Maharashtra Academy of Engineering and Educational Research, Pune V. Income-tax Officer,

ITA 974/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7115 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-10-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 23-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KOTRU
• Assessee Lawyers: DR SUNIL PATHAK
• Keywords: Depreciation; Search and seizure; Principle of natural justice; Initiation of penalty proceedings; Cancellation of registration; Documents seized
• Section: 153A; 27; 148; 10; 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 / ASSESSMENT YEARS : 2001-02 TO 2004-05 & 2006-07 TO 2007-08 MAHARASHTRA ACADEMY OF ENGINEERING AND EDUCATIONAL RESEARCH, S.NO.124, EX-SERVICEMAN COLONY, PAUD ROAD, KOTHRUD, PUNE 411 029 PAN :AAAAM1206F . /APPELLANT VS. ITO, WARD-11(1), PUNE . / RESPONDENT . / ITA NOS.2018 TO 2021 & 2023 TO 2024/PUN/2012 / ASSESSMENT YEARS : 2001-02 TO 2004-05 & 2006-07 TO 2007-08 MAHARASHTRA ACADEMY OF ENGINEERING AND EDUCATIONAL RESEARCH, S.NO.124, EX-SERVICEMAN COLONY, PAUD ROAD, KOTHRUD, PUNE 411 029 PAN :AAAAM1206F . /APPELLANT VS. ACIT, CENTRAL CIRCLE-1(1), PUNE . / RESPONDENT ASSESSEE BY : DR. SUNIL PATHAK & SHRI MAHAVIR JAIN REVENUE BY : MS. NIRUPAMA KOTRU / DATE OF HEARING : 22.11.2017 / DATE OF PRONOUNCEMENT: 08.12.2017 / ORDER PER SUSHMA CHOWLA, JM: THE APPEALS IN ITA NOS. 968 TO 971 & 973 TO 974/PUN /2015 FILED BY THE ASSESSEE ARE AGAINST SEPARATE ORDERS OF CIT(A)-10, PUNE, ALL DATED 20.03.2015 RELATING TO ASSESSMENT YEARS 2001-02 TO 2004-05 AND 2006-07 TO 2007-08 ARE AGAINST RESPECTIVE ORDERS PASSED BY ASSESSING OFFIC ER UNDER SECTION 271(1)(C) OF ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 2 THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). THE APPEALS IN ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 FILED BY THE ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT(A)-III, PUNE, DATED 27.08.2012 RELATIN G TO ASSESSMENT YEARS 2001-02 TO 2004-05 AND 2006-07 TO 2007-08 ARE AGAINST RESPE CTIVE ORDERS PASSED BY CIT(A) UNDER SECTION 271(1)(C) OF THE INCOME-TAX AC T, 1961 (IN SHORT THE ACT). 2. BOTH THE BUNCH OF APPEALS FILED BY THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FO R THE SAKE OF CONVENIENCE. 3. FIRST WE SHALL TAKE UP THE BUNCH OF APPEALS IN I TA NOS. 968 TO 971 & 973 TO 974/PUN/2015 WHERE SIMILAR ISSUE WAS RAISED. HOWEV ER, FOR THE SAKE OF REFERENCE TO FACTS AND ISSUES, WE REFER TO FACTS IN ITA NO.96 8/PUN/2015. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE TO EACH OTHER- ON FACTS AND IN LAW, 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF RS.2,84,73,372/-. 2] THE ASSESSEE SUBMITS THAT THE REOPENING U/S 148 IS BAD IN LAW AND ACCORDINGLY, THE REASST. ORDER AND THE PENALTY ORDE R PASSED U/S 271 (1)(C) BE DECLARED NULL AND VOID. 3] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AS SESSEE TRUST HAD VIOLATED THE PROVISIONS OF SECTION 13 (1)( C) RESULTING IN DENIA L OF EXEMPTION U/S 11/10(23C)(VI) AND HENCE, THE LEVY OF PENALTY ON ACCOUNT OF DISALL OWANCE OF EXEMPTION U/S 11/1O(23C)(VI) WAS JUSTIFIED. 4] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE EX PLANATION 1 TO SECTION 271(1)(C) WAS ATTRACTED IN THE CASE OF THE ASSESSEE TRUST AND HENCE, THE LEVY OF PENALTY WAS JUSTIFIED ON THE FACTS OF THE C ASE. 5] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AS SESSEE TRUST HAD CONCEALED ITS INCOME AS WELL AS FURNISHED INACCURATE PARTICUL ARS OF INCOME BY PROVIDING UNDUE BENEFITS TO THE TRUSTEES AND RELATE D PARTIES AND HENCE, THE LEARNED A.O. WAS JUSTIFIED IN LEVYING THE PENALTY O N ACCOUNT OF DISALLOWANCE OF EXEMPTION U/S 11. 6] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E ASSESSEE TRUST HAD NOT PROVIDED ANY BENEFIT TO THE TRUSTEES AND THEIR RELA TIVES AND ACCORDINGLY, THERE WAS NO QUESTION OF VIOLATION OF PROVISIONS OF SECTION 13(1)(C) AND HENCE, THE DENIAL OF EXEMPTION U/S 11 WAS ALSO NOT JUSTIFIED AND THE PENALTY LEVIED MAY ALSO KINDLY BE DELETED. 7] THE LEARNED CIT(A) ERRED IN NOT APPRECIATING TH AT THE ISSUE WHETHER THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 13 (1)(C) WAS A DEBATABLE ONE AND TWO OPINIONS WERE CLEARLY POSSIBLE AND HENC E, THE QUESTION OF LEVY OF PENALTY ON SUCH DEBATABLE ISSUE SIMPLY DOES NOT ARISE. ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 3 8] THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THA T THE ASSESSEE TRUST HAD SUBMITTED ITS EXPLANATION THAT NO BENEFIT WAS PROVI DED TO THE TRUSTEES AND THE LEVY OF PENALTY BY SIMPLY REJECTING THE EXPLANA TION FURNISHED WITHOUT PROVING IT TO BE FALSE IS NOT JUSTIFIED AT ALL. 9] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE RE WAS NO CONCRETE EVIDENCE THAT THE ASSESSEE HAD PROVIDED BENEFIT TO THE TRUSTEES AND THE DENIAL OF EXEMPTION U/S 11 ON THIS GROUND WAS BASED ON PRESUMPTIONS AND SURMISES AND HENCE, THE LEVY OF PENALTY ON SUCH BAS IS IS INVALID IN LAW. 10] WITHOUT PREJUDICE, THE ASSESSEE SUBMITS THAT A SSUMING WITHOUT ADMITTING THAT IT HAD PROVIDED ANY BENEFIT TO THE TRUSTEES, T HE INCOME ONLY TO THE EXTENT OF THE VIOLATION OF SECTION 13(1)(C) CAN BE TAXED AND HENCE, THE LEVY OF PENALTY SHOULD BE RESTRICTED ONLY ON THE AM OUNT OF VIOLATION OF SECTION 13 (1 )( C) AND NOT ON THE ENTIRE ASSESSED INCOME. 11] THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 4. FURTHER, THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND OF APPEAL WHICH READS AS UNDER : 1] THE ASSESSEE SUBMITS THAT THE PENALTY ORDER PAS SED U/S 271(1)(C) BE DECLARED NULL AND VOID SINCE NO CONCRETE FINDING HA S BEEN GIVEN BY THE LEARNED A.O. IN THE PENALTY ORDER AS TO WHETHER THE PENALTY IS BEING LEVIED FOR CONCEALMENT OF INCOME OR FOR FILING INAC CURATE PARTICULARS OF INCOME AND HENCE, THE PENALTY ORDER PASSED U/S 271( 1)(C) IS BAD IN LAW AND THE PENALTY LEVIED MAY KINDLY BE DELETED. THE ASSESSEE SUBMITS THAT THE ADDITIONAL GROUND RAI SED IS LEGAL IN NATURE AND AS ALL THE FACTS ARE ON RECORD, THE ASSE SSEE REQUESTS FOR ADMISSION OF THE ABOVE GROUND. 5. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESS EE POINTED OUT THAT THE ADDITIONAL GROUND OF APPEAL BEING PURELY LEGAL IN N ATURE MERITS TO BE ADMITTED. HE FURTHER STATED THAT THE ADDITIONAL GROUND OF APPEAL GOES TO THE JURISDICTION OF THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND HENCE THE SAME NEEDS TO BE ADJUDICATED FIRST. 6. THE ISSUE RAISED VIDE ADDITIONAL GROUND OF APPEA L IS AS TO WHETHER IN THE ABSENCE OF ANY CONCRETE FINDING OF THE ASSESSING OF FICER IN THE PENALTY ORDER AS TO WHETHER THE PENALTY IS BEING LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND HENCE THE PENA LTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT IS BAD IN LAW, IS PURE LY LEGAL ISSUE AND DOES NOT INVOLVE ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 4 ANY INVESTIGATION OF FACTS AND HENCE WE ADMIT THE S AME AND PROCEED TO ADJUDICATE THE SAID ISSUE FIRST. 7. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE IS A TRUST WHICH IS RUNNING SEVERAL EDUCATIONAL INSTITUTIONS. FOR THE YEARS UN DER CONSIDERATION, THE ASSESSEE HAD CLAIMED ITS ENTIRE INCOME AS EXEMPT UNDER SECTI ON 10(23C)(VI) OF THE I.T. ACT. THE ASSESSING OFFICER HOWEVER DENIED THE SAID EXEMP TION CLAIMED UNDER SECTION 10(23C)(VI) OF THE ACT. THE ASSESSING OFFICER FURT HER HELD THE ASSESSEE TO HAVE DELIBERATELY FILED INACCURATE PARTICULARS OF ITS IN COME AND CLAIMED DEDUCTION UNDER SECTION 10(23C)(VI) OF THE ACT THOUGH NOT ELIGIBLE AND HENCE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER, DIRECTED ISSUE OF NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT. THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER IN NOT GRANTING THE EXEMPTION UNDER SECTION 10 (23C)(VI) A ND UNDER SECTION 11 OF THE ACT. THE TRIBUNAL IN ITA NOS. 915 TO 920/PUN/2012 FOR TH E ASSESSMENT YEARS 1999- 2000 TO 2004-05 ORDER DATED 10.02.2017 HELD THE ASS ESSEE TO BE ENTITLED TO THE EXEMPTION UNDER SECTION 11 OF THE ACT EXCEPT FOR TH E VIOLATION UNDER SECTION 13(1)(C) OF THE ACT. THE SAID ISSUE WAS DECIDED BY THE TRIBUNAL VIDE PARA NOS. 148 TO 152 OF ITS ORDER. FURTHER THE TRIBUNAL IN I TA NOS. 921 TO 923/PUN/2012 RELATING TO ASSESSMENT YEARS 2005-06 TO 2007-08 ORD ER DATED 16.05.2017 ALSO HELD SIMILARLY. 8. MEANWHILE, THE ASSESSING OFFICER VIDE ORDER DATE D 28.03.2013 LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE SA ID PENALTY WAS LEVIED FOR BOTH CANCELLATION OF REGISTRATION AND DENIAL OF EXEMPTIO N UNDER SECTION 10(23C)(VI) OF THE ACT. THE ASSESSING OFFICER WHILE PASSING THE O RDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT VIDE PARA NO.18 HAD RE CORDED A SATISFACTION THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME OR FUR NISHED INACCURATE PARTICULARS OF INCOME, AS BROUGHT OUT IN THE ASSESSMENT ORDER A ND HENCE WAS LIABLE TO LEVY OF ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 5 PENALTY. THE SAID PENALTY LEVIED BY THE ASSESSING OFFICER WAS CONFIRMED BY THE CIT(A) AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFO RE US. 9. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESS EE POINTED OUT THAT THE INCOME WAS ASSESSED IN THE HANDS OF THE ASSESSEE BE CAUSE OF THE DENIAL OF DEDUCTION UNDER SECTION 10 (23C)(VI), 11 AND 12 OF THE ACT. HOWEVER, THE TRIBUNAL HAS ALLOWED THE SAID DEDUCTION TO THE ASSESSEE EXCE PT ON CERTAIN FACILITIES WHICH WERE PROVIDED TO THE TRUSTEE AND ON EXPENDITURE OF FOREIGN TOURS OF TRUSTEES AND ALSO FURTHER CONCESSIONAL EDUCATIONAL EXPENSES INCU RRED ON RELATIVES OF THE TRUSTEES. THE LD. AUTHORISED REPRESENTATIVE FOR TH E ASSESSEE REFERRING TO THE ORDER OF THE ASSESSING OFFICER POINTED OUT THAT THE ASSESSING OFFICER HAD INITIATED THE PENALTY ONLY ON THE ISSUE OF DENIAL OF EXEMPTIO N UNDER SECTION 10(23C)(VI) OF THE ACT THOUGH VARIOUS ADDITIONS WERE MADE IN THE H ANDS OF THE ASSESSEE. HE FURTHER REFERRED TO THE SAID DIRECTIONS OF THE ASSE SSING OFFICER WHERE THE ASSESSING OFFICER HAS FAILED TO RECORD A SATISFACTION AS TO W HICH LIMB OF SECTION 271(1)(C) OF THE ACT HAS NOT BEEN FULFILLED BY THE ASSESSEE. 