Mahaveer Saraswathi, Arsikere V. ITO, Hassan

ITA 801/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0174 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PRATIBHA
• Keywords: Unexplained cash credit; Principle of natural justice; Corroborative evidences; Onus to prove; Revenue expenditure; Capital expenditure
• Section: 234B; 68; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE S HRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER I.T . A. NO S . 801 & 802 /BANG/20 15 (ASSESSMENT YEAR : 20 10 - 11 ) MAHAVEER SARASWATHI, MAHAVEER NIVAS, 2 ND CR OSS, SUBHASH NAGAR, ARSIKERE TQ. . APPELLANT. PAN AHTPS 5201P VS. INCOME TAX OFFICER, WARD 2, HASSAN. .. RESP ONDENT. APPELLANT BY : SMT. PRATIBHA, ADVOCATE. R E SPONDENT BY : SHRI SUNIL KUMAR AGARWAL, JCIT (D.R) DATE OF H EARING : 21.7.2016. DATE OF P RONOUNCEMENT : 29 .7 .201 6 . O R D E R PER SHRI VIJAY P AL RAO, J .M . : THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF THE CIT (APPEALS) , MYSURU ARISING FROM ASSESSMENT ORDER UNDER SECTION143(3) OF THE INCOME TA X ACT, 1961 (IN SHORT 'THE ACT') AND PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEAR 2010 - 11. 2 IT A NO S . 801 & 802 /BANG/201 5 2. FIRST WE TAKE UP THE QUANTUM APPEAL OF THE ASSESSEE WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. THE LEA RNED CIT (APPEALS) ERRED IN PASSING THE ORDER IN THE MANNER WHICH HE DID. 2. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE OF RS.1 LAKH TOWARDS CASH CREDIT AND OUGHT TO HAVE ACCEPTED THE EXPLANATION OFFERED BY THE APPELLANT AND ACCORDING LY LIABLE TO BE DELETED THE SAID ADDITION. 3. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THE SUBMISSIONS OF THE APPELLANT TOWARDS THE SOURCE FOR CASH CREDIT OF RS.2.5 LAKHS AND OUGHT TO HAVE DELETED THE ADDITION MADE BY A.O. UNDER SECTION 68 OF THE ACT. 4. THE LEARNED CIT (APPEALS) OUGHT TO HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT TOWARDS THE GENUINENESS OF THE LOAN BORROWED FROM THE VILLAGERS AND THE SAME WAS SUPPORTED BY CONFIRMATION LETTERS. THUS, THE ADDITION OF RS.6,46,000 HAS T O BE DELETED. 5. WITHOUT PREJUDICE, THE ADDITION/DISALLOWANCE IS EXCESSIVE, ARBITRARY AND UNREASONABLE AND LIABLE TO BE DELETED INTO. 6. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE INTEREST UNDER SECTION 234A AND 234B OF THE ACT. 7. FOR THESE AN D OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 3. GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 4. GROUND NO.2 IS REGARDING ADDITIO N OF RS.1 LAKH O N ACCOUNT OF CASH CREDIT. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CASH CREDIT IN THE BOOKS OF ACCOUNTS AS 3 IT A NO S . 