SHAH JAIN ASSOCIATES, MUMBAI V. ASST CIT RG 24 & 26, MUMBAI

ITA 878/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1567 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 09-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VAIBHAQV JAIN
• Assessee Lawyers: DINKLE HERIYA
• Keywords: Business income; Search and seizure; Initiation of penalty proceedings
• Section: 143(3); 142(1); 153A; 27; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH , MUMBAI BEFORE SRI AMIT SHUKLA , J M AND SRI RAJESH KUMAR , AM ITA NO . 8 7 8/MUM/2015 (A.Y: 2006 - 07 ) M/S. SHAH JAIN ASSOCIATES, BAHADUR MANJIL, 2 - C, 2 ND FLOOR, S. A. BREVLI ROAD, STORE LANE, FORT, MUMBAI 400 00 1 PAN: AASFS 7448G VS. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 24 & 26, MUMBAI APPELLANT .. RESPONDENT APPELLANT BY .. MISS DINKLE HERIYA, AR RESPONDENT BY .. SHRI VAIBHAQV JAIN, DR DATE OF HEARING .. 13 - 12 - 2016 DATE OF PRONOUNCEME NT .. 13 - 12 - 2016 O R D E R PER AMIT SHUKLA , JM : THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 21 - 08 - 2013 PASSED BY THE LEARNED CIT (A) - 39, MUMBAI IN RELATION TO THE PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR THE ASSESSME NT YEAR 2006 - 07. THE ASSESSEE I S MAINLY AGGRIEVED BY THE LEVY OF PENALTY OF RS.6,73,121/ - ON ACCOUNT OF AD HOC ADDITION OF RS.19,99,76/ - . THE GROUNDS OF APPEAL AS RAISED BY THE ASS ESSEE READ S AS UNDER: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN CONFIRMING THE PENALTY LEVIED BY THE ASSISTANT COMMISSIONER OF INCOME TAX U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961 ON ADHOC ADDITION OF RS.19,99,776/ - IN OR IGINAL ASSESSMENT U/S 143(32). 2. A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN IGNORING THE FACT THAT THE PENALTY ORDER WAS PASSED WITH REFERENCE TO ORDER U/S 153 - C AND NOT ORDER U/S 143(3). ITA NO. 8 7 8 /MUM/20 1 5 ASSESSMENT YEAR: 2006 - 07 2 B) IN ORDER U/S 153 - C NO PENALTY WAS INITIATE D U/S 271 (1) (C). 2. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE, MISS DINKLE HERIYA EXPLAINING THE BACKGROUND OF THE CASE SUBMITTED THAT, A SEARCH AND SEIZURE ACTION WAS CONDUCTED AT THE PREMISES OF NAVKAR GROUP OF COMPANIES ON 13 - 03 - 2013 IN WHIC H ASSESSEE WAS ALSO COVERED. P OST SEARCH ACTION AND BEFORE THE ISSUANCE OF NOTICE U/S 153A OF THE ACT, THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 31 - 03 - 2008 DECLARING TOTAL INCOME AT NIL. THE SAID RETURN OF INCOME WAS ALSO SELECTED FOR SCRUTINY U/S 143 (2 ) OF THE ACT BY SERVICE OF NOTICE ON 24 - 09 - 2008 AND THEREAFTER, NOTICES U/S 142(1) W ERE ISSUED , WHICH WERE COMPLIED WITH BY THE ASSESSEE. ACCORDINGLY, ASSESSMENT ORDER U/S 143(3) WAS PASSED ON 30 - 12 - 2008 WHEREBY THE ASSESSEES INCOME WAS DETERMINED BY TH E ESTIMATING THE PROFIT RATE OF 8% ON TOTAL SALES TURNOVER OF RS.2. 