Nishith Kumar Jain, Kolkata V. A.C.I.T CC - XXVII,kolkata, Kolkata

ITA 961/KOL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3167 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHY SHYAM
• Assessee Lawyers: MANISH TIWARI
• Keywords: Search and seizure; Principle of natural justice; Retrospective amendment; Initiation of penalty proceedings
• Section: 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI N.V.VASUSDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 961 - 964 / KOL / 2013 ASSESSMENT YEARS :2006-07 TO 2009-10 NISHITH KUMAR JAIN 265,RABINDRA SARANI, 2 ND FLOOR, KOLKATA-700 007 [ PAN NO.ACRPJ 9991 Q ] V/S . ACIT, CENTRAL CIRCLE- XXVII, AAYKAR BHAWAN POORVA, 110, SHANTI PALLY, KOLKATA-700 107 /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI MANISH TIWARI, FCA /BY RESPONDENT SHRI RADHY SHYAM, CIT-DR /DATE OF HEARING 04-02-2016 /DATE OF PRONOUNCEMENT 10-02-2016 / O R D E R PER BENCH:- THESE FOUR APPEALS BY ONE ASSESSEE ARE ARISING OUT OF ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-II, KOLKATA IN APPEALS NO.50-47/CC XXVII /CIT(A)C-II/12-13 ALL DATED 28.02.2013. ASSE SSMENTS WERE FRAMED BY ACIT, CENTRAL CIRCLE-XXVII, KOLKATA U/S 153A/143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HI S ORDERS DATED 30.12.2011 FOR ASSESSMENT YEARS 2006-07 TO 2009-10 RESPECTIVELY. P ENALTY LEVIED U/S 271(1)(C) OF THE ACT BY ASSESSING OFFICER SEPARATEL Y VIDE ORDERS DATED 29.06.2012. ITA NO.961-964/KOL/2013 A.YS. 06-07 TO 09-10 NISHITH KR. JAIN V. ACIT, CC-XXVII, KOL. PAGE 2 2. SINCE COMMON GROUNDS ARE INVOLVED EXCEPT AMOUNT IN ALL THESE APPEALS, THEREFORE, WE HEARD THEM TOGETHER AND DEEM IT APPROPRIATE TO DISPOSE OF THEM BY WAY OF THIS COMMON ORDER. 3. EXCEPT FIGURE THE FACTS IN ALL THE APPEALS ARE S AME THEREFORE WE ARE TAKING THE FACTS OF THE CASE FOR THE A.Y 2006-07 AS A LEAD ( ITA NO.961/KOL/2013 ) CASE FOR THE SAKE OF CONVENIENCE AND PASSING A CONSOLIDATED ORDER FOR ALL THE APPEALS. IN ALL THES E APPEALS, ASSESSEE HAS CHALLENGED THE ORDERS OF LD. CIT(A) WHEREBY LD. CIT (A) CONFIRMING THE ORDER OF ASSESSING OFFICER IMPOSING PENALTY ON THE ASSESS EE U/S. 271(1)(C) OF THE ACT. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT LD. CIT(A) HAVING ADMITTED THAT ADDITIONAL INCOME OFFERED U/S. 132(4) WAS ACCEPTED AND INCLUDED IN ORDER U/S 153A HAS ERRED IN HOLDING NO IMMUNITY FROM P0ENALTY IS AVAILABLE. 2. THAT ON THE ACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS WRONG IN CONFIRMING THE PENALTY ORDER BY RELYING TO EXPLANATION 5A OF SECTION 271(1)(C) AS SUBSTITUTED BY FINANCE (NO.2) ACT 2009 WITH RETROSPECTIVE EFFECT. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE CONCLUSION OF LD. CIT(A) THAT NO IMMUNITY FROM PENALTY U/S 271 (1)(C) IS AVAILABLE FOR DECLARATION U/S 132(4) IS ERRONEOUS AND ARBITRARY S INCE SECTION 271AAA(2) GRANTS IMMUNITY FROM PENALTY UNDER SIMILA R SITUATIONS. 3.1 THE FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN SEVERAL TYPES OF BUSINESS VIZ. REAL ESTATE DEVELOPM ENT, EXPORT OF FRUIT AND JEWELLERY BUSINESS. THERE WAS A SEARCH AND SEIZURE OPERATION U/S. 132(1) OF THE ACT IN BADALIA GROUP OF CASES. THE ASSESSEE IN THE INSTANT CASE WAS ALSO SEARCHED U/S 132(1) OF THE ACT. IN THE COURSE OF SE ARCH SEVERAL INCRIMINATING DOCUMENTS, JEWELLERY & CASH ETC. WERE FOUND. THE AS SESSEE IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT HAS DISCLOSED AN INC OME OF . 250 LACS PERTAINING TO AYS 2006-07 TO 2010-11 AND HAS GIVEN BREAK-UP OF UNDISCLOSED INCOME OF 250 LACS. ITA NO.961-964/KOL/2013 A.YS. 06-07 TO 09-10 NISHITH KR. JAIN V. ACIT, CC-XXVII, KOL. PAGE 3 3.2 A NOTICE U/S. 153A OF THE ACT WAS ISSUED UPON ASSESSEE FOR THE AYS 2006-07 TO 2010-11 FOR FILING THE RETURN OF INC OME. IN RESPONSE THERETO, ASSESSEE FILED HIS RETURN OF INCOME AS DECLARED IN THE STATEMENT FURNISHED U/S. 132(4) OF THE ACT. SUBSEQUENTLY ASSESSING OFFICER H AS ACCEPTED THE RETURN OF INCOME IN THE ASSESSMENT FRAMED BY HIM AND DETAILS IN THIS REGARD CAN BE SUMMARIZED IN THE FOLLOWING TWO CHARTS:- SL.NO. ASSST. YEAR AMOUNT 1 2006-07 RS.5 LACS 2 2007-08 RS.5 LACS 3 2008-09 RS.10 LACS 4 2009-10 RS.130 LACS 5 2010-11 RS.100 LACS A.Y. RETURNED INCOME U/S 139 RETUNED INCOME U/S. 153A ADDITIONAL INCOME SHOWN IN THE RETURN U/S 153A ADDITION MADE IN THE CURSE OF THE ASSESSMENT U/S 153A TOTAL INCOME OFFERED BY THE ASSESSEE AND INCOME ASSESSED. 2006-07 RS.1,11,510 RS. 5 LACS NIL NIL RS. 6,11,510/- 2007-08 RS.1,68,700/- RS.5 LACS NIL NIL RS. 6,68,700/- 2008-09 RS.1,93,250/- RS.10 LACS NIL RS.9,45,659/- RS. 21,38,905/- 2009-10 RS. NIL RS.1.30 LACS NIL RS.3,54,840/- RS.1,33,54,840/- IN ASSESSMENT ORDERS PASSED FOR VARIOUS AYS, THE AO HAS ACCEPTED THE INCOME DECLARED BY ASSESSEE AFTER MAKING SOME ADDIT IONS AND AFTER VERIFYING THE BOOKS OF ACCOUNTS, OTHER DOCUMENTARY EVIDENCE. THE AO ALSO INITIATED PENALTY PROCEEDINGS AGAINST ASSESSEE U/S. 271(1)(C) OF THE ACT BY OBSERVING AS FOLLOWS:- PENALTY PROCEEDINGS U/S 271(1)(C) HAS BEEN SEPARATE LY INITIATED . A SHOW CAUSE NOTICE U/S. 274 OF THE ACT WAS ISSUED TO THE ASSESSEE FOR THE AYS 2006-07 TO 2009-10. THE ASSESSEE SUBMITTED REPL Y TO THE SHOW CAUSE NOTICE POINTING OUT THAT THE DISCLOSURE MADE BY THE ASSESSEE WAS VOLUNTARY PRIOR TO ANY DETECTION BY THE REVENUE AND THAT THER E WAS NO ATTEMPT TO CONCEAL PARTICULARS OF INCOME. THE AO HOWEVER HELD THAT BUT FOR THE SEARCH AND ITA NO.961-964/KOL/2013 A.YS. 06-07 TO 09-10 NISHITH KR. JAIN V. ACIT, CC-XXVII, KOL. PAGE 4 SEIZURE OPERATION THE INCOME DECLARED BY THE ASSESS EE WOULD NOT HAVE BEEN DECLARED. ACCORDINGLY, THE AO IMPOSED PENALTY U/S. 271(1)(C) OF THE ACT ON THE ASSESSEE FOR AYS 2006-07 TO 2009-10. 4. ON APPEAL BY THE ASSESSEE, LD. CIT(A) CONFIRMED THE ORDER OF THE AO IMPOSING PENALTY BY HOLDING THAT EXPLANATION 5A TO SEC. 271(1)(C) OF THE ACT WAS APPLICABLE TO THE CASE AND THEREFORE PENALTY WA S TO BE IMPOSED ON THE ASSESSEE AND THEREFORE NOTWITHSTANDING THE FACT THA T THE INCOME ULTIMATELY BROUGHT TO TAX IN THE ASSESSMENT FRAMED U/S. 153C O F THE ACT WAS DECLARED IN THE RETURN OF INCOME FILED BY THE ASSESSEE, PENALTY WAS TO BE IMPOSED. EXPLANATION 5A TO SEC. 271(1)(C) OF THE ACT READS T HUS:- EXPLANATION 5A : WHERE, IN THE COURSE OF AS ARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1SST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF- (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR TING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQU IRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PA RT) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND,- (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YE AR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FO R SUCH 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 PENAL TY UNDER CLAUSE OF SUB-SECTION (1) OF THIS SECTION, BE DEE MED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. ITA NO.961-964/KOL/2013 A.YS. 06-07 TO 09-10 NISHITH KR. JAIN V. ACIT, CC-XXVII, KOL. PAGE 5 5. AGGRIEVED, BY THIS ORDER OF LD. CIT(A) ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED COU NSEL FOR THE ASSESSEE WHO SUBMITTED THAT THE AO HAS NOT RECORDED SATISFACTION IN THE ORDER OF ASSESSMENT THAT THE ASSESSEE IS LIABLE TO BE PRO CEEDED AGAINST US/S 271(1)(C) OF THE ACT EXCEPT RECORDING AS FOLLOWS IN THE ORDER OF ASSESSMENT VIZ., PENALTY PROCEEDING U/S. 271(1)(C) INITIATED . ACCORDING TO HIM THE ABOVE MANNER OF INITIATION OF PENALTY PROCEEDINGS I N THE ORDER OF ASSESSMENT IS NOT IN ACCORDANCE WITH LAW. 7. THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUT AT TENTION TO THE SHOW CAUSE NOTICE ISSUED U/S. 274 OF THE ACT BEFORE IMPO SING PENALTY AND SUBMITTED THAT THE SAID NOTICE DOE S NOT SPECIFY AS TO WHETHE R THE ASSESSEE IS GUILTY OF HAVING FURNISHED INACCURATE PARTICULARS OF INCOME OR OF HAVING CONCEALED PARTICULARS OF SUCH INCOME. HE POINTED OUT THAT TH E POINTED SHOW CAUSE NOTICE DOES NOT STRIKE OUT THE IRRELEVANT PORTION VIZ., FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF SUCH INCOME. HE DRE W OUR ATTENTION TO A DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY (2013) 218 TAXMAN 423 (KAR.) WHEREIN IT WAS HELD THAT IF THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT DOES NOT SPECIFY AS TO THE EXACT CHARGE VIZ., WHETHER THE CHARGE IS THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF INCOME BY STRIKING OUT THE IRRELEVANT PORTION OF P OINTED SHOW CAUSE NOTICE, THEN THE IMPOSITION OF PENALTY ON THE BASIS OF SUCH INVALID SHOW CAUSE NOTICE CANNOT BE SUSTAINED. 8. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A) . 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE A RGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS THAT THE SHOW CAUSE NOTICE U/S.274 OF ITA NO.961-964/KOL/2013 A.YS. 06-07 TO 09-10 NISHITH KR. JAIN V. ACIT, CC-XXVII, KOL. PAGE 6 THE ACT WHICH IS IN A PRINTED FORM AND THE AO HAS I NDICATED IN THE SAID NOTICE AS TO WHETHER THE PENALTY IS SOUGHT TO BE LEVIED ON THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR C ONCEALING PARTICULARS OF SUCH INCOME BY STRIKING OFF THE IRRELEVANT PORTION OF T HE PRINTED SHOW CAUSE NOTICE. ON THIS ASPECT WE FIND THAT IN THE SHOW CAUSE NOTIC E U/S.274 OF THE ACT THE AO HAS NOT STRUCK OUT THE IRRELEVANT PART. IT IS THER EFORE NOT SPELT OUT AS TO WHETHER THE PENALTY PROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS O F SUCH INCOME. 9.1. THE HONBLE KARNATAKA HIGH COURT IN THE CASE O F CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KARN), HAS HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPECIFICALLY STAT E AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF PAR TICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE H ONBLE HIGH COURT HAS FURTHER LAID DOWN THAT CERTAIN PRINTED FORM WHERE A LL THE GROUNDS GIVEN IN SECTION 271 ARE GIVEN WOULD NOT SATISFY THE REQUIRE MENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PENALTY PROCEEDINGS ON ON E LIMB AND FIND THE ASSESSEE GUILTY IN ANOTHER LIMB IS BAD IN LAW. IT WAS SUBMI TTED THAT IN THE PRESENT CASE, THE AFORESAID DECISION WILL SQUARELY APPLY AND ALL THE ORDERS IMPOSING PENALTY HAVE TO BE HELD AS BAD IN LAW AND LIABLE TO BE QUAS HED. 9.2. THE HONBLE KARNATAKA HIGH COURT IN THE CASE O F CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS LAID DOWN THE FOLLOWING PRINCIPLES TO BE FOLLOWED IN THE MATTER OF IMPOSING PENALTY U/S.271(1)(C) OF THE ACT. 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 EXIST ENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDINGS IS I NITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY R EFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHORITY WH ICH HAS PASSED THE ORDER. HOWEVER, IF THE EXISTENCE OF THE CONDITIONS COULD N OT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE OF RELYING ON DEEMIN G PROVISION CONTAINED IN ITA NO.961-964/KOL/2013 A.YS. 06-07 TO 09-10 NISHITH KR. JAIN V. ACIT, CC-XXVII, KOL. PAGE 7 EXPLANATION-1 OR IN EXPLANATION-1(B), THEN THOUGH P ENALTY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED I N SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND I MPOSING PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEE T 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 FARM WHERE ALL THE GRO UND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT 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 30 0% 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 JUST ICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH PROCEED INGS, 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 PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH TH E OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER TH E ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATIS FACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE C ONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALL Y STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE G ROUNDS. 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 O N WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSES SEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PR OCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEN D 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 S AME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS N OT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PE NALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF TH E AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHE R DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALI DATE 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 INACCURAT E PARTICULARS OF INCOME ITA NO.961-964/KOL/2013 A.YS. 06-07 TO 09-10 NISHITH KR. JAIN V. ACIT, CC-XXVII, KOL. PAGE 8 ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISS UING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEAL MENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE A PEX COURT IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HEL D THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED A ND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASS ESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE N OTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNI SHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING O F THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. THE FINAL CONCLUSION OF THE HONBLE COURT WAS AS FO LLOWS:- 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EMER GES IS AS UNDER: A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIAB ILITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSI NG PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDI ENT FOR ATTRACTING CIVIL LIABILITY. D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 2 71(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SEC TION 271. E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISC ERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORIT Y OR REVISIONAL AUTHORITY. F) 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) & (B) IT SHOULD BE DISCERNIBLE FRO M THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BEC AUSE OF DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE AS SESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 271(L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMISSIONER . I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORD ER OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TAX AND INTER EST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIAT E PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSME NT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME T O BE ADMITTED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY TH E ASSESSING OFFICER IN THE ASSESSMENT ORDER. ITA NO.961-964/KOL/2013 A.YS. 06-07 TO 09-10 NISHITH KR. JAIN V. ACIT, CC-XXVII, KOL. PAGE 9 L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPL ANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THA T THE EXPLANATION OFFERED IS NOT BONAFIDE, AN ORDER IMPOSING PENALTY COULD BE PA SSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUB STANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY S ATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDING S, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PR OCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE AS SESSING AUTHORITY. P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPEC IFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETH ER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORREC T PARTICULARS OF INCOME Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTI ONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE H AS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUST ICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPO SED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AN D FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE A SSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENA LTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SE PARATE ASPECT OF THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEED INGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORREC T PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PE NALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS. (EMPHASIS SUPPLIED) 9.3. IT IS CLEAR FROM THE AFORESAID DECISION THAT O N THE FACTS OF THE PRESENT CASE THAT THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT IS DEFECTIVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS SOUGH T TO BE IMPOSED. FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT, W E HOLD THAT THE ORDERS IMPOSING PENALTY IN ALL THE ASSESSMENT YEARS HAVE T O BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPOSED IS CANCELLED. ITA NO.961-964/KOL/2013 A.YS. 06-07 TO 09-10 NISHITH KR. JAIN V. ACIT, CC-XXVII, KOL. PAGE 10 9.4. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT LEVY OF PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED. WE THEREFORE CANCEL THE ORDERS IMPOSING PENALTY ON THE ASSESSEE AND ALLOW THE APPEAL BY THE ASSESSE E. IN VIEW OF OUR ABOVE CONCLUSIONS ON THE ISSUE OF DEFECT IN SHOW CAUSE NO TICE U/S.274 OF THE ACT, WE ARE NOT DEALING WITH THE OTHER ARGUMENTS MADE ON ME RITS OF THE ORDERS IMPOSING PENALTY ON THE ASSESSEE. 10. TAKING A CONSISTENT VIEW OF ASSESSEES APPEAL I N ITA NO.961/KOL/2013, SO WE ALLOW REMAINING APPEALS OF ASSESSEE ACCORDING LY. 11. IN THE RESULT, ALL FOUR APPEALS OF ASSESSEE ARE ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT 10/ 02/2016 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 10 / 02 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-NISHITH KR. JAIN, 265, RABINDRA SARANI, 2 ND FL. KOLKTA-07 2. /RESPONDENT-ACIT, CENTRAL CIRCLE-XXVII, AAYKAR BHAW AN, POORVA, 110, SHANTIPALLY KO LKATA-700 107 3. ) *+ , , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,