801 & 802 /BANG/201 5 WITHDRAWAL FROM AXIS BANK OF RS.1 LAKH. THE ASSESSING OFFICER VERIFIED THE BA NK ACCOUNT OF THE ASSESSEE AND FOUND THAT THERE IS NO SUCH ENTRY OF RS.1 LAKH APPEARING IN THE AXIS BANK ACCOUNT. WHEN THIS FACT WAS POINTED OUT TO THE ASSESSEE, THE ASSESSEE SUBMITTED THAT IN THE CASH BOOK THE ACCOUNTANT WRONGLY TYPED AS AXIS BANK WH ERE AS IT IS LOAN TAKEN FROM TWO PERSONS NAMELY SRI YAGATI NAGANNA OF RS.50,000 AND SRI NERLIGE KARINAYAK OF RS.50,000. THE ASSESSEE HAS ALSO EXPLAINED THAT THE ABOVE AMOUNTS HAVE BEEN REPAID TO THESE TWO CREDITORS ON 21.7.2009 AND 22.7.2009 RESPECTIVELY. TH E ASSESSING OFFICER DID NOT ACCEPT THIS EXPLANATION OF THE ASSESSEE AND MADE AN ADDITION OF RS.1 LAKH AS UNEXPLAINED CASH CREDIT. ON APPEAL, THE ASSESSEE HA S REITERATED THE CONTENTIONS AS RAISED BEFORE THE ASSESSING OFFICER. THE CIT (APPEALS) WAS NOT IM PRESSED WITH THE EXPLANATION OF THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS SUBMITTED THE RELEVANT DETAILS IN THE ASSE SSMENT PROCEEDINGS AND ALSO GIVEN THE DETAILS OF THE REPAYMENT OF THE SAID AMOUNT TO THESE TWO CREDITORS. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO FILED THE 4 IT A NO S . 801 & 802 /BANG/201 5 CONFIRMATION WHICH WAS NOT ACCEPTED BY THE AUTHORITIES B ELOW AND THE ASSESSEE IS READY TO PRODUCE THE CREDITORS FOR EXAMINATION OF THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS MADE ADDITION BECAUSE OF TH IS MISTAKE COMMITTED BY THE ACCOUNTANT IN THE BOOKS SHOWING THIS AMOUNT AS WITHDRAWN FROM AXIS BANK IN S TEAD OF LOAN TAKEN FROM THESE TWO CREDITORS. 6. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT ONLY WHEN THE ASSESSING OFFICER HAS VERIFIED THE ACCOUNT AND FOUND THAT THE CLAIM OF THE ASSESSEE I S FACTUALLY INCORRECT AND BOGUS, T HE ASSESSEE HAS CO ME UP WITH A NEW EXPLANATION THAT THIS AMOUNT IS TAKEN FROM TWO PARTIES WHICH IS AFTER THOUGH. HE HAS RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. ADMITTEDLY THE ASSESSEE HAS SHOWN RS.1 LAKH IN THE CASH BOOK AS WITHDRAWAL FROM THE AXIS BANK HOWEVER , ON VERIFICATION THE ASSESSING OFFICER FOUND THAT THERE IS NO SUCH ENTRY IN THE ACCOUNT. T HE ASSESSEE THEN EXPLAINED THAT THIS WAS A MISTAKE COMMITTED BY THE ACCO UNTANT AND THE AMOUNT INVOLVED IS LOAN TAKEN FROM TWO PERSONS NAMELY (1) YAGATI NAGANNA & (2) NERLIGE KARINAYAK . THE ASSESSEE HAS ALSO EXPLAINED THAT THE SAID AMOUNT WAS REPAID BY THE ASSESSEE ON 5 IT A NO S . 801 & 802 /BANG/201 5 21.7.2009 AND 22.7.2009 RESPECTIVELY. THE ASSESSING O FFICER DID NOT CHOOSE TO VERIFY THE FACTS EXPLAINED BY THE ASSESSEE AND DISALLOWED THE EXPLANATION AT THRESHOLD. IT IS PERTINENT TO NOTE THAT WHEN THE ASSESSEE HAS EXPLAINED THAT THIS LOAN AMOUNT IN QUESTION HAS BEEN PAID TO THESE CREDITORS AND ALSO FILED THE CONFIRMATION OF THESE TWO PARTIES THEN IN CASE THE ASSESSING OFFICER WAS NOT SATISFIED OR DOUBTING THE VERACITY OF THE CONFIRMATION AS WELL AS THE CLAIM THEN FURTHER ENQUIRY / INVESTIGATION COULD HAVE BEEN CONDUCTED BY THE ASSESSING OFFICER. INSTEAD OF CONDUCTING FURTHER ENQUIRY, THE ASSESSING OFFICER HAS OUT RIGHTLY REJECTED THE EXPLANATION A S WELL AS CONFIRMATION PRODUCED BY THE ASSESSEE. ACCORDINGLY IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THIS ISSUE REQUIRES A PROPER VERI FICATION AND EXAMINATION. IF NEED ARISES THE CREDITORS MAY BE EXAMINED BY THE ASSESSING OFFICER ON BEING PRODUCTION BY THE ASSESSEE. 8. GROUND NO.3 IS REGARDING ADDITION OF RS.2.5 LAKHS TOWARDS UNEXPLAINED CASH CREDIT. 