10. OUR ATTENTION WAS FURTHER DRAWN TO THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER WHERE HE HAS FAILED TO COME TO A FINDING AGAIN AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT HAS NOT BEEN FULFIL LED. HE LEVIED PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT I N THE CASE OF CIT VS. SAMSON PERINCHERY VIDE TAX APPEAL NO.1154 OF 2014 AND OTHE R CONNECTED APPEALS, JUDGMENT DATED 05-01-2017 AND THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KANHAIYALAL D. JAIN VS. ACIT IN ITA NOS. 12 01 TO 1205/PN/2014 RELATING TO ASSESSMENT YEARS 2003-04 TO 2007-08, ORDER DATED 30 .11.2016. HE ALSO POINTED OUT THAT THE ASSESSING OFFICER HAS FAILED TO STRIKE OUT IRRELEVANT LIMB IN THE NOTICE ISSUED UNDER SECTION 271(1)(C) OF THE ACT AND FOR SUCH ACT OF THE ASSESSING OFFICER ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 6 THE INITIATION AND LEVY OF PENALTY UNDER SECTION 27 1(1)(C) OF THE ACT WAS INVALID AND BAD IN LAW. IN THIS REGARD, HE PLACED HIS RELIANCE ON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MEHERJE E CASSINATH HOLDINGS PVT. LTD. VS. ACIT FOR ASSESSMENT YEAR 2008-09 IN ITA NO .2555/MUM/2012, ORDER DATED 28.04.2017. 11. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE IN REPLY POINTED OUT THAT THE ADDITIONS HAVE BEEN SUSTAINED BY THE TRIBU NAL ON MERITS AND ONCE THE ADDITIONS HAVE BEEN SUSTAINED THEN THERE IS A CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT . WITH REGARD TO THE FAILURE OF THE ASSESSING OFFICER TO STRIKE OFF THE IRRELEVANT PORTION IN THE NOTICE ISS UED, HE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBUNAL IN TH E CASE OF EARTHMOVING EQUIPMENT SERVICE CORPORATION VS DCIT FOR ASSESSMEN T YEAR 2010-11 IN ITA NO.6617/MUM/2011, ORDER DATED 02.05.2017. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE BUNCH OF APPEALS IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WHEREIN THE BASIC JURISDICTION OF THE ASSE SSING OFFICER TO LEVY OF PENALTY FOR CONCEALMENT HAS BEEN CHALLENGED BY THE ASSESSEE. T HE CASE OF THE ASSESSEE BEFORE US IS THAT IN THE ABSENCE OF THE ASSESSING O FFICER RECORDING A PROPER SATISFACTION AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT HAS NOT BEEN FULFILLED BY THE ASSESSEE AND FOR FAILURE OF THE ASSESSING OFFIC ER TO GIVE A SHOW CAUSE NOTICE TO THE ASSESSEE IN THIS REGARD, THE SAID PENALTY PR OCEEDINGS INITIATED IN THE CASE ARE INVALID. FURTHER THE ORDER LEVYING PENALTY UND ER SECTION 271(1)(C) OF THE ACT HAS ALSO BEEN CHALLENGED BY THE ASSESSEE SINCE THE ASSESSING OFFICER WHILE LEVYING THE PENALTY FOR CONCEALMENT HAS NOT COME TO A FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED HIS INCOME OR FURNISHED INAC CURATE PARTICULARS OF INCOME. IN THE ABSENCE OF THE SAME, THE PENALTY ORDER HAS B EEN CHALLENGED BEING INVALID AND BAD IN LAW. ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 7 13. PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT IS ATTRACTED WHERE THE ASSESSEE HAS EITHER CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER IN TH IS REGARD HAS TO RECORD A SATISFACTION AND TO THAT EXTENT SHOW CAUSE THE ASSE SSEE. FURTHER, WHILE LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT, AO HAS TO COME TO A FINDING AS TO THE LIMB FOR WHICH SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE, STANDS FULFILLED AND THUS WORK OUT THE PENALTY FOR CONCEALMENT ON NO N-FULFILMENT OF SUCH LIMB OF SECTION 271(1)(C) OF THE ACT. THE TWO LIMBS OF SEC