAIM OF LOSS OF LOAN AND LOSS ON SALE OF SHARE PARA (14.1&14.2 OF PENALTY ORDER). IN CONCLUDING PARA- 17 OF PENALTY ORDER THE ASSESSING OFFICER AGAIN MENTIONED THAT PENALTY IS LEVIED @ OF 100% OF THE TAX SOUGHT TO BE EVADED ON THE INCOME I N RESPECT OF WHICH INCOME HAS BEEN CONCEALED/ INACCURATE PARTICULARS OF INCOM E HAVE BEEN FURNISHED. THE ASSESSING OFFICER HAS NOT SPECIFIED THE SPECIFIC CH ARGE, RATHER, IN THE ASSESSMENT ORDER THE PENALTY WAS PROPOSED FOR FILING INACCURAT E PARTICULARS, WHILE PASSING THE PENALTY ORDER THE PENALTY WAS LEVIED FOR CONCEA LMENT ON INCOME. 7. IN RECENT DECISION BY HONBLE BOMBAY HIGH COURT IN CIT VS SHRI SAMSON PERINCHARY (SUPRA) WHILE CONSIDERING ALMOST SIMILAR GROUND OF APPEAL HELD AS UNDER; 3. THE IMPUGNED ORDER OF THE TRIBUNAL DELE TED THE PENALTY IMPOSED UPON THE RESPONDENT-ASSESSEE. THIS BY HOLDING THAT INITIATIO N OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY ASSESSING OFFICER WAS FOR F URNISHING INACCURATE PARTICULAR OF INCOME WHILE ORDER IMPOSING PENALTY I S FOR CONCEALMENT OF INCOME. THE IMPUGNED ORDER HOLDS THAT THE CONCEALME NT OF INCOME IN FURNISHING INACCURATE PARTICULARS OF INCOME CARRIED DIFFERENT CONNOTATIONS. THEREFORE, THE ASSESSING OFFICER SHOULD BE CLEAR AS TO WHICH OF THE TWO LIMBS UNDER WHICH PENALTY IS IMPOSABLE, HAS BEEN CONTRAVE NED OR INDICATE THAT BOTH HAVE BEEN CONTRAVENED WHILE INITIATING PENALTY PROC EEDINGS. IT CANNOT BE THAT THE INITIATION WOULD BE ONLY ON ONE LIMB I.E. FOR F URNISHING INACCURATE PARTICULARS OF INCOME WHILE IMPOSING A PENALTY ON T HE OTHER LIMB I.E. CONCEALMENT OF INCOME. FURTHER, THE TRIBUNAL ALSO N OTED THAT NOTICE UNDER SECTION 274 OF THE ACT IS IN A STANDARD PERFORMA, W ITHOUT HAVING STRIKED OUT IRRELEVANT CLAUSES THEREIN. THIS INDICATES NON-APPL ICATION OF MIND ON THE PART OF THE ASSESSING OFFICER WHILE ISSUING THE PENALTY NOTICE. 4. THE IMPUGNED ORDER RELIED UPON THE FOLLO WING EXTRACT OF KARNATAKA HIGH COURT DECISION IN CIT VERSUS MANJUNATH COTTON AND G INNING FACTORY 359 ITR 565 TO DELETE THE PENALTY:- THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDING ONCE HES SATISFIED IN THE COURSE OF ANY PROCEEDING THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING INACCURATE P ARTICULARS OF TOTAL INCOME UNDER CLAUSE(C). CONCEALMENT, FURNISHING INA CCURATE PARTICULARS OF INCOME IS 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 COURT IN CASE OF ASHOK PAI REPORTED IN[2007] 292 I TR 11(SC) AT PAGE 19 ITA NO.7953/M/2010 NARESH KUMAR MALHOTRA 7 HAS HELD THAT CONCEALMENT OF INCOME IN FURNISHING I NACCURATE PARTICULARS OF INCOME CARRIED DIFFERENT CONNOTATIONS. THE GUJAR AT HIGH COURT IN CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN CASE OF VIRGO MARKETING PRIVATE LIMITED REPORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS T O THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NO T SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSED TO I NVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROP RIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTI CULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. 5 . THE GRIEVANCE OF THE REVENUE BEFORE US IS THAT TH ERE IS NO DIFFERENCE BETWEEN FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. THUS, DISTINCTION AND DRAWN BY THE IMPUGNED ORDER I S BETWEEN TWEEDLEDUM AND TWEEDLEDEE. IN THE ABOVE VIEW THE DELETION OF P ENALTY, IS UNJUSTIFIED. 6. THE ABOVE SUBMISSION ON THE PART OF THE R EVENUE IS IN THE FACE OF DECISION OF SUPREME COURT IN ASHOK PAI VERSUS CIT 292 ITR 11[RE LIED UPON IN MANJUNATH COTTON AND GINNING FACTORY (SUPRA)]-WHEREIN IT IS O BSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AND SECTION 271(1)(C) OF THE ACT, CARRY DIFFERENT MEANINGS/ CON NOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD T O ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE A CT, FOR INITIATION OF PENALTY PROCEEDING WILL NOT WARRANT/PERMIT PENALTY BEING IM POSED FOR THE OTHER BREACH. THIS IS MORE SO, AS THE ASSESSEE WOULD RESP OND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MU ST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE G ROUND OF WHICH THE PENALTY PROCEEDINGS HAD BEEN INITIATED, AND IT CANNOT BE ON LY FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 7. THEREFORE, THE ISSUE HEREIN STAND CONCLUD ED IN FAVOUR OF THE RESPONDENT- ASSESSEE BY THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY(SUPRA). NOTHING HAS BEEN SHOWN TO US IN THE PRESENT FACTS WHICH WOULD WARRANT OUR TAKING A VIEW DIFFERENT FROM THE KARNATAKA HIGH COURT IN CASE OF THE MANJUNATH COTTO N AND GINNING FACTORY (SUPRA) . 8. CONSIDERING THE DECISION OF JURISDICTIONAL HIGH COU RT IN SAMSON PERINCHARY (SUPRA), GUJARAT HIGH COURT IN MARLOWE ENGINEERING REPORTED IN 122 ITR 306, DELHI HIGH COURT IN VIRGO MARKETING PRIVATE LI MITED REPORTED IN 171 TAXMAN 156 AND KARNATAKA HIGH COURT IN MANJUNATH CO TTON AND GINNING FACTORY, WE ARE INCLINED TO ALLOW THE ADDITIONAL GR OUND OF APPEAL VIDE APPLICATION DATED 6 TH APRIL 2017, RAISED BY THE ASSESSEE. AS WE HAVE ALL OWED THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSES SEE, THUS THE DISCUSSION ON ITA NO.7953/M/2010 NARESH KUMAR MALHOTRA 8 THE MERIT OF THE APPEAL IS BECOME ACADEMIC. THUS, T HE APPEAL OF THE ASSESSEE IS ALLOWED. IN THE RESULT APPEALS OF THE ASSESSEE IS ALLOWED . ORDER ANNOUNCE IN THE OPEN COURT ON 28 TH DAY OF APRIL 2017. SD/- SD/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 28/04/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/