Lathakumari S , Mysore V. The Assistant Commissioner of Income TAx Circle-1(1), Mysore

ITA 969/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7685 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 28-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR
• Keywords: Principle of natural justice; Initiation of penalty proceedings; Reasonable cause
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO S . 968 & 969 / BANG/201 8 ASSESSMENT YEAR S : 20 07 - 08 & 2008 - 09 SMT. S. LATHAKUMARI, #567, ASHWINI, 1 ST CROSS, MARUTHI TEMPLE ROAD, KUMVEMPUNAGARA, MYSURU 570 023. PAN: A FWPK4040D VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1 (1), MYSURU. APPELLANT RESPONDENT APPELLANT BY : SHRI TATA KRISHNA, ADVOCATE RESPONDENT BY : SHRI P. DHIVAHAR, ADDL. CIT (DR) DATE OF HEARING : 10 .0 7 .2018 DATE OF PRONOUNCEMENT : 13 .0 7 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE WHICH ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A), MYSORE BOTH DATED 28 .09.2017 FOR ASSESSMENT YEARS 2007-08 AND 2008-09. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR T HE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2007-08 IN ITA NO. 968/BANG/2018 ARE AS UNDER. 1. THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) DATED 28.09.2017 BEING SERVED TO THE APPELLANT ON 06.02.2 018 I.E. AFTER 128 DAYS OF PASSING ORDER IS ILLEGAL BEING PRE-DATED, T IME BARRED AND CONTRARY TO THE BOARD INSTRUCTION NO. 20 OF 2013 DA TED 23.01.2013 R.W. LETTER DATED 08.03.2018. ITA NOS. 968 & 969/BANG/2018 PAGE 2 OF 8 3. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIF IED IN DISMISSING THE APPEAL FOR STATISTICAL PURPOSE AS SUCH PROCEDUR E IS NOT LEGALLY RECOGNISED. 4. WITHOUT PREJUDICE TO THE ABOVE, THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) OF DISMISSING THE APPEAL FOR STATISTICAL PURPOSE IS BY IMPLICATION ALLOWING THE APPEAL ON ME RITS. 5. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIF IED IN NOT ADJUDICATING THE GROUND OF THE APPELLANT THAT THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME, WHEN THE ASSESSING OFFICER ADOPTS THE RETURNED INCOME AS THE ASSESSED INCOME. 6. THE PENALTY ORDER BEING PASSED WITHOUT OBTAINING THE PRIOR APPROVAL OF THE LEARNED JOINT COMMISSIONER IS NOT V ALID. 7. THE IMPUGNED PENALTY ORDER IS BAD BEING BASED ON NOTICE ISSUED UNDER SECTION 274 R.W. 271(1)(C) WHICH IS VAGUE WIT HOUT SPECIFYING THE NATURE OF OFFENCE COMMITTED BY THE APPELLANT UNDER SECTION 271(1)(C) IN AS MUCH AS, IT DOES NOT SPECIFY THAT WHETHER THE APPELLANT HAS 'CONCEALED PARTICULARS OF INCOME' OR HAS 'FURNISHED INACCURATE PARTICULARS OF INCOME'. 8. AS REGARDS THE LEARNED ASSESSING OFFICER HAVING NOT RECORDED SATISFACTION BEFORE INITIATING PENALTY PROCEEDINGS: 8.1 THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN LEVYING PENALTY WITHOUT RECORDING HIS SATISFACTION IN THE RE-ASSESS MENT ORDER BEFORE INITIATING PENALTY PROCEEDINGS. 8.2 THE LEARNED ASSESSING OFFICER HAS FAILED TO APP RECIATE THAT THE PROVISIONS OF SECTION 271(1B) DO NOT APPLY AS THERE IS NO ADDITION/DISALLOWANCE TO THE TOTAL INCOME DECLARED BY THE APPELLANT. 8.3 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED ASS ESSING OFFICER HAS FAILED TO APPRECIATE THAT THE PROVISIONS OF SECTION 271(1B) DO NOT APPLY FOR THE REASON THAT THE RE-ASSESSMENT ORDER D OES TY NOT CONTAIN ANY DIRECTION FOR INITIATION OF PENAL PROCEEDINGS. 