9. THE ASSESSEE CLAIMED TO HAVE RECEIVED RS.2.5 LAKHS FROM VARIOUS PERSONS AS PER CASH BOOK. THE ASSESSEE FILED CERTAIN DOCUMENTS CERTIFIED BY SRI MAHAVEER WHO W AS EXAMINED BY THE ASSESSING OFFICER. THE 6 IT A NO S . 801 & 802 /BANG/201 5 ASSESSEE PRODUCED THE CONTRACT DT.2.4.2009 AND 5.4.2009 UNDER WHICH THE AMOU NT OF ADVANCE WAS CLAIMED TO HAVE RECEIVED AGAINST THE AGRICULTURAL INCOME. THE ASSESSING OFFICER VERIFIED THE DATE OF ISSUE OF STAMP PAPER ON WHICH THE CONTRACT DT.2.4.2009 AND 5.4.2009 W ERE EXECUTED AND ALSO RECEIVED CLARIFICATION FROM KARNATAKA STAT REG ISTRATION AND STAMP DEPARTMENT AND MULTI PURPOSE CO - OPERATIVE SOCIETY LTD. WHO IS RESPONSIBLE FOR PRINTING AND DISTRIBUTION OF STAMP PAPER. IT WAS CLARIFIED THAT THE SAME WERE ISSUED IN THE MARKET ON 31.12.2010 ONWARDS. WHEN THIS FACT WAS POINTED OUT TO THE ASSESSEE, THE ASSESSEE EXPLAINED THAT THE ORIGINAL AGREEMENT WAS WRITTEN ON A PLAIN PAPER AND LATER ON THE SAME WAS WRITTEN ON THE STAMP PAPER. THE ASSESSING OFFICER DID NOT ACCEPT THIS EXPLANATION AND HELD THAT THE ALLEGED AGREEMENT IS AFTER THOUGHT AS THE ASSESSEE EVEN DID NOT PRODUCE THE ORIGINAL AGREEMENT. ACCORDINGLY, THE ASSESSING OFFICER MADE THE ADDITION OF THIS AMOUNT AS UNEXPLAINED CASH CREDIT. ON APPEAL, THE ASSESSEE HAS REITERATED THE CONTENTION AND EXPLANATION AS RAISED BEFORE THE ASSES SING OFFICER BUT COULD NOT SUCCEED. 10. WE HAVE HEARD THE LEARNED AUTHORISED REPRESENTATIVE AS WELL AS LEARNED DEPARTMENTAL REPRESENTATIVE AND CONSIDERED THE RELEVANT 7 IT A NO S . 801 & 802 /BANG/201 5 MATERIAL ON RECORD. THE ASSESSEE CLAIMED TO HAVE RECEIVED AN ADVANCE OF RS.2,50,00 0 FROM VARIOUS PERSONS AGAINST THE AGRICULTURAL INCOME. IN SUPPORT OF THE CLAIM THE ASSESSEE PRODUCED TWO AGREEMENTS DT.2.4.2009 AND 5.4.2009. HOWEVER THE STAMP PAPER USED FOR THESE AGREEMENTS BELONG TO THE SERIES OF THE STAMP PAPER WHICH WERE AVAILABLE ONLY ON 31.12.2010 ONWARDS . APART FROM THESE AGREEMENTS THE ASSESSEE HAS NOT PRODUCED ANY OTHER SUPPORTING DOCUMENTS EXCEPT CONFIRMATION LETTERS FROM THE CREDITORS. IT IS MANIFEST FROM THE RECORD THAT WHEN THE ASSESSING OFFICER QUESTIONED THE GENUINENES S OF THE CLAIM THE ASSESSEE ATTEMP TED TO MANUFACTURE THE EVIDENCE IN SUPPORT OF THE CLAIM BY PRODUCING PRE - DATED AGREEMENTS ON SUBSEQUENTLY PURCHASED STAMP PAPERS. THEREFORE THE EVIDENCE PRODUCED BY THE ASSESSEE IS AFTER THOUGHT AND CREATED ONLY AFTER TH E ASSESSING OFFICER HAS QUESTIONED THE GENUINENESS OF THE CLAIM. IN THE ABSENCE OF ANY CONTEMPORANEOUS SUPPORTING EVIDENCE WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE AUTHORITIES BELOW FOR THIS ISSUE. 11. GROUND NO.4 IS REGARDING ADDI TION OF RS.6,46,000 ON ACCOUNT OF BORROWED FUND FROM VILLAGERS. 8 IT A NO S . 801 & 802 /BANG/201 5 12. THE ASSESSEE HAS SHOWN LOAN OF RS.19,000 EACH FROM 34 PERSONS AMOUNTING TO RS.6,46,000. THE ASSESSING OFFICER QUESTION THE STRANGE SITUATION WHE N 34 PERSONS LENT MONEY TO THE ASS ESSEE IN A SPAN OF FOUR DAYS OF AN IDENTICAL AMOUNT OF RS.19,000 EACH. THE ASSESSEE FILED CONFIRMATION LETTERS FROM THE CREDITORS BUT ALL STER E O TYPED LETTERS DATED BETWEEN 21.7.2012 TO 31.7.2012. THE ASSESSING OFFICER FURTHER NOTED THAT ALL THE CONFIR MATIONS WERE WRITTEN IN THE SAME HAND WRITING AND GAVE NAME AND VAGUE ADDRESSES OF THE ALLEGED CREDITORS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE LENDERS. IN RESPONSE THE ASSESSEE SHOWN H ER IN ABILITY TO PRODUCE THE LENDERS ON THE GROUND THAT THEY WERE BUSY IN THEIR AGRICULTURE WORK. HENCE THE ASSESSING OFFICER MADE AN ADDITION OF RS.6,46,000 AS UNEXPLAINED CASH CREDIT. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE CIT (APPEALS) BUT COULD NOT SUCCEED. 13. W E HAVE HEARD THE LEARNED AUTHORISED REPRESENTATIVE AS WELL AS LEARNED DEPARTMENTAL REPRESENTATIVE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. EXCEPT THE ALLEGED CONFIRMATIONS AS PRODUCED BEFORE THE ASSESSING OFFICER, NO OTHER EVIDENCE HAS BEEN PRODUCE D BY THE ASSESSEE. THE ASSESSING OFFICER HA D ENOUGH REASON TO DOUBT THE 9 IT A NO S . 801 & 802 /BANG/201 5 GENUINENESS OF THE TRANSACTION AS IT IS APPARENT THAT THE ASSESSEE SHOWN LOAN OF RS.19,000 EACH FROM 34 PERSONS. THIS FACT ITSELF SHOWS THAT IT IS ALL WELL THOUGHT OUT CLAIM OF THE A SSESSEE TO ESCAPE THE RELEVANT PROVISIONS OF THE ACT. FURTHER ALL LOANS ARE SHOWN AS INTEREST FREE LOANS WHICH IS NOT ACCEPTABLE EXCEPT IN CASE OF A CLOSE RELATIVES NOBODY WILL ADVANCE LOAN WITHOUT INTEREST. THE BURDEN OF PROVING THE ONUS IS ON THE ASSES SEE TO PRODUCE THE CREDITORS SPECIFICALLY WHEN THE FACTS AND CIRCUMSTANCES CLEARLY RAISE THE SUSPICION ON THE VERY GENUINENESS OF THE CLAIM. ACCORDINGLY, WE FIND THAT THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS TO PROVE THE GENUINENESS OF THE CLAIM. THIS GROUND OF THE ASSESSEE IS DISMISSED. 14. BEFORE PARTING WITH THE MATTER, WE TAKE NOTE OF THE FACT THAT THE ASSESSEE HAS ALSO SHOWN AGRICULTURAL INCOME OF RS.3,20,995 WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER THEREFORE THE ADDITION SUSTAINED BY US ON ACCOUNT OF UNEXPLAINED CREDIT TO THE EXTENT OF THE AGRICULTURAL INCOME STAND EXPLAINED AND THEREFORE THE ASSESSEE WILL GET THE BENEFIT OF SOURCE OF THE CASH CREDIT TO THE EXTENT OF THE AMOUNT OF RS.3,20,995. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 10 IT A NO S . 801 & 802 /BANG/201 5 16. IN THE PENALTY APPEAL (ITA NO.802/BANG/2015) , THE ASSESSEE HAS ORIGINALLY RAISED THE FOLLOWING GROUNDS : 1. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS OPPOSED TO LAW AS THERE BEING NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS TO JUSTIFY SUCH PENALTY. 3. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE AMOUNT RECEIVED FROM THE PARTIES WERE IDENTIFIABLE AND CONFIRMATIONS WERE ALSO PRODUCED AND ACCORDINGLY CONFIRMING THE ADDITIONS UNDER SECTION 68 OF THE ACT WAS UNJUSTIFIABLE MUCH LESS THE PENALTY CONFIRMED UNDER SECTION 271(1)(C) OF THE ACT ON ALLEGED CONCEALMENT WAS OPPOSED TO LAW AND LIABLE TO BE DELETED. 4. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT EVEN IF THE EXPLANATION FURNISHED WAS NOT ACCEPTABLE, STILL THERE COULD BE NO CONCLUSION AS TO THE CONCEALMENT OR F URNISHING OF INACCURATE PARTICULARS TO JUSTIFY THE CONFIRMING OF THE LEVY OF PENALTY. 