50 CRORES AND ACCORDINGLY, ASSESSEES INCOME WAS ASSESSED AT RS.19,99,780/ - . AGAINST THE SAID ASSESSMENT ORDER PASSED U/S 143(3) , FIRST APPEAL HAS BEEN PREFERRED BEFORE THE LEARNED CIT (A). IN RELATION TO THE SAID ASSESSMENT ORDER U/S 143(3), A PENALTY NOTICE WAS ISSUED ON 30 - 12 - 2008 U/S 274 R. W. S. 271(1) (C), I.E. , ON THE DATE WHEN THE ASSESSMENT ORDER U/S 143(3) WAS PASSED. AGAIN, IN PURSUANCE OF THE SEARCH AND SEIZURE ACTION, PROCEEDING S U/S 153A /153C, WAS INITIATED AND , NOT ONLY THAT , AN ORDER WAS ALSO PASSED U/S 153A READ WITH SECTION 143(3) OF THE ACT ON 22 - 12 - 2009 , ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.19,99,776/ - AS AGAINST THE RETURNED INCOME OF RS.6,24,403/ - WHICH WAS F ILED IN RESPONSE TO THE NOTICE ISSUED U/S 153A/153C . IN THE SAID ASSESSMENT ORDER, THE ASSESSING OFFICER HAD N EITHER INITIATED ANY PENALTY PROCEEDINGS U/S 271(1) (C) NOR ANY SUCH SATISFACTION HAS BEEN RECORDED. DESPITE NOT INITIATING ANY PENALTY PROCEEDING S IN THE ASSESSMENT ORDER, A NOTICE FOR INITIATION OF PENALTY PROCEEDINGS U/S 271 (1) (C) WAS ISSUED ON 12 - 03 - 2012 AND ITA NO. 8 7 8 /MUM/20 1 5 ASSESSMENT YEAR: 2006 - 07 3 CONSEQUENTLY, PENALTY HAS BEEN LEVIED OF RS.6,23,121/ - VIDE ORDER DATED 30 - 03 - 2012. AFTER EXPLAINING THE AFORESAID EVENTS AND FACTS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT HERE IN THIS CASE PENALTY HAS NOT BEEN LEVIED WIT H RESPECT TO ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) VIDE ORDER DATED 30 - 12 - 2008 , ALBEIT, IN CONSEQUENCE TO THE ASSESSMENT ORDER DATED 2 2 - 12 - 2009 PASSED U/ S 153A READ WITH SECTION 143(3) , WHICH LACKS INITIATION ITSELF. T HE PENALTY WHICH HAS BEEN LEVIED ON THE BASIS OF THE SECOND ASSESSMENT ORDER, IS NOT SUSTAINABLE IN LAW , FOR THE REASONS THAT FIRSTLY , THERE IS NO INITIATION OF PENALTY PROCEEDINGS IN THE ASS ESSMENT ORDER, AND SECONDLY, THERE I S TO BE PRIMA FACIE SATISFACTION IN THE ASSESSMENT ORDER . I N ABSENCE OF SUCH INITIATION AND SATISFACTION, PENALTY LEVIED ITSELF IS UNSUSTAINABLE IN LAW. IN SUPPORT, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE FO LLOWING DECISIONS: - (I) C.I.T. V. LOTUS CONSTRUCTIONS [2015] 370 ITR 475 - THE SECTION 271(1)(C) ITSELF INDICATES THAT THE SATISFACTION OR DECISION TO INITIATE PROCEEDINGS MUST ARISE IN THE COURSE OF THE PROCEEDINGS. ADDED TO THAT, SUB - SECTION (1) (B) OF SECTION 271 MANDATES THAT THE INTENTION OR SATISFACTION TO INITIATE PROCEEDINGS MUST BE EVIDENT FROM THE ORDER OF ASSESSMENT ITSELF, MEANING THEREBY THAT SUCH SATISFA CTION NEED NOT BE SUPPORTED WIT H OTHER REASONS. IN CHENNAKESAVA PHARMACEUTICALS V. CIT [2 012] 349 ITF1 196 (AP), HON'BLE HIGH COURT HELD THAT ABSENCE OF A NY MENTION IN THE ORDER OF ASSES SMENT THAT PROCEEDINGS UNDER SECTION 271(1) (C) WOULD BE INITIATED MAKES THE INITIATION OF SUCH PROCEEDINGS UNTENABLE. [PARA 12] THE NATURE OF SATISFACTION OF ASSESSEE NEED NOT BE IN WRITING, THOUGH