8.4 THE LEARNED ASSESSING OFFICER HAS FAILED TO APP RECIATE THAT THE EXPRESSION PENALTYPROCEEDINGS INITIATED U/S 271(1) (C) SEPARATELY STATED IN THE RE-ASSESSMENT ORDER, CANNOT BE REGARD ED AS 'DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS'. 8.5 WITHOUT PREJUDICE TO THE ABOVE, THE EXPRESSION PENALTY PROCEEDINGS INITIATED U/S. 271(1) (C) SEPARATELY S TATED IN THE RE- ASSESSMENT ORDER DOES NOT NAME THE EXACT NATURE OF ALLEGED OFFENCE, I.E. CONCEALMENT OR FURNISHING OF INACCURATE PARTIC ULARS. 8.6 WITHOUT PREJUDICE, THE LOWER AUTHORITIES HAVE E RRED IN WRONGLY ITA NOS. 968 & 969/BANG/2018 PAGE 3 OF 8 DETERMINING THE RANGE OF PENALTIES AND THEREBY INCO RRECTLY DECIDING THE QUANTUM OF PENALTY. 9. THE IMPUGNED PENALTY ORDER IS BAD AS IT FAILS TO SPECIFY THE NATURE OF OFFENCE COMMITTED BY THE APPELLANT UNDER SECTION 271(1)(C) IN AS MUCH AS, IT DOES NOT SPECIFY THAT WHETHER THE APPEL LANT HAS 'CONCEALED PARTICULARS OF INCOME' OR HAS 'FURNISHED INACCURATE PARTICULARS OF INCOME'. 10. AS REGARDS LEVY OF PENALTY UNDER SECTION 271(1) (C): 10.1 THE LEARNED COMMISSIONER (APPEALS) IS NOT JUST IFIED IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFIC ER IN LEVYING PENALTY, IN THE ABSENCE OF ANY ADDITIONS/DISALLOWAN CE MADE IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147. 10.2 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIAT E THAT WHEN THE RETURN OF INCOME FILED BY THE APPELLANT WAS COMPLET ELY ACCEPTED, THE QUESTION OF 'CONCEALMENT OF PARTICULARS OF INCOME/F URNISHING INACCURATE PARTICULARS OF INCOME' DOES NOT ARISE. 10.3 WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AUTH ORITIES HAVE FAILED TO APPRECIATE THAT FAILURE TO FILE THE RETURN OF IN COME DUE TO REASONABLE CAUSE BEYOND THE CONTROL OF THE APPELLAN T DOES NOT AMOUNT TO 'CONCEALMENT OF PARTICULARS OF INCOME' EVEN AS P ER EXPLANATION 3 TO SECTION 271(1). 10.4 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIAT E THAT THE APPELLANT WAS PREVENTED BY REASONABLE CAUSE FROM FILING THE R ETURN OF INCOME WITHIN THE ORIGINAL DUE DATE. 10.5 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIAT E THAT EXPLANATION 3 DOES NOT APPLY AS THE APPELLANT HAD ORIGINALLY FI LED A RETURN OF INCOME ON 03.09.2013 I.E. BEFORE THE ISSUE OF NOTIC E UNDER SECTION 148 ON 23.09.2013. 10.6 WITHOUT PREJUDICE TO THE ABOVE, EVEN IF EXPLAN ATION 3 WERE TO APPLY, THERE IS NO TAX SOUGHT TO BE EVADED AS PER C LAUSE (C) TO EXPLANATION 4. 10.7. WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AUT HORITIES HAVE FAILED TO APPRECIATE THAT PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED FOR FAILING TO FILE THE RETURN OF INCOME WITHIN DUE DAT E WHEN A PENALTY UNDER SECTION 271F FOR THE SAME CAUSE WAS ALREADY L EVIED. 10.8. WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AUT HORITIES HAVE FAILED TO APPRECIATE THAT UNLESS ANY PARTICULARS OF INCOME ARE CONCEALED/INACCURATELY FURNISHED 'IN THE COURSE OF ANY PROCEEDINGS... BEFORE THE ASSESSING OFFICER', PENALTY CANNOT BE LE VIED UNDER SECTION 271(1)(C). ITA NOS. 968 & 969/BANG/2018 PAGE 4 OF 8 10.9. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIA TE THAT THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT OUT ANYTHING ON R ECORD TO ESTABLISH THAT DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS BEFORE THE LEARNED ASSESSING OFFICER, THE APPELLANT CONCEALED ANY PARTICULARS OF INCOME/FURNISHED INACCURATE PARTICULARS OF INCOME. 10.10. THE LEARNED COMMISSIONER (APPEALS) IS NOT JU STIFIED IN PERVERSELY HOLDING THAT THE APPELLANT ADMITTED TO T HE CONCEALMENT OF INCOME DURING THE SURVEY PROCEEDINGS UNDER SECTION 133A, WHEN IN THE CASE OF APPELLANT THE SURVEY WAS NOT AT ALL CON DUCTED. 10.11. THE LEARNED COMMISSIONER (APPEALS) IS NOT JU STIFIED IN PASSING ORDER IN VERBATIM TO THE ORDER PASSED IN CASE OF AP PELLANTS HUSBAND SRI. RAMASWAMY K., WITHOUT TAKING INTO CONSIDERATIO N FACTS IN THE APPELLANTS CASE. FOR THE ABOVE GROUNDS AND FOR SUCH OTHER GROUNDS WH ICH MAY BE ALLOWED BY THE HONOURABLE MEMBERS TO BE URGED AT TH E TIME OF HEARING, IT IS PRAYED THAT THE AFORESAID APPEAL BE ALLOWED. 3. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2008-09 IN ITA NO. 969/BANG/2018 ARE AS UNDER. 1. THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) DATED 28.09.2017 BEING SERVED TO THE APPELLANT ON 06.02.2 018 I.E. AFTER 128 DAYS OF PASSING ORDER IS ILLEGAL BEING PRE-DATED, T IME BARRED AND CONTRARY TO THE BOARD INSTRUCTION NO. 20 OF 2013 DA TED 23.01.2013 R.W. LETTER DATED 08.03.2018. 3. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIF IED IN DISMISSING THE APPEAL FOR STATISTICAL PURPOSE AS SUCH PROCEDUR E IS NOT LEGALLY RECOGNISED. 4. WITHOUT PREJUDICE TO THE ABOVE, THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) OF DISMISSING THE APPEAL FOR STATISTICAL PURPOSE IS BY IMPLICATION ALLOWING THE APPEAL ON ME RITS. 5. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIF IED IN NOT ADJUDICATING THE GROUND OF THE APPELLANT THAT THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME, WHEN THE ASSESSING OFFICER ADOPTS THE RETURNED INCOME AS THE ASSESSED INCOME. 6. THE PENALTY ORDER BEING PASSED WITHOUT OBTAINING THE PRIOR APPROVAL OF THE LEARNED JOINT COMMISSIONER IS NOT V ALID. ITA NOS. 968 & 969/BANG/2018 PAGE 5 OF 8 7. THE IMPUGNED PENALTY ORDER IS BAD BEING BASED ON NOTICE ISSUED UNDER SECTION 274 R.W. 271(1)(C) WHICH IS VAGUE WIT HOUT SPECIFYING THE NATURE OF OFFENCE COMMITTED BY THE APPELLANT UNDER SECTION 271(1)(C) IN AS MUCH AS, IT DOES NOT SPECIFY THAT WHETHER THE APPELLANT HAS 'CONCEALED PARTICULARS OF INCOME' OR HAS 'FURNISHED INACCURATE PARTICULARS OF INCOME'. 8. AS REGARDS THE LEARNED ASSESSING OFFICER HAVING NOT RECORDED SATISFACTION BEFORE INITIATING PENALTY PROCEEDINGS: 8.1 THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN LEVYING PENALTY WITHOUT RECORDING HIS SATISFACTION IN THE RE-ASSESS MENT ORDER BEFORE INITIATING PENALTY PROCEEDINGS. 8.2 THE LEARNED ASSESSING OFFICER HAS FAILED TO APP RECIATE THAT THE PROVISIONS OF SECTION 271(1B) DO NOT APPLY AS THERE IS NO ADDITION/DISALLOWANCE TO THE TOTAL INCOME DECLARED BY THE APPELLANT. 8.3 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED ASS ESSING OFFICER HAS FAILED TO APPRECIATE THAT THE PROVISIONS OF SECTION 271(1B) DO NOT APPLY FOR THE REASON THAT THE RE-ASSESSMENT ORDER D OES TY NOT CONTAIN ANY DIRECTION FOR INITIATION OF PENAL PROCEEDINGS. 