TION 271(1)(C) OF THE ACT ARE DISTINCT AND THE AO IN THIS REGARD HAS TO COME TO A FINDING AND RECORD A SATISFACTION FOR NON-FULFILMENT OF EITHER OF THE LIMBS OF SECTIO N 271(1)(C) OF THE ACT. IN SOME CASES WHERE MORE THAN ONE ADDITIONS IS MADE, IT CAN BE A CASE WHERE FOR ONE ADDITION ONE LIMB IS SATISFIED AND FOR ANOTHER ADDI TION THE SECOND LIMB OF SECTION 271(1)(C) IS SATISFIED. IT IS INCUMBENT UPON THE A SSESSING OFFICER IN SUCH A SITUATION TO COME TO A FINDING. IN THE ABSENCE OF THE SAME, THE PENALTY PROCEEDINGS INITIATED STANDS VITIATED AND THE PENAL TY ORDER PASSED CONSEQUENT TO SUCH INITIATION OF PENALTY PROCEEDINGS IS BOTH INVA LID AND BAD IN LAW. 14. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. SAMSON PERINCHERY (SUPRA) HAS LAID DOWN THE PROPOSITION THAT THE SATI SFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTION ED UNDER SECTION 271(1)(C) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING IMPOSED FOR THE OTHER BREACH. IT WAS FURTHER OBSER VED THAT THE ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT WAS THUS HELD THAT THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND ON WHICH THE PENALTY PROCEEDINGS HAD BEEN IN ITIATED AND IT CANNOT BE ON A FRESH GROUND ON WHICH THE ASSESSEE HAS NO NOTICE. 15. FURTHER, THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KANHAIYALAL D. JAIN VS. ACIT FOR THE ASSESSMENT YEARS 2003-04 TO 2007-0 8 IN ITA NOS. 1201 TO ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 8 1205/PN/2014 ORDER DATED 30.11.2016 HAS ALSO LAID D OWN THE SAID PROPOSITION BY HOLDING AS UNDER : 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE ISSUE ARISING IN THE PRESENT BUNCH OF APPEALS IS JURISDIC TIONAL ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE REQ UIREMENT OF SECTION IS THAT WHERE THE ASSESSING OFFICER OR THE COMMISSIONER OF APPEALS OR THE PRINCIPAL COMMISSIONER OR COMMISSIONER, IN THE COURSE OF ANY P ROCEEDINGS UNDER THE ACT, IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME , THEN HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY THE AMOUNTS AS SPECIFIED IN SUB- CLAUSE (III) WHICH WOULD BE IN ADDITION TO TAX, IF ANY, PAYABLE BY THE SAID PERSON. THE SECTION THUS REQUIRES THE CONCERNED OFF ICER TO RECORD SATISFACTION IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, THA T THE PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. AFTER RECORDING THE SATISFACTION, DU RING THE COURSE OF PENALTY PROCEEDINGS ALSO, THE CONCERNED OFFICER HAS COME TO A FINDING THAT AS TO WHETHER THE PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AND THEREAFTE R, LEVY THE PENALTY ACCORDINGLY. THE WORD USED BETWEEN THE TWO ACTS I.E . CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME IS 'OR'. SO THE PENALTY LEVIED BY THE CONCER NED OFFICER IS ON SATISFACTION OF ANY OF THE LIMBS AND NOT THE SATISF ACTION OF BOTH THE LIMBS. WHERE THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME IN PARTICULAR CIRCUMSTANCES, THEN THE ASSESSING OFFICER MAY RECOR D SATISFACTION TO THAT EFFECT AND INITIATE PENALTY PROCEEDINGS AND THEREAF TER ON FIXATION OF CHARGE, LEVY THE PENALTY FOR SUCH ACT OF CONCEALING THE PAR TICULARS OF INCOME. SIMILARLY, IN CASES WHERE THE ASSESSEE CONCERNED HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, THEN SIMILAR EXERCISE HA S TO BE CARRIED OUT BY THE CONCERNED OFFICER. 