THE FACTUM OF SATISFACTION MUST BE IN WRITING. [PARA 15] ( II ) CHENNAKESAVA PHARMACEUTICALS V. C.I.T [2012] 349 IT R 16 ( AP) THE HON'BLE HIGH COURT HELD THAT THE ASSESSING OFFICE R WAS NOT JUSTIFIED IN DIRECTING PENALTY PR OCEEDINGS TO BE INITIATED IN THE ABSENCE OF ANY FINDING RECORDED BY HIM IN THE ASSESSMENT ORDER THAT THERE HAS BEEN CONCEALMENT OF I NCOME BY THE ITA NO. 8 7 8 /MUM/20 1 5 ASSESSMENT YEAR: 2006 - 07 4 ASSESSEE OR THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS IN HIS RETURN. RELIED ON: CIT V. RAM COMMER CIAL ENTERPRISES LTD. [2000 246 ITR 568 (DELHI) (PARA 29) CIT M.K. SHARMA [20081 307 ] ITR 147 (DELHI) ( III ) C.I.T V. TRIVENI ENGINEERING & INDUSTRIES LTD [(2014) 369LTR 660 (ALL)] IT WAS HELD THAT IN ORDER THAT THE DEEMING FICTION IN SUB - SECTION (113) MUST APPL Y, TWO REQUIREMENTS MUST BE FULFILLED. THE FIRST REQUIREMENT IS THAT AN AMOUNT MUST HAVE BEEN ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OR LO SS OF AN ASSESSEE IN ANY ORDER OF ASSESSMENT OR REASSESSMENT. THE SECOND IS THAT THE ORDER OF ASSESSMENT OR REASSESSMENT MUST CONTAIN A DIRECTION FOR THE INITIATI O N OF PENALTY PROCEEDINGS UNDER CLAUSE (C) OF SUB - SECTION (1) OF SECTION 271. WHERE BOT H THE CONDITIONS AS AFORESAID ARE FULFILLED, THE ORDER OF ASSESSMENT MUST BE DEEMED A CONSTITUTE SATISFACTION OF T HE ASSESSING OFFICER FOR INITIATING PENALTY PROCEEDINGS UNDER CLAUSE (C). THE HON'BLE HIGH COURT HELD THAT IN THE PRESENT CASE THERE IS NO DIRECTION TO INITIATE PENALTY BY THE ASSESSING OFFICER IN RESPECT OF THE SPECIFIC HEAD OF INTEREST ON THE SDF LOAN AN D THEREFORE THE TRIBUNAL WAS RIGHT IN DELETING THE PENALTY IN RESPECT OF THE SDF LOAN. ( IV ) C.I.T V. MWP LTD [(2014) 264 CTR 502 (KAR)] [THE ASSESSEE HAD WITHDRAWN THE QUANTUM APPEAL TO BUY PEACE. THE ASSESSMENT ORDER STATED THE WORDS 'PENALTY UNDER SECTION 27 1(1) (C) INITIATED SEPARATELY.' THERE WAS NO DIRECTION BY THE ASSESSING OFFICER] IT WAS HELD THAT THE PLAIN READING OF THE ASSESSMENT ORDER MAKES IT CLEAR THAT THE ASSESSING OFFICER WAS NOT SATISFIED THAT THERE IS CONCEALMENT OF THE INTENT. FURTHER THERE IS NO DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS COULD BE GATHERED FROM THE SAID ORDER ALSO. IT IS HELD IN THE AFORESAID JUDGMENT THAT (A) PHRASES LIKE PENALTY PROCEEDINGS ARE BEING INITIATED SEPARATELY (B) PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ARE INITIATED SEPARATED DO NOT COMPLY WITH THE MEANING OF THE WORD DIRECTION AS CONTEMPLATED EVEN IN THE AMENDED PROVISIONS OF LAW. THE DIRECTION SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. THE WORD 'DIRECTION' HAS BEEN INTERPRETED BY THE DECISION OF THE AP EX COURT IN THE CASE OF RAJINDER NATH V. CIT [1979] 120 ITR 14, WHERE IT HAS BEEN HELD THAT IN ANY EVENT WHATEVER ELSE IT MAY AMOUNT TO, ON ITS VERY TERMS THE OBSERVATION THAT THE ITO IS FREE TO TAKE ACTION, TO ASSESS