8.4 THE LEARNED ASSESSING OFFICER HAS FAILED TO APP RECIATE THAT THE EXPRESSION PENALTYPROCEEDINGS INITIATED U/S 271(1) (C) SEPARATELY STATED IN THE RE-ASSESSMENT ORDER, CANNOT BE REGARD ED AS 'DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS'. 8.5 WITHOUT PREJUDICE TO THE ABOVE, THE EXPRESSION PENALTY PROCEEDINGS INITIATED U/S. 271(1) (C) SEPARATELY S TATED IN THE RE- ASSESSMENT ORDER DOES NOT NAME THE EXACT NATURE OF ALLEGED OFFENCE, I.E. CONCEALMENT OR FURNISHING OF INACCURATE PARTIC ULARS. 8.6 WITHOUT PREJUDICE, THE LOWER AUTHORITIES HAVE E RRED IN WRONGLY DETERMINING THE RANGE OF PENALTIES AND THEREBY INCO RRECTLY DECIDING THE QUANTUM OF PENALTY. 9. THE IMPUGNED PENALTY ORDER IS BAD AS IT FAILS TO SPECIFY THE NATURE OF OFFENCE COMMITTED BY THE APPELLANT UNDER SECTION 271(1)(C) IN AS MUCH AS, IT DOES NOT SPECIFY THAT WHETHER THE APPEL LANT HAS 'CONCEALED PARTICULARS OF INCOME' OR HAS 'FURNISHED INACCURATE PARTICULARS OF INCOME'. 10. AS REGARDS LEVY OF PENALTY UNDER SECTION 271(1) (C): 10.1 THE LEARNED COMMISSIONER (APPEALS) IS NOT JUST IFIED IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFIC ER IN LEVYING PENALTY, IN THE ABSENCE OF ANY ADDITIONS/DISALLOWAN CE MADE IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147. ITA NOS. 968 & 969/BANG/2018 PAGE 6 OF 8 10.2 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIAT E THAT WHEN THE RETURN OF INCOME FILED BY THE APPELLANT WAS COMPLET ELY ACCEPTED, THE QUESTION OF 'CONCEALMENT OF PARTICULARS OF INCOME/F URNISHING INACCURATE PARTICULARS OF INCOME' DOES NOT ARISE. 10.3 WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AUTH ORITIES HAVE FAILED TO APPRECIATE THAT FAILURE TO FILE THE RETURN OF IN COME DUE TO REASONABLE CAUSE BEYOND THE CONTROL OF THE APPELLAN T DOES NOT AMOUNT TO 'CONCEALMENT OF PARTICULARS OF INCOME' EVEN AS P ER EXPLANATION 3 TO SECTION 271(1). 10.4 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIAT E THAT THE APPELLANT WAS PREVENTED BY REASONABLE CAUSE FROM FILING THE R ETURN OF INCOME WITHIN THE ORIGINAL DUE DATE. 10.5 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIAT E THAT EXPLANATION 3 DOES NOT APPLY AS THE APPELLANT HAD ORIGINALLY FI LED A RETURN OF INCOME ON 22.10.2013 I.E. BEFORE THE ISSUE OF NOTIC E UNDER SECTION 148 ON 23.09.2013. 10.6 WITHOUT PREJUDICE TO THE ABOVE, EVEN IF EXPLAN ATION 3 WERE TO APPLY, THERE IS NO TAX SOUGHT TO BE EVADED AS PER C LAUSE (C) TO EXPLANATION 4. 10.7. WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AUT HORITIES HAVE FAILED TO APPRECIATE THAT PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED FOR FAILING TO FILE THE RETURN OF INCOME WITHIN DUE DAT E WHEN A PENALTY UNDER SECTION 271F FOR THE SAME CAUSE WAS ALREADY L EVIED. 10.8. WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AUT HORITIES HAVE FAILED TO APPRECIATE THAT UNLESS ANY PARTICULARS OF INCOME ARE CONCEALED/INACCURATELY FURNISHED 'IN THE COURSE OF ANY PROCEEDINGS... BEFORE THE ASSESSING OFFICER', PENALTY CANNOT BE LE VIED UNDER SECTION 271(1)(C). 10.9. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIA TE THAT THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT OUT ANYTHING ON R ECORD TO ESTABLISH THAT DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS BEFORE THE LEARNED ASSESSING OFFICER, THE APPELLANT CONCEALED ANY PARTICULARS OF INCOME/FURNISHED INACCURATE PARTICULARS OF INCOME. 