14. THE FIRST STAGE OF INVOCATION OF PROVISIONS OF SECTION 271(1)(C) OF THE ACT IS THE SATISFACTION TO BE RECORDED BY THE ASSESSING OF FICER, WHICH ADMITTEDLY, HAS TO BE DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. SO, WHERE THE ASSESSMENT PROCEEDINGS ARE PENDING, THEN THE ASSESS ING OFFICER HAS TO APPLY HIS MIND AND ON BEING SATISFIED, HE HAS TO GIV E A FINDING THAT THE ASSESSEE BEFORE HIM HAS EITHER CONCEALED THE PARTI CULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPE CT OF THE ISSUE BEFORE HIM. THEREAFTER, THE NOTICE SHOULD BE ISSUED TO SUCH PER SON BY THE CONCERNED OFFICER, WHEREIN IT SHOULD BE CLEAR THAT THE ASSESS EE HAS TO JUSTIFY ITS CASE EITHER FOR CONCEALMENT OF INCOME OR FURNISHING OF I NACCURATE PARTICULARS OF INCOME. THERE MAY BE CASES WHERE THERE IS ISSUE OF BOTH CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME, BASED ON THE NATURE OF ADDITIONS, THEN IN SUCH CASES, SATISFACTI ON AND NOTICE THEREON SHOULD SPECIFY EXACT CHARGE AGAINST THE ASSESSEE. T HE CHARGE HAS TO BE FURTHER SPECIFIED WHILE COMPLETING PENALTY PROCEEDI NGS AND THE ASSESSING OFFICER HAS TO COME TO A CONCLUSION AS TO WHETHER I T IS CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE QUESTION WHICH FURTHER ARISES WHERE THE SATISFACTION RECORDED BY T HE ASSESSING OFFICER AND THE NOTICE ISSUED THEREAFTER IS WITHOUT APPLICATION OF MIND, THEN CAN THE SUBSEQUENT ORDER PASSED LEVYING PENALTY BE HELD TO BE VALID?. THE HON'BLE KARNATAKA HIGH COURT IN CIT & ANR. VS. MANJUNATH A COTTON AND GINNING FACTORY (SUPRA) HAD DEALT UPON THE ISSUE OF NOTICE UNDER SECTION 274 OF THE ACT FOR THE PURPOSE OF LEVYING PENALTY FOR CONCEALM ENT AND OBSERVED AS UNDER:- ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 9 '59. AS THE PROVISION STANDS, THE PENALTY PROCEEDIN GS CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PAS SED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXISTENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF THE EXISTENCE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE S AID ORDER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 OR IN EXPLANATION-1(B), THEN THOUGH PENALTY PROCEED INGS 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 IMPOSING PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AN D SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT E XIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE ITA NOS.1201 TO 1205/PN/2014 KANHAIYALAL D. JAIN DEPARTMENT SENDING A PRINTED FARM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSE QUENCES OF THE ASSESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS S ERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% 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 JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUC H PROCEEDINGS, 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 INAC CURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY AT TRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PE NALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSE E 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 SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 2 71(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE P ENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SA ID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOUL D HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. 