THE EXCESS IN THE HAND OF ITA NO. 8 7 8 /MUM/20 1 5 ASSESSMENT YEAR: 2006 - 07 5 THE CO - OWNER S CANNOT BE DESCRIBED AS A DIRECTION. A DIRECTION BY A STATUTORY AUTHORITY IS IN THE NATURE OF AN ORDER REQUIRING POSITIVE COMPLIANCE. WHEN IT IS LEFT TO THE OPTION AND DISCRETION OF THE ITO WHETHER OR NOT TO TAKE ACTION, IT CANNOT BE DESCRIBED AS A DIRECT ION. IN THE ABSENCE OF SUCH A DIRECTION, THE DEEMING PROVISION IS NOT ATTRACTED. THEREFORE THE CONDITIONS PRESCRIBED UNDER SECTION 271(1)(C) OF THE ACT, IS NOT ATTRACTED. ( V ) C.I.T V. MANJUNATHA COTTON & GRINNING FACTORY[(2013) 359 ITR 565 (KAR)] THE HON'BLE HIGH COURT HAD HELD THAT EXISTENCE OF CONDITIONS STIPULATED IN SECTION 271(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271. THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APP ELLATE AUTHORITY OR REVISIONAL AUTHORITY. EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) AND (B) SHOULD BE DISCERNIBLE FROM THE SAID ORDER, WHICH WOULD, BY A LEGAL FICTION, CONSTITUTE CONCEALMENT BECAUSE OF DEEMING PROVISION. EVEN IF THESE CONDITIONS DO NOT EXIST IN THE ASSESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 271(1)(C) IS A SINE QUA NON FOR THE ASSESSING OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER (APPEALS) AND THE COMMISSIONER. [PARA 63] THE DIRECTION REFERRED TO IN EXPLANATION 1B TO SECTION 271 SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. IF THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS IN APPEAL, BUT THE APPELLATE AUTHORITY RECORDS SATISFACTION , THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY. 3. ON THE OTHER HAND, THE LEARNED DR , SHRI VAIBHAV JAIN SUBMITTED THAT THE LEARNED CIT (A) HAS CLARIFIED THAT THE PRESENT PENALTY PROCEEDINGS IS ARISING OUT OF THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT AND IT IS BY INADVERTENT MISTAKE THE ASSESSING OFFICER HAS MENTIONED THE DATE OF ORDER AS 22 - 12 - 2009. THE LEARNED CIT (A) HAS REFERRED TO THE PROVISIONS OF SECTION 292B OF THE ACT AND HELD THAT THE SAME IS PROTECTED BY THE SAID ITA NO. 8 7 8 /MUM/20 1 5 ASSESSMENT YEAR: 2006 - 07 6 PROVISION ON ACCOUNT OF HAVING DEFECT OF TECHNICAL IN NATURE WHICH CAN BE RECTIFIED. THE RELEVANT OBSERVATION OF THE LEARNED CIT (A) READ BY HIM IS REPRODUCED HERE UNDER: 6.2 THE APPELLANT SEEKS TO STATE THAT THE PEN ALTY ORDER IS NULL AND VOID FOR THE REASON THAT IN THE NOTICE ISSUED THE A.O. HAS GIVEN REFERENCE TO THE ORDER PASSED DATED 22.12.2009. IN ORDER TO VERIFY THIS ASSERTION, I HAVE EXAMINED THE RECORD OF THE A.O. IT IS OBSERVED THAT A. O. ISSUED STATUTORY NOT ICE UNDER S. 274 R. W. S. 271 OF THE INCOME TAX ACT 1961 DATED 12.03.2012 ALONGWITH A COVERING LETTER. IN THE COVERING LETTER, THE A.O. HAS MENTIONED THAT THE ASSESSMENT UNDER S. 143(3) OF THE I. T. ACT, FOR A. Y. 2006 - 07 IN THE CAPTIONED CASE WAS COMPLET ED ON 22.12.2009 WH E REIN, PENALTY UNDER S. 271 (1) (C) AND UNDER S. 271 B OF THE I. T. ACT ARE INITIATED AND PENDING AGAINST YOU. CERTAINLY A MISTAKE APPARENT FROM RECORD HAS CREPT IN HERE IN THAT THE A. O. HAD INADVERTENTLY MENTIONED THE DATE OF ORDER AS 22.12.2009, WHEREAS HE HAS VERY CLEARLY MENTIONED AND DRAWN THE ATTENTION OF THE ASSESSEE TO THE ASSESSMENT UNDER S. 143(3) OF THE I. T. ACT. THAT BEING SO, THE PROVISIONS OF S. 292B AMPLY SAVES THE SAID NOTICE SINCE IT IS IN SUBSTANCE AND EFFECT IN CON FORMITY WITH THE INTENT AND PURPOSE OF THE ACT. THOUGH THE NOTICE IS TECHNICALLY DEFECTIVE, IT HAS NOT CAUSED ANY PREJUDICE TO THE ASSESSEE AND IS PROTECTED UNDER S. 292B. IT THEREFORE FOLLOWS THAT MERELY BECAUSE OF THE SAID DEFECT, THE ORDER OF PENALTY DO ES NOT BECOME INVALID. IN THIS VIEW OF THE MATTER, SUPPORT IS DRAWN FROM THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SHIRIISH MADHUKAR DALVI VS ACIT (2006) 287 ITR 242 (BOM). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER AS WELL AS THE MATERIALS PLACED ON RECORD. BEFORE GOING INTO THE MERITS OF THE MATTER , WHETHER PENALTY U/S 271 (1) (C) IS LEVIABLE ON THE ADDITION OF RS.19,99,776/ - OR NOT, WE WOULD LIKE TO DWELL UPON THE VERY SUBSTRATU M OF INITIATION OF PENALTY PROCEEDINGS U/S 271 (1) (C) ON THE FACTS OF THE PRESENT CASE. ADMITTEDLY, IN THE PRESENT CASE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006 - 07 WAS FILED BY THE ASSESSEE ON 3 1 - 03 - 2008 WHICH WAS U/S 139 (4). THE SAID RETURN OF INCO ME WAS ALSO SELECTED FOR SCRUTINY BY ISSUANCE OF AND SERVICE OF NOTICE U/S 143(2) DATED 24 - 09 - 2008. HOWEVER, PRIOR TO FILING OF THE RETURN OF INCOME AN D ISSUANCE OF NOTICE U/S 143(2) , A SEARCH AND ITA NO. 8 7 8 /MUM/20 1 5 ASSESSMENT YEAR: 2006 - 07 7 SEIZURE ACTION WAS CONDUCTED ON 13 - 03 - 2008 , WHEREIN THE ASS ESSEE WAS ALSO ROPED IN U/S 153A R. W. S. 153C . ONCE, THE ASSESSEES CASE WAS COVERED UNDER THE SEARCH PROVISIONS, T HEN IT WAS MANDATORY UPON THE A O TO PROCEED WITH THE ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT. IN TERMS OF SECOND PROVISO TO SECTION 153 A OF THE ACT, THE PENDING ASSESSMENT ON THE DATE OF INITIATION OF SEARCH ACTION GET S ABATED. THE A BATE MENT IS BY LAW HERE IN THIS CASE AS THE ASSESSMENT WAS PENDING. THUS, THE ORIGINAL ASSESSMENT PROCEEDINGS U/ 143(3) OF THE ACT AND ALSO THE CONSEQUENT ASS ESSMENT ORDER PASSED ON 30 - 12 - 2008 AUTOMATICALLY GETS ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A OF THE ACT. THE ONLY COURSE LEFT FOR THE A O WAS TO PROCEED AND COMPLETE THE ASSESSMENT OR REASSESSMENT IN TERMS OF 153A . HERE, IN THIS CASE, A SSESS MENT PROCEEDINGS U/S 153A/153C DID COMMENCED , WHICH CULMINATED INTO THE ORDER U/S 153A R. W. S. 143(3) ASSESSMENT ORDER DATED 22 - 12 - 2009. IN THE SAID ASSESSMENT ORDER, THE A O FIRST OF ALL HELD THAT THE INCOME ALREADY ASSESSED U/S 143(3) VIDE ORDER DATED 30 - 12 - 2 008 , IS TO BE ADOPTED AND SECONDLY, HE DID NOT INITIATE ANY PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE ACT. AFTER A GAP OF TWO YEARS AND THREE MONTHS, A NOTICE U/S 274 READ WITH SECTION 271 DATED 12 - 03 - 201 2 W AS ISSUED , WHEREBY THE A O REFERRED TO THE ASSESS MENT ORDER PASSED ON 22 - 12 - 2009 , I. E. ORDER U/S 153A R. W. S. 143(3), WHICH HAS BEEN STATED TO BE BY MISTAKE BY THE LEARNED CIT (A) , WHO HAS HELD THAT THE SAME I S RECTIFIABLE U/S 292B AND, THEREFORE, THE PENALTY NOTICE SHOULD BE RECKONED TO THE ORIGINAL A SSESSMENT ORDER PASSED U/S 143(3) THAT IS, DATED 30 - 12 - 2008. WE ARE UNABLE TO APPRECIATE SUCH AN OBS ERVATION OF THE LEARNED CIT (A), F IRSTLY, IN THE NOTICE DATED 12 - 03 - 2012, THE LEARNED A O HAS SPECIFICALLY MENTIONED INITIATION OF PENALTY PROCEEDINGS IN TER MS OF THE ORDER DATED 22 - 12 - 2009 AND , NOT ORDER DATED 30 - 12 - 2008 , AND SECONDLY , IN ITA NO. 8 7 8 /MUM/20 1 5 ASSESSMENT YEAR: 2006 - 07 8 THE WAKE OF THE PROCEEDINGS U/S 153A/153C THE SAID ASSESSMENT ORDER AUTOMATICALLY STANDS ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A. SUCH AN ABATED ASSESSMENT C ANNOT BE REVIVED FOR THE PURPOSE OF LEVYING PENALTY U/S 271 (1) (C) . THUS, SUCH AN OBSERVATION AND FINDING OF THE LEARNED CIT (A) CANNOT BE UPHELD. ONCE, THE ORIGINAL ASSESSMENT STANDS ABATED, THEN CONSEQUENTLY , NO PROCEEDINGS U/S 271 (1) (C) ACT CAN BE IN ITIATED OR PENALTY CAN BE LEVIED IN TERMS OF THE SAID ASSESSMENT ORDER . SO FAR AS LEVY OF PENALTY U/S 271 (1) (C) IN RESPECT OF THE ASSESSMENT ORDER DATED 22 - 12 - 2009 IS CONCERNED, THE SAME AGAIN IS UNWARRANTED, BECAUSE THERE IS NO INITIATION OF PENALTY PRO CEEDINGS U/S 271 (1) (C) IN THE ABETMENT ORDER AND NOTHING IS DISCERNIBLE FROM THE SAID ASSESSME NT ORDER THAT THE A O HAD SOME KIND OF SATISFACTION FOR INITIATING PROCEEDINGS OR LEVYING PENALTY U/S 271 (1) (C). THE DECISIONS CITED ABOVE CLEARLY CLINCH ES T HE ISSUE AND THEREFORE, THE IMPUGNED ORDER IS HEREBY QUASHED ON THE GROUND THAT THE SAME HAS NOT BEEN INITIATED OR IS ARISING OUT OF THE ASSESSMENT ORDER DATED 22 - 12 - 2009. ACCORDINGLY, THE GROUNDS OF APPEALS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 - 12 - 2016 . SD/ - ( RAJESH KUMAR ) ACCONTANT MEMBER MUMBAI, DA TED: 1 3 - 12 - 2016 LAKSHMIKANTA DEKA/SR.PS SD/ - ( AMIT SHUKLA ) JUDICIAL MEMBER ITA NO. 8 7 8 /MUM/20 1 5 ASSESSMENT YEAR: 2006 - 07 9 BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI SR. NO. PARTICULARS DATE INITIALS MEMBER CONCERNED 1 DICTATION GIVEN ON 13.12.16 LK DEKA JM 2 DRAFT PLACED BEFORE AUTHOR 13.12.16 14.12.16 3 DRAFT PROPOSED/PLAC ED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR.PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO THE BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH O F ORDER COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GU ARD FILE. //TRUE COPY//