5. WITHOUT PREJUDICE, THE CONFIRMING OF PENALTY BY THE CIT (APPEALS) IS EXCESSIVE, A RBITRARY AND UNREASONABLE AND LIABLE TO BE DELETED IN TO TO . 6 . FOR THESE AND OTHE R GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 17 . THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND WHICH READS AS UNDER : 1. THE ASSESSING OFFICER HAVING ISSUED THE NOTICE UNDE R SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT IN A MECHANICAL MANNER, THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT IS NOT SUSTAINABLE IN THE EYE OF LAW. 11 IT A NO S . 801 & 802 /BANG/201 5 2. THE APPELLANT BEGS TO SUBMIT THAT THE DECISION OF THE JURISDICTIONAL HIGH CO URT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 (KARN) IS SQUARELY APPLICABLE AND THEREFORE THE IMPUGNED ORDER OF THE AUTHORITIES BELOW IS REQUIRED TO BE SET ASIDE. 1 8 . WE HAVE HEARD THE LEARNED AUTHORISED REPRESEN TATIVE AS WELL AS LEARNED DEPARTMENTAL REPRESENTATIVE AND CONSIDERED THE RELEVANT MATERIAL ON ADMISSION OF ADDITIONAL GROUNDS. AS IT IS CLEAR FROM THE ISSUE RAISED IN THE ADDITIONAL GROUND THAT IT IS PURE LEGAL IN NATURE WHEREBY THE ASSESSEE IS CHALLENGIN G THE VALIDITY OF NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)( C ) OF THE ACT AND SUPPORTED THE SAME WITH THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY REPORTED IN 35 9 ITR 565. SINCE THE ADDITIONA L GROUNDS RAISED BY THE ASSESSEE DOES NOT REQUIRE ANY FRESH INVESTIGATION OF FACTS THEREFORE , IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF NTPC LTD. VS. CIT 229 ITR 383, THE ADDITIONAL GRO UND RAISED BY THE ASSESSEE IS ADMITTED FOR ADJUDICATION. 19. THE ASSESSEE HAS FILED THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT AND SUBMITTED THAT THE ASSESSING OFFICER HAS NOT S PECIFIED THE DEFAULT ON THE PART OF THE ASSESSEE WHET HER IT IS 12 IT A NO S . 801 & 802 /BANG/201 5 CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE THE SAID SHOW CAUSE NOTICE UNDER SECTION 274 IS DEFECTIVE AND ILLEGAL AND CONSEQUENTLY PENALTY IS NOT SUSTAINABLE. SHE HAS ALSO RELIED UPON THE SUBSEQUENT DECI SION OF THE HON'BLE JURISDICTIONAL HIGH COURT DT.25.1.2016 IN THE CASE OF SAFINA HOTELS PVT. LTD. VS. CIT, BANGALORE I II & ANOTHER IN ITA NO.240/2010 WHEREIN T HE HON'BLE HIGH COURT HAS REITERATED THE PRINCIPLE AS LAID OUT IN THE CASE OF CIT VS. MANJUNATH A COTTON & GINNING FACTORY (SUPRA). 20 . ON THE OTHER HAND, THE LD. DR HAS RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 2 1. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD, IT IS NOTED THAT THE ASSESSING OFFICER HAS INITIATED THE PE NALTY PROCEEDINGS BY ISSUING A NOTICE UNDER SECTION 274 R.W.S. 271 DT. 3.12.20 12 . THE GROUNDS OF PROPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN MENTIONED IN THE NOTICE AS UNDER : H AVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 22 . AS IT IS CLEAR THAT THE ASSESSING OFFICER HAS NOT MADE IT CLEAR AS ON WHICH GROUND THE PENALTY WAS PROPOSED TO BE INITIATED BY ISSUING THE 13 IT A NO S . 801 & 802 /BANG/201 5 SAID NOTICE, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA) HAS HELD THAT THE NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUND MENTIONED IN 271(1)(C) OF THE ACT I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULA RS OF INCOME. SENDING PRINTED FORM WHERE ALL THE GROUNDS ME NTIONED IN THE SECTION 271(1) ARE MENTION ED WOULD NOT SATISFY THE REQUIREMENT OF LAW. BY CONSIDERING THE SAID DECISION, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE SUBSEQUENT DECISION DT.25.1.2 016 IN THE CASE OF M/S. SAFINA HOTELS PVT. LTD. VS. CIT & ANOTHER (SUPRA) HAS HELD IN PARAS 9 TO 11 AS UNDER : 9. THE JUDGMENT OF MANJUNATH COTTON AND GINNING'S CASE (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE WHEREIN, IT IS HELD THA T THE LEVY OF PENALTY IS NOT AUTOMATIC CONCOMITANT OF THE ASSESSMENT AND THE STANDARD PROFORMA WITHOUT SPEAKING OF THE RELEVANT CLAUSES LEAD TO AN INFERENCE TO NON - APPLICATION OF MIND. IN THE CONCLUSION PART AT PARA.63 OF THE SAID JUDGMENT, IN CLAUSES N,P, Q,R, IT IS HELD THUS: '(N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. (P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION271(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 MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. (R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE.' 14 IT A NO S . 801 & 802 /BANG/201 5 10. AS REGARDS SECTION 271 (1 - B) OF THE ACT, IT CLEARLY INDICATES THAT THE ASSESSMENT ORDER SHOULD CONTAIN A DIRECTION FOR INITIAT ION OF PROCEEDINGS. MERELY SAYING THAT THE PENALTY PROCEEDINGS HAVE BEEN INITIATED WOULD NOT SATISFY THE REQUIREMENT, A DIRECTION TO INITIATE PROCEEDING SHALL BE CLEAR AND NOT BE AMBIGUOUS. 11. IN THE LIGHT OF THE SAID JUDGMENT OF THE CO - ORDINATE BENCH, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND AT THE TIME OF ISSUING NOTICE UNDER SECTION 274 R/W SECTION 271(1)(B) OF THE ACT. THIS VIEW IS FORTIFIED BY THE ORDER PASSE D UNDER SECTION 271(1)(C) OF THE ACT. NO DIRECTION IS COMING FORTH IN THE ASSESSMENTS ORDER FOR LEVYING PENALTY WHICH IS MANDATORY AS PER SECTION 271(1 B) OF THE ACT. CONSIDERING THE RELEVANT FACTORS, APPELLATE COMMISSIONER HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE SETTING - ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER WHICH HAS BEEN REVERSED BY THE ITAT ON THE GROUND THAT THE ASSESSEE DELIBERATELY EVADED THE PAYMENT OF TAX BY DECLARING THE CAPITAL EXPENDITURE AS REVENUE EXPENDITURE IN THE 'FINANCIAL EXPENSES'. IN OUR CONSIDERED OPINION, FOR THE REASONS STATED ABOVE, THE ORDER PASSED BY THE ITAT IS NOT SUSTAINABLE. ACCORDINGLY, WE SET ASIDE THE ORDE R OF THE ITAT AND RESTORE THE ORDER PASSED BY THE CIT(A) ANSWERING THE SUBSTANTIAL QUESTIONS OF LAW IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT ON THIS ISSUE, THE PENALTY LEVIED UNDER SECTION 271(1)(C) ON THE BASIS OF DEFECTIVE NOTICE UNDER SECTION 274 IS NOT SUSTAINABLE AND ACCORDINGLY THE SAME IS DELETED. 2 3 . IN THE RESULT, THE ASSESSEE'S APPEALS IN ITA NO. 801 /BANG/201 5 IS PARTLY ALLOWED AND ITA NO. 802 /BANG/201 5 IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 29TH DAY OF JULY, 201 6 . SD/ - ( INTURI RAMA RAO ) ACCOUNTANT MEMBER SD/ - ( VIJAY PA L RAO ) JUDICIAL MEMBER *REDDY GP