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 ON WHICH HE I S CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIM E OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT AS SESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATIO N OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANN OT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROU ND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE TH E BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT 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 I N THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDE R WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSI TION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PA SSED, WAS NOT SUSTAINABLE. ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 10 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE AC T TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COU RSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIF FERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COUR T IN THE CASE OF ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAG E 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURAT E PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HI GH COURT IN THE CASE OF MANU ENGINEERING WORKS REPORTED IN [1980] 1 22 ITR 306 (GUJ) AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRG O MARKETING P. LTD. REPORTED IN [2008] 171 TAXMAN 156, HAS HELD THAT LE VY 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 ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CON CEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS TH E CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE S TANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND.' . . . . . . . . . . . . . . . . . . . . 22. NOW, COMING TO THE FACTS OF THE CASE BEFORE US, WHEREIN SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT ON CHHORIYA GRO UP OF CONCERNS ON 22.08.2008 AND DECLARATION OF RS.11.44 CRORES WAS M ADE IN THE HANDS OF WHOLE GROUP FOR VARIOUS YEARS. CONSEQUENT TO THE NO TICES ISSUED UNDER SECTION 153A OF THE ACT FOR VARIOUS YEARS, DI FFERENT ENTITIES FILED THE RETURN OF INCOME FOR THE RESPECTIVE YEARS AND CUMUL ATIVELY FOR RS.13.99 CRORES AS ADDITIONAL INCOME. THE INCOME WAS DECLARE D ON ACCOUNT OF ON- MONEY ON SALE OF PLOTS, WHICH WAS DETECTED FROM THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH. ADMITTEDLY, EXPLANATIO N 5A TO SECTION 271(1)(C) OF THE ACT IS ATTRACTED IN SUCH CASES. HO WEVER, THE CASE OF ASSESSEE BEFORE US IS THAT THE ASSESSING OFFICER WH ILE COMPLETING THE ASSESSMENT PROCEEDINGS HAD TO BE SATISFIED THAT THE ASSESSEE HAD EITHER CONCEALED THE INCOME OR FURNISHED INACCURATE PARTIC ULARS OF INCOME AND IS LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) R .W.S. EXPLANATION 5A OF THE ACT. THE NOTICE IS TO BE ISSUED TO THE ASSESSEE UND ER SECTION 274 OF THE ACT. BEFORE ISSUING SUCH NOTICE, SATISFACTION HAS TO COM E OUT FROM THE PROCEEDINGS GOING ON BEFORE THE ASSESSING OFFICER. THE PERUSAL OF ASSESSMENT ORDER PASSED IN THE PRESENT CASE REFLECT S THAT THE ASSESSING OFFICER WHILE INITIATING PROCEEDINGS HAS RECORDED S ATISFACTION AS TO THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME AND HAS ALSO CONCEALED THE INCOME. THE ONLY SOURCE OF ADDITION I N THE HANDS OF ASSESSEE IS ADDITIONAL INCOME OFFERED BY THE ASSESSEE PURSUA NT TO SEARCH OPERