DCIT, C.Circle-4(2), Kolkata, Kolkata V. Shri Brijendra Kumar Poddar, Kolkata

ITA 93/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1432 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 18-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN ADD L; ANAND R BAIWAR
• Assessee Lawyers: D S DAMLE
• Keywords: Reopening of assessment; Principle of natural justice; Initiation of penalty proceedings
• Section: 131; 148

Judgement Text

I.T.A. NOS. 93 & 94/KOL./2017 ASSESSMENT YEAR: 2006-2007 & 2007-2008 & C.O. NOS. 12 & 13/KOL/2017 (IN ITA NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NOS. 93 & 94/KOL/ 2017 ASSESSMENT YEARS: 2006-2007 & 2007-2008 DEPUTY COMMISSIONER OF INCOME TAX,................. .......................APPELLANT CENTRAL CIRCLE-4(2), KOLKATA AAYAKAR BHAWAN, POORVA, ROOM NO. 506, 5 TH FLOOR, 110, SHANTI PALLY, KOLKATA-700 107 -VS.- SRI BRIJENDRA KUMAR PODDAR,........................ .............................RESPONDENT 216, A.J.C. BOSE ROAD, KOLKATA-700 017 [PAN: AFTPP 6620 F] & C.O. NOS. 12 & 13/KOL/2017 (ARISING OUT OF I.T.A. NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS : 2006-2007 & 2007-2008 SRI BRIJENDRA KUMAR PODDAR,........................ ............................CROSS OBJECTOR 216, A.J.C. BOSE ROAD, KOLKATA-700 017 [PAN: AFTPP 6620 F] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. .....................RESPONDENT CENTRAL CIRCLE-4(2), KOLKATA AAYAKAR BHAWAN, POORVA, ROOM NO. 506, 5 TH FLOOR, 110, SHANTI PALLY, KOLKATA-700 107 APPEARANCES BY: SHRI ANAND R. BAIWAR, CIT & SHRI SALLONG YADEN, ADD L. CIT, D.R., FOR THE DEPARTMENT SHRI D.S. DAMLE, FCA, , ADVOCATE, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JULY 27, 2017 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 22, 2017 I.T.A. NOS. 93 & 94/KOL./2017 ASSESSMENT YEAR: 2006-2007 & 2007-2008 & C.O. NOS. 12 & 13/KOL/2017 (IN ITA NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 2 OF 12 O R D E R PER SHRI P.M. JAGTAP, A.M. .: THESE TWO APPEALS ARE PREFERRED BY THE REVENUE AGAI NST TWO SEPARATE ORDERS OF LD. COMMISSIONER OF INCOME TAX ( APPEALS)-XXI, KOLKATA, BOTH DATED 14.10.2016, WHEREBY THE PENALTI ES IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE IN COME TAX ACT, 1961 FOR ASSESSMENT YEARS 2006-07 AND 2007-08 AMOUNTING TO R S.3,76,15,923/- AND RS.7,29,657/- WERE CANCELLED BY HIM AND THE SAM E ARE BEING DISPOSED OF BY A COMMON ORDER ALONG WITH THE CORRESPONDING C ROSS OBJECTIONS FILED BY THE ASSESSEE BEING C.O. NOS. 12 & 13/KOL/2 017 . 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS REGULARLY ASSESSED TO TAX. ON 26.09.2011, HE FURNISHED A DECL ARATION BEFORE THE DIRECTOR GENERAL OF INVESTIGATION, KOLKATA. IN THE SAID DECLARATION CLAIMED TO BE FILED VOLUNTARILY, THE ASSESSEE ADMITTED THAT HE HAD MAINTAINED A BANK ACCOUNT WITH HSBC IN SWITZERLAND, WHICH WAS NO T DISCLOSED IN HIS BOOKS OF ACCOUNT. IT WAS STATED BY THE ASSESSEE THA T THE SAID BANK ACCOUNT WAS CLOSED BY HIM SOMETIME BACK AND THE AMOUNT OF U S DOLLARS 9,53,187 EQUIVALENT TO RS.4,43,23,196/- LYING THEREIN WAS RE CENTLY BROUGHT BACK TO INDIA. THE ASSESSEE AGREED TO SURRENDER THE SAID AM OUNT AS HIS UNDISCLOSED INCOME FOR THE ASSESSMENT YEAR 2012-13 AND ALSO PAID TAX THEREON AMOUNTING TO RS.1,36,95,868/- ON 28.09.2011 . PURSUANT TO THE SAID DECLARATION, A NOTICE UNDER SECTION 131 WAS IS SUED BY THE DIRECTOR GENERAL OF INVESTIGATION, KOLKATA REQUIRING THE ASS ESSEE TO APPEAR PERSONALLY ON 30.09.2011. IN RESPONSE TO THE SAID N OTICE, THE ASSESSEE APPEARED ON 30.09.2011 AND IN HIS STATEMENT RECORDE D ON THAT DATE, HE REITERATED THE STAND TAKEN IN THE DECLARATION FILED ON 26.09.2011. THEREAFTER THE ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2012-13 ON 26.07.2012, WHEREIN HE DECLARED THE AMOUNT OF RS.4, 43,23,196/- AS HIS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE SAID RETURN WAS DULY PROCESSED BY THE ASSESSING OFFICER UNDER SECTI ON 143(1) ON I.T.A. NOS. 93 & 94/KOL./2017 ASSESSMENT YEAR: 2006-2007 & 2007-2008 & C.O. NOS. 12 & 13/KOL/2017 (IN ITA NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 3 OF 12 10.05.2013 THEREBY ACCEPTING THE INCOME OFFERED BY THE ASSESSEE ON ACCOUNT OF THE AMOUNT LYING IN HIS OVERSEAS UNDISCL OSED BANK ACCOUNT AS HIS INCOME FOR A.Y. 2012-13. 3. MEANWHILE, THE ASSESSING OFFICER NOTED FROM THE INFORMATION RECEIVED BY THE GOVERNMENT OF INDIA FROM A FOREIGN GOVERNMENT BY VIRTUE OF PROVISIONS FOR EXCHANGE OF INFORMATION UNDER THE BILATERAL DOUBLE TAXATION AVOIDANCE AGREEMENT THAT THE ASSESSEE HAD OPERATED A BANK ACCOUNT IN SWITZERLAND WITH HSBC BANK AND THERE WER E DEPOSITS MADE IN THE SAID BANK ACCOUNT DURING THE PREVIOUS YEAR RELE VANT TO A.YS. 2006-07 & 2007-08. SINCE THE SAID BANK ACCOUNT WAS NOT DISC LOSED BY THE ASSESSEE IN THE RETURNS OF INCOME FILED REGULARLY FOR A.YS. 2006-07 AND 2007-08, HE REOPENED THE ASSESSMENTS FOR THE SAID TWO YEARS AND ISSUED NOTICES TO THE ASSESSEE UNDER SECTION 148 FOR ASSESSMENT YEARS 200 6-07 AND 2007-08 ON 08.03.2013 AND 12.03.2013 RESPECTIVELY AFTER REC ORDING THE REASONS. ALTHOUGH THE ASSESSEE FILED A LETTER STATING THAT T HE RETURNS OF INCOME ORIGINALLY FILED BY HIM FOR BOTH THE YEARS UNDER CO NSIDERATION MAY BE TREATED AS THE RETURNS FILED IN COMPLIANCE TO THE N OTICES ISSUED UNDER SECTION 148, HE RAISED CERTAIN OBJECTIONS CHALLENGI NG THE REOPENING OF ASSESSMENTS. THE ASSESSING OFFICER DID NOT FIND MER IT IN THE SAID OBJECTIONS AND OVERRULING THE SAME, HE PROCEEDED TO COMPLETE THE ASSESSMENTS UNDER SECTION 147/143(3) FOR BOTH THE Y EARS UNDER CONSIDERATION VIDE ORDERS DATED 04.03.2015 AND 31.0 3.2015. IN THE ASSESSMENTS SO MADE, ADDITIONS OF RS.4,17,95,469/- AND RS.8,10,731/- WERE MADE BY THE ASSESSING OFFICER TO THE TOTAL INC OME OF THE ASSESSEE FOR ASSESSMENT YEARS 2006-07 AND 2007-08 RESPECTIVELY O N ACCOUNT OF UNDISCLOSED INVESTMENT IN HSBC, SWITZERLAND. HE ALS O INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR BOTH THE YEARS UNDER CONSIDERATION. 4. IN RESPONSE TO THE SHOW-CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER DURING THE COURSE OF PENALTY PROCEEDINGS, I T WAS SUBMITTED ON I.T.A. NOS. 93 & 94/KOL./2017 ASSESSMENT YEAR: 2006-2007 & 2007-2008 & C.O. NOS. 12 & 13/KOL/2017 (IN ITA NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 4 OF 12 BEHALF OF THE ASSESSEE, INTER ALIA, THAT HE HAD MADE VOLUNTARY DECLARATION OF HIS FOREIGN BANK ACCOUNT BEFORE THE INCOME TAX D EPARTMENT MUCH PRIOR TO THE INITIATION OF ASSESSMENT PROCEEDINGS F OR ASSESSMENT YEARS 2006-07 AND 2007-08. IT WAS ALSO SUBMITTED BY THE A SSESSEE THAT THE SAID BANK ACCOUNT HAVING BEEN CLOSED AND THE ENTIRE AMOU NT LYING THEREIN HAVING BEEN BROUGHT BACK INTO INDIA IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2012-13, THE AMOUNT WAS SURRENDERED AS HIS UNDISCLOSED INCOME BY THE ASSESSEE FOR A.Y. 2012-13 AND AFTER D ISCLOSING THE SAME IN THE RETURN OF INCOME FOR THAT YEAR, THE TAX DUE THE REON WAS ALSO PAID BY THE ASSESSEE. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. ACCORDING TO HIM, IRRESPE CTIVE OF THE SOURCE OF INCOME OR THE ROUTE THROUGH WHICH THE SAME MIGHT HA VE COME TO THE POSSESSION OF THE DEPARTMENT, THE FACT THAT REMAINE D UNDISPUTED WAS THAT THE ASSESSEE HAD MAINTAINED AN ACCOUNT WITH HSBC, S WITZERLAND, WHICH WAS AN UNDISCLOSED, CONCEALED OFFSHORE ACCOUNT. HE HELD THAT THE ASSESSEE BY EVADING TAX HAD GENERATED INCOME IN THE FORM OF MONEY EITHER IN INDIAN OR FOREIGN CURRENCY AND HAD SOURCED THE INVE STMENT AND TRANSACTION IN VIOLATION OF LAW OR PROVISION OF INC OME TAX ACT, 1961. AS REGARDS THE DISCLOSURE MADE BY THE ASSESSEE IN HIS RETURN OF INCOME FOR A.Y. 2012-13, HE HELD THAT IT WAS NOT UNDERSTANDABL E AS TO HOW THE ASSESSEE DECLARED THE INCOME EARNED IN A.Y. 2006-07 AND 2007-08 AS APPARENT FROM HIS BANK ACCOUNT WITH HSBC, SWITZERLA ND IN A.Y. 2012-13 AND PAID TAX THEREON. THE ASSESSING OFFICER HELD TH AT IT WAS THUS A CLEAR CASE OF CONCEALMENT OF INCOME BY THE ASSESSEE FOR B OTH THE YEARS UNDER CONSIDERATION, I.E. A.Y. 2006-07 & 2007-08 AND ACCO RDINGLY PENALTIES OF RS.3,76,15,923/- AND RS.7,29,657/- WERE IMPOSED BY HIM FOR A.Y. 2006-07 AND 2007-08 BEING 300% OF THE TAX SOUGHT TO BE EVAD ED BY THE ASSESSEE IN RESPECT OF HIS INCOME REPRESENTING UNDISCLOSED INVE STMENT MADE IN HSBC, SWITZERLAND. 5. THE PENALTIES IMPOSED BY THE ASSESSING OFFICER U NDER SECTION 271(1)(C) FOR BOTH THE YEARS UNDER CONSIDERATION WE RE CHALLENGED BY THE I.T.A. NOS. 93 & 94/KOL./2017 ASSESSMENT YEAR: 2006-2007 & 2007-2008 & C.O. NOS. 12 & 13/KOL/2017 (IN ITA NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 5 OF 12 ASSESSEE IN THE APPEALS FILED BEFORE THE LD. CIT(AP PEALS). DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT( APPEALS), VARIOUS CONTENTIONS WERE RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF INITIATION OF THE PENALTY PROCEEDINGS AS WELL AS TH E CONSEQUENT ORDERS PASSED UNDER SECTION 271(1)(C). THE ASSESSEE ALSO S TRONGLY RELIED ON THE DECLARATION FILED BEFORE THE DIRECTOR GENERAL OF IN VESTIGATION, KOLKATA ON 26.09.2011 TO CONTEND THAT THE SAID DECLARATION HAV ING BEEN FILED BY HIM VOLUNTARILY DECLARING THE ENTIRE AMOUNT LYING IN HI S UNDISCLOSED BANK ACCOUNT WITH HSBC SWITZERLAND FOR A.Y. 2012-13 BEFO RE INITIATION OF ANY ACTION OR ISSUE OF ANY NOTICE BY THE INCOME TAX DEP ARTMENT, THERE WAS NO CASE OF CONCEALMENT OF PARTICULARS OF HIS INCOME BY THE ASSESSEE OR FILING OF INACCURATE PARTICULARS OF SUCH INCOME ATTRACTING THE PROVISIONS OF SECTION 271(1)(C). THE LD. CIT(APPEALS) FOUND MERIT IN THE LATTER PART OF THE ARGUMENTS OF THE ASSESSEE AND ACCEPTING THE SAM E, HE CANCELLED THE PENALTIES IMPOSED BY THE ASSESSING OFFICER FOR BOTH THE YEARS UNDER CONSIDERATION FOR THE FOLLOWING IDENTICAL REASONS G IVEN IN HIS IMPUGNED ORDERS:- I HAVE CONSIDERED FINDINGS OF THE AD IN THE PENALT Y ORDER AND THE WRITTEN SUBMISSION FILED BY THE AR DURING THE A PPELLATE PROCEEDING. I FIND THAT IT IS A UNIQUE CASE WHEREIN THE ASSESSEE HAS MADE SUO MOTO DECLARATION BEFORE THE INCOME TAX AUTHORITIES REGARDING ITS FOREIGN BANK ACCOUNT BEFO RE INITIATION OF ANY ACTION OR ISSUE OF NOTICE BY THE INCOME TAX DEPARTMENT FOR THE SAME TO THE ASSESSEE. IN THIS CA SE NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE BY THE AO ON 27- 03-2012 ABOUT THE FOREIGN BANK ACCOUNT AND DEPOSITS THEREIN . BUT THE FACT IS THAT THE ASSESSEE HAD SUO MOTO WRITTEN A LE TTER TO DGIT (INV) KOLKATA ON 26-09-2011 IN WHICH IT WAS STATED BY THE ASSESSEE AS UNDER: 'I HAD AN ACCOUNT WITH HSBC SWITZERLAND ALONG WITH MY WIFE, MRS KAVITA PODDAR AND SON, MR YASH WARDHAN PODDAR, I HAVE DECIDED NOW TO DISCLOSE THE SAID ACCOUNT TO THE INC OME TAX DEPARTMENT AND PAY TAX IN ORDER TO BUY PEACE AND AV OID PROTRACTED LITIGATION. THE AMOUNT MAINTAINED AT HSBC SWITZERLAND WAS CLOSE D SOME TIME BACK AND THE MONEY KEPT OUTSIDE HAS RECENTLY B EEN BROUGHT BACK TO INDIA. I SHALL INTRODUCE THE SAID M ONEY IN MY I.T.A. NOS. 93 & 94/KOL./2017 ASSESSMENT YEAR: 2006-2007 & 2007-2008 & C.O. NOS. 12 & 13/KOL/2017 (IN ITA NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 6 OF 12 BOOKS AND PAY TAX NOW. SINCE I HAVE DECIDED TO COME CLEAN AND PAY TAX VOLUNTARILY. I HOPE NO PENAL ACTION WOULD B E TAKEN AGAINST ME, MY WIFE AND MY SON. I WOULD FURTHER LIKE TO MENTION THAT MY WIFE, MRS K AVITA PODDAR AND SON, MR. YASH WARDHAN PODDAR WERE ONLY T HE JOINT ACCOUNT HOLDERS AND AUTHORIZED SIGNATORIES BUT THE MONEY KEPT ABROAD WAS SOLELY BELONGING TO ME AND CONSEQUENTLY THE DISCLOSURE IS BEING MADE IN MY NAME'. I FURTHER FIND THAT THE ASSESSEE SUO MOTO MADE PAYM ENT OF RS.1,36,95,868/- AS TAX LIABILITY ON 28-09-2011. TH E AO ISSUED NOTICE U/S 148 FOR THE SAME BANK ACCOUNT AND SAME D EPOSITS IN THAT ACCOUNT ON 27-03-2012 FOR AYS 2006-07 & 2007-0 8. THE AO HAD ISSUED SUCH NOTICE ON THE BASIS OF CERTAIN I NFORMATION IN HIS POSSESSION REGARDING DEPOSITS MADE IN THE FO REIGN BANK ACCOUNT OF THE ASSESSEE DURING THOSE ASSESSMENT YEA RS. LATER ON ASSESSMENT ORDERS WERE PASSED BY THE AO FOR THE AYS 2006- 07 & 2007-08 ON 04-03-2015 (WHICH ARE NOT SUBJECT M ATTER UNDER THIS APPEAL FILED BY THE ASSESSEE). IN THE AS SESSMENT ORDER PENALTY PROCEEDING U/S 271(L)(C) WAS INITIATE D AND THE AO LEVIED PENALTY @ 300% IN THE PENALTY ORDER PASSE D ON 31- 03-2015. HERE IT IS CLEAR THAT THE HSBC ACCOUNT WAS OPENED O N 09-06- 2005 I.E. IN FY 2005-06. THEREFORE, SO FAR AS ASSES SMENT ORDERS PASSED TAKING THE PEAK AMOUNT IN FYS 2005-06 & 2006 -07 ON THE BASIS OF DEPOSITS MADE IN FYS 2005-06 & 2006-07 AND MAKING ADDITION FOR THE SAME IN THE HANDS OF THE AS SESSEE IN AYS 2006-07 & 2007-08 ARE JUSTIFIED, BUT NOW THE QU ESTION IS WHETHER IT IS JUSTIFIED TO LEVY PENALTY U/S 271(1)( C ) FOR THE SAME WHEN THE ASSESSEE HAD SUO MOTO DECLARED ITS HS BC BANK ACCOUNT AND DEPOSITS THEREIN TO THE INCOME TAX DEPA RTMENT MUCH BEFORE INITIATION OF ANY ACTION OR ISSUE OF AN Y NOTICE FOR THE SAME. DURING THE PENALTY PROCEEDING THE AO WAS FULLY AWARE OF THE FACT THAT THE ASSESSEE HAD ALREADY DIS CLOSED THIS FOREIGN BANK ACCOUNT BEFORE THE DGIT(LNV) KOLKATA I N SEPTEMBER, 2011 AND HAD FULLY PAID DUE TAXES THEREO N IN SEPTEMBER,2011 ITSELF. THE AO WAS ALSO AWARE THAT T HE ASSESSEE HAD IN GOOD FAITH ACTED UPON AND THE SAID DISCLOSURE WAS INCLUDED IN THE RETURN OF INCOME FOR AY 2012-13 . AS THE SUM OF US $ 953187(US $ 935230 FOR AY2006-07 + US $ 17956 FOR AY 2007-08) WAS VOLUNTARILY OFFERED FOR TAXATIO N BEFORE THE INCOME TAX DEPARTMENT (AND DUE TAXES WERE ALSO PAID ), BEFORE INITIATION OF ANY ACTION OR ISSUE OF ANY NOTICE BY THE INCOME TAX DEPARTMENT, IN THAT CASE WHERE IS THE SCOPE OF CHARGING I.T.A. NOS. 93 & 94/KOL./2017 ASSESSMENT YEAR: 2006-2007 & 2007-2008 & C.O. NOS. 12 & 13/KOL/2017 (IN ITA NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 7 OF 12 THE ASSESSEE FOR CONCEALMENT OR FILING OF INACCURAT E PARTICULARS AS REQUIRED U/S 271(1)(C) OF THE I.T. A CT, 1961. KEEPING IN VIEW FACTS DISCUSSED IN ABOVE PARAGRAPHS , I AM OF THIS VIEW THAT IN THIS PARTICULAR CASE LEVY OF PENA LTY U/S 271(1)(C ) OF THE I.T. ACT, 1961 IS NOT JUSTIFIED. HERE, IT WOULD NOT BE OUT OF CONTEXT TO MENTION THAT THIS CASE IS A UNIQUE CASE WHERE THE ASSESSEE HAS SUO MOTO MADE A DECLARATION BEFORE THE DGIT(INV) KOLKATA REGARDING ITS HSBC ACCOUNT AND DE POSITS MADE THEREIN. NOT ONLY THAT THE ASSESSEE HAS ALSO P AID FULL TAXES ON ITS OWN BEFORE INITIATION OF ANY ACTION OR ISSUE OF ANY NOTICE FOR THIS BANK ACCOUNT AND DEPOSITS MADE THER EIN. ACCORDINGLY, ASSESSEE'S APPEAL ON GROUNDS NO 1 TO 4 ARE ALLOWED. THE LD. CIT(APPEALS) THUS ACCEPTED THE ARGUMENTS RA ISED BY THE ASSESSEE ON THE IMPOSITION OF PENALTIES UNDER SECTION 271(1) (C) FOR BOTH THE YEARS UNDER CONSIDERATION ON MERIT AND WITHOUT GOING INTO THE PRELIMINARY ISSUES RAISED BY THE ASSESSEE CHALLENGING THE VALID ITY OF THE INITIATION OF PENALTY PROCEEDINGS AS WELL AS THE CONSEQUENT PENAL TY ORDERS PASSED UNDER SECTION 271(1)(C), HE CANCELLED THE PENALTIES IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) FOR BOTH THE YEARS UNDER CONSIDERATION. AGGRIEVED BY THE ORDERS OF THE LD. C IT(APPEALS), THE REVENUE HAS PREFERRED THESE APPEALS BEFORE THE TRIB UNAL, WHILE THE ASSESSEE HAS ALSO FILED HIS CROSS OBJECTIONS. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN HIS CROSS OBJECTIONS, THE ASSESSEE HAS RAISED A PRELIMINARY ISSUE CHALLENGING THE VALIDITY OF THE PENALTY ORDERS PASSED BY THE ASSESSING OFFICER ON T HE GROUND THAT IN THE ABSENCE OF ANY SPECIFIC MENTION IN THE SHOW-CAUSE N OTICES ISSUED UNDER SECTION 274 OF THE ACT FOR THE YEARS UNDER CONSIDER ATION BY THE ASSESSING OFFICER AS TO WHETHER THE ASSEESSEE IS GUILTY OF HA VING FURNISHED INACCURATE PARTICULARS OF INCOME OR OF HAVING CON CEALED PARTICULARS OF SUCH INCOME, THE INITIATION OF PENALTY PROCEEDINGS ITSELF WAS BAD IN LAW AND THE PENALTY ORDERS PASSED IN PURSUANCE THEREOF ARE LIABLE TO BE I.T.A. NOS. 93 & 94/KOL./2017 ASSESSMENT YEAR: 2006-2007 & 2007-2008 & C.O. NOS. 12 & 13/KOL/2017 (IN ITA NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 8 OF 12 QUASHED. IN SUPPORT OF THE CASE OF THE ASSESSEE ON THIS PRELIMINARY ISSUE, LD. COUNSEL FOR THE ASSESSEE HAS RELIED, INTER ALIA, ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & A NOTHER VS.- MANJUNATHA COTTON & GINNING FACTORY REPORTED IN 359 ITR 565 AND SUBMITTED THAT THE SAID DECISION HAS BEEN CONSISTEN TLY FOLLOWED BY THIS TRIBUNAL TO CANCEL THE PENALTIES IMPOSED UNDER SECT ION 271(1)(C) IN SEVERAL CASES, WHERE THE NOTICE UNDER SECTION 274 H AS BEEN FOUND TO BE ISSUED IN THE PRINTED FORM WITHOUT STRIKING OFF THE IRRELEVANT PORTION, VIZ. FURNISHED INACCURATE PARTICULARS OF INCOME OR CO NCEALED PARTICULARS OF SUCH INCOME. HE HAS ALSO INVITED OUR ATTENTION TO THE SHOW-CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER IN THE PRESENT CASE FOR BOTH THE YEARS UNDER CONSIDERATION UNDER SECTION 274 IN THE PRINTE D FORM TO POINT OUT THAT THERE IS A SIMILAR INFIRMITY IN THE SAID NOTIC ES, INASMUCH AS, THE IRRELEVANT PORTION WAS NOT STRUCK OFF BY THE ASSESS ING OFFICER AND THIS POSITION CLEARLY EVIDENT FROM THE SAID NOTICES HAS NOT BEEN DISPUTED EVEN BY THE LD. D.R. HE, HOWEVER, HAS CONTENDED THAT THE NOTICE ISSUED UNDER SECTION 274 CANNOT BE READ IN ISOLATION AND IT HAS TO BE READ WITH THE ASSESSMENT ORDER TO FIND OUT THE EXACT CHARGE LEVEL LED BY THE ASSESSING OFFICER AGAINST THE ASSESSEE. WE ARE UNABLE TO ACCE PT THIS CONTENTION OF THE LD. D.R. AS HELD BY THE HONBLE KARNATAKA HIGH COURT IN THIS REGARD IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY (SU PRA), THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS IN SO FAR AS CONCEALMENT OF INCOME AND FURNISHING OF INCORRECT PARTICULARS W OULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS AND IT IS OPEN TO THE A SSESSEE TO CONTEST THE SAID PROCEEDINGS ON THE MERITS. HONBLE HIGH COURT FURTHER HELD THAT NOTICE UNDER SECTION 274 OF THE ACT SHOUL D SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E. WHETHE R IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULAR S OF INCOME AND SENDING PRINTED FORM WHERE ALL GROUNDS ARE MENTIONED IN SEC TION 271 WOULD NOT SATISFY THE REQUIREMENT OF LAW. EXPLAINING FURTHER, IT WAS OBSERVED BY THE HONBLE KARNATAKA HIGH COURT THAT THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE KNOWN ABOUT THE I.T.A. NOS. 93 & 94/KOL./2017 ASSESSMENT YEAR: 2006-2007 & 2007-2008 & C.O. NOS. 12 & 13/KOL/2017 (IN ITA NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 9 OF 12 GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY ON HI M AS SECTION 274 MAKES IT CLEAR THAT THE ASSESSEE HAS A RIGHT TO CON TEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE O F 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. IT WAS HELD T HAT THE PRACTICE OF THE DEPARTMENT SENDING A PRINTED FORM WHERE ALL THE GRO UNDS MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQ UIREMENT OF LAW, INASMUCH AS THE PRINCIPLES OF NATURAL JUSTICE IS OF FENDED IF THE SHOW-CAUSE NOTICE IS VAGUE AND ON THE BASIS OF SUCH NOTICE, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. IT IS PERTINENT TO NOTE HE RE THAT A SIMILAR VIEW AS EXPRESSED IN THE CASE OF MANJUNATHA COTTON & GIN NING FACTORY (SUPRA) WAS REITERATED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (ITA NO. 380 OF 2015 DATED 23.11.20 15) AND THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SSAS E MERALD MEADOWS HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT VIDE OR DER DATED 05.08.2016. 7. IT IS WELL SETTLED POSITION OF LAW THAT THE PENA LTY UNDER SECTION 271(1)(C) IS LEVIABLE IF THE ASSESSING OFFICER IS S ATISFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF [91 TAXMAN 218], THE TWO EX PRESSIONS CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCU RATE PARTICULARS OF INCOME ARE DIFFERENT CONNOTATIONS AND IT IS IMPERA TIVE FOR THE ASSESSEE TO BE MADE AWARE AS TO WHICH OF THE TWO IS BEING PU T AGAINST HIM FOR THE PURPOSE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) SO THAT HE CAN DEFEND ACCORDINGLY. IF THE NOTICE ISSUED UNDER SECTION 274 IS ISSUED BY THE ASSESSING OFFICER IN THE STANDARD PRINTED PROFORMA WITHOUT STRIKING OUT THE IRRELEVANT CLAUSE LIKE IN THE PRESENT CASE, THE SAME, IN OUR OPINION, CANNOT CONVEY TO THE ASSESSEE AS TO WHICH OF THE CH ARGES HE HAS TO RESPOND AND SUCH NOTICE ISSUED BY THE ASSESSING OFF ICER WITHOUT I.T.A. NOS. 93 & 94/KOL./2017 ASSESSMENT YEAR: 2006-2007 & 2007-2008 & C.O. NOS. 12 & 13/KOL/2017 (IN ITA NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 10 OF 12 APPLICATION OF MIND IS LIABLE TO TREATED AS VAGUE O N THE BASIS OF WHICH NO PENALTY CAN BE IMPOSED ON THE ASSESSEE AS HELD BY T HE HONBLE KARNATAKA HIGH COURT, INTER ALIA, IN THE CASE OF SSAS EMERAL D MEADOWS (SUPRA) AND MANJUNATHA COTTON & GINNING FACTORY (SUPRA). EVEN T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMSUNG PERINACHERY (ITA NO. 1154, 953, 1097 AND 1126 OF 2014 DATED 05.01.2017) HAS TAKEN A SIMI LAR VIEW WHILE UPHOLDING THE DECISION OF THE TRIBUNAL THAT THE NOT ICE ISSUED UNDER SECTION 274 BY THE ASSESSING OFFICER IN THE STANDAR D FORMAT WITHOUT STRIKING OFF THE IRRELEVANT PORTION WAS BAD IN LAW AND THE ORDER PASSED IN PURSUANCE OF SUCH NOTICE IMPOSING PENALTY UNDER SEC TION 271(1)(C) WAS LIABLE TO BE CANCELLED BEING INVALID. 8. KEEPING IN VIEW THE LEGAL POSITION EMANATING FRO M THE VARIOUS JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THE NOTICES ISSUED BY THE ASSESSING OFFICER UNDER SECTI ON 274 IN THE PRESENT CASE FOR BOTH THE YEARS UNDER CONSIDERATION NOT BEI NG IN ACCORDANCE WITH LAW, THE PENALTY ORDERS PASSED BY HIM IN PURSUANCE THEREOF ARE LIABLE TO BE CANCELLED BEING INVALID. WE ACCORDINGLY UPHOLD T HE IMPUGNED ORDERS OF THE LD. CIT(APPEALS) CANCELLING THE PENALTIES IMPOS ED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) FOR BOTH THE YEARS UNDER CONSIDERATION ALTHOUGH ON DIFFERENT GROUNDS. 9. IT IS OBSERVED THAT THE PENALTIES IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) FOR BOTH THE YEARS UNDER CO NSIDERATION WERE CANCELLED BY THE LD. CIT(APPEALS) VIDE HIS IMPUGNED ORDER BY ACCEPTING THE STAND OF THE ASSESSEE ON MERIT THAT THE DECLARA TION MADE BY THE ASSESSEE SURRENDERING HIS UNDISCLOSED INCOME REPRES ENTING THE AMOUNT LYING IN THE OVERSEAS BANK ACCOUNT WITH HSBC SWITZE RLAND ON 26.09.2011 WITHOUT INITIATION OF ANY ACTION OR ISSUANCE OF ANY NOTICE ISSUED BY THE INCOME TAX DEPARTMENT WAS VOLUNTARY SHOWING THE BON AFIDE OF THE ASSESSEE. IN THIS REGARD, THE LD. D.R. HAS SUBMITTE D BEFORE US THAT THE MATTER RELATING TO THE LEAKAGE OF INFORMATION REGAR DING THE UNDISCLOSED I.T.A. NOS. 93 & 94/KOL./2017 ASSESSMENT YEAR: 2006-2007 & 2007-2008 & C.O. NOS. 12 & 13/KOL/2017 (IN ITA NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 11 OF 12 BANK ACCOUNTS MAINTAINED BY THE INDIAN RESIDENTS BY ONE OF THE EMPLOYEES OF HSBC SWITZERLAND WAS ALREADY REPORTED IN PRINT MEDIA WELL BEFORE THE DECLARATION MADE BY THE ASSESSEE ON 26.0 9.2011 AND, THEREFORE, THE SAID DECLARATION MADE BY THE ASSESSE E CANNOT BE SAID TO BE VOLUNTARY AS HELD BY THE LD. CIT(APPEALS). THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS NARRATED THE SEQUE NCE OF THE RELEVANT EVENTS IN DETAILS AND CONTENDED THAT GOING BY THE S AID SEQUENCE AS WELL AS KEEPING IN VIEW THAT THE DECLARATION MADE BY THE AS SESESE ON 26.09.2011 WAS WITHOUT ANY SPECIFIC DETECTION BY THE DEPARTMEN T AND WAS WITHOUT ANY INITIATION OF ACTION OR ISSUE OF NOTICE BY THE DEPARTMENT WAS A VOLUNTARY ONE MADE SUO MOTU BY THE ASSESSEE AS RIGH TLY HELD BY THE LD. CIT(APPEALS). HE HAS ALSO RAISED ONE MORE CONTENTIO N IN SUPPORT OF THE ASSESSEES CASE BY RELYING ON THE RELEVANT PROVISIO NS OF THE BLACK MONEY (UNDISCLOSED FOREIGN INCOME AND ASSETS) AND IMPOSIT ION OF TAX ACT, 2015 WHEREBY THE ASSESSEES WERE GIVEN THE OPPORTUNITIES OF DECLARING THE VALUE OF AN UNDISCLOSED ASSETS LOCATED OUTSIDE INDI A AND PAY TAX THEREON @ 60%. THE CONTENTION AS RAISED BY THE LD. COUNSEL FOR THE ASSESSEE IN THIS REGARD IS THAT ANY ASSESSEE AS PER THE SAID AC T THUS COULD GET AWAY BY PAYING TAX @60% ON THE VALUE OF AN UNDISCLOSED ASSE T LOCATED OUTSIDE INDIA IN THE YEAR 2015, WHILE THE ASSESSEE IN THE P RESENT CASE EVEN AFTER DECLARING HIS UNDISCLOSED ASSET LOCATED OUTSIDE IND IA IN THE YEAR 2011 ITSELF AND FINALLY PAYING TAX ON SUCH VALUE ALONG W ITH INTEREST THEREON, AS THE CORRESPONDING INCOME WAS ULTIMATELY CHARGED TO TAX IN HIS HANDS IN A.YS. 2006-07 AND 2007-08 COULD NOT AVAIL THE IMMUN ITY PROVIDED IN THE SAID ACT INTRODUCED IN 2015. HE HAS CONTENDED THAT THE ASSESSEE HAVING DECLARED THE INCOME ON ACCOUNT OF UNDISCLOSED ASSET LOCATED OUTSIDE INDIA VOLUNTARILY IN THE YEAR 2011 ITSELF AND HAVING PAID TAX THEREON ALONG WITH INTEREST THUS IS PUT IN AN ADVERSE POSITION AS COMP ARED TO THE OTHER ASSESSEES WHO DID NOT MAKE SUCH DECLARATION AND FIN ALLY GOT THE BENEFIT OF THE ACT INTRODUCED IN 2015. HE HAS CONTENDED THAT G OING BY THE SPIRIT OF RULE OF EQUALITY BEFORE LAW, THE BENEFIT OF IMMUNIT Y PROVIDED IN THE 2015 ACT THUS SHOULD BE EXTENDED TO THE ASSESSEE AND THE ORDERS OF THE LD. I.T.A. NOS. 93 & 94/KOL./2017 ASSESSMENT YEAR: 2006-2007 & 2007-2008 & C.O. NOS. 12 & 13/KOL/2017 (IN ITA NOS. 93 & 94/KOL/2017) ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 12 OF 12 CIT(APPEALS) CANCELLING THE PENALTIES IMPOSED UNDER SECTION 271(1)(C) ARE LIABLE TO BE UPHELD ON THIS GROUND ALSO. EVEN T HOUGH THESE ARGUMENTS RAISED BY THE LD. COUNSEL FOR THE ASSESSEE IN SUPPO RT OF THE ASSESSEES CASE ON THE ISSUE OF IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) ON MERIT APPEAR INTERESTING, WE REFRAIN OURSELVES FROM CONSI DERING THE SAME ON MERITS AND GIVING ANY DECISION THEREON AS THE SAME HAVE BECOME VIRTUALLY INFRUCTUOUS AS A RESULT OF OUR DECISION RENDERED HE REINABOVE ON THE PRELIMINARY ISSUE CANCELLING THE PENALTY ORDERS PA SSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) BY HOLDING THE SAME TO BE INVALID. 10. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED, WHILE THE CROSS OBJECTIONS FILED BY THE ASSESSEE AR E ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 22, 2017. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. J AGTAP) JUDICIAL MEMBER ACCOUNTANT MEM BER KOLKATA, THE 22 ND DAY OF SEPTEMBER, 2017 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4(2), KOLKATA AAYAKAR BHAWAN, POORVA, ROOM NO. 506, 5 TH FLOOR, 110, SHANTI PALLY, KOLKATA-700 107 (2) SRI BRIJENDRA KUMAR PODDAR, 216, A.J.C. BOSE ROAD, KOLKATA-700 017 (3) COMMISSIONER OF INCOME TAX (APPEALS)-21, KOLK ATA; (4) COMMISSIONER OF INCOME TAX ,KOLKAT A (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/DDO INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.