10.10. THE LEARNED COMMISSIONER (APPEALS) IS NOT JU STIFIED IN PERVERSELY HOLDING THAT THE APPELLANT ADMITTED TO T HE CONCEALMENT OF INCOME DURING THE SURVEY PROCEEDINGS UNDER SECTION 133A, WHEN IN THE CASE OF APPELLANT THE SURVEY WAS NOT AT ALL CON DUCTED. 10.11. THE LEARNED COMMISSIONER (APPEALS) IS NOT JU STIFIED IN PASSING ORDER IN VERBATIM TO THE ORDER PASSED IN CASE OF AP PELLANTS HUSBAND SRI. RAMASWAMY K., WITHOUT TAKING INTO CONSIDERATIO N FACTS IN THE APPELLANTS CASE. ITA NOS. 968 & 969/BANG/2018 PAGE 7 OF 8 10.12. WITHOUT PREJUDICE TO THE ABOVE, THE ADDITION OF RS. 15,000/- FOR NON-SUBMISSION OF VOUCHERS CANNOT BE REGARDED AS CO NCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME. FOR THE ABOVE GROUNDS AND FOR SUCH OTHER GROUNDS WH ICH MAY BE ALLOWED BY THE HONOURABLE MEMBERS TO BE URGED AT TH E TIME OF HEARING, IT IS PRAYED THAT THE AFORESAID APPEAL BE ALLOWED. 4. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR O F ASSESSEE THAT IF THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 7 IN BOTH YEAR S IS DECIDED IN FAVOUR OF THE ASSESSEE THEN THE OTHER GROUNDS RAISED BY THE ASSES SEE WILL BECOME INFRUCTUOUS. HE SUBMITTED THAT THE COPY OF THE NOT ICES ISSUED BY THE AO U/S. 274 R.W.S. 271(1)(C) OF IT ACT FOR ASSESSMENT YEARS 2007-08 AND 2008-09 ARE AVAILABLE ON PAGES 107 AND 108 RESPECTIVELY AND HE POINTED OUT THAT AS PER THESE NOTICES, THE ALLEGATION OF THE AO IS NOT CLEA R AS TO WHETHER THE ALLEGATION IS REGARDING CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE PLACED RELIANCE ON THE JUDGEMENT OF HON 'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON A ND GINNING FACTORY AS REPORTED IN (2013) 359 ITR 565 AND SUBMITTED THAT I N THE FACTS OF PRESENT CASE AND AS PER THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, THE PENALTY ORDERS PASSED BY THE AO ARE BAD IN LAW AND CANNOT BE SUSTA INED. THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND FORCE IN THE SUBMISSIONS OF LD. AR OF ASSESSEE BECAUSE WE FIND THAT IN FACT, AS PER THE NOTICES ISSUED BY THE AO U/S. 274 R.W.S. 271(1)(C) OF IT ACT, THE ALL EGATION OF THE AO IS NOT CLEAR AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTIC ULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND UNDE R THESE FACTS, IT WAS HELD BY HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) THAT NOTICE UNDER SECTION 2 74 OF IT ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C) I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCO RRECT PARTICULARS OF INCOME BECAUSE THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. IT IS ALSO HELD THAT OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. IT IS ALSO HELD THAT ON THE BASIS OF SUC H PROCEEDINGS, NO PENALTY COULD ITA NOS. 968 & 969/BANG/2018 PAGE 8 OF 8 BE IMPOSED ON THE ASSESSEE. RESPECTFULLY FOLLOWING THIS JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT, WE SET ASIDE BOTH THE PENALTY ORDERS AS BAD IN LAW. 6. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (N.V. VASUDEVAN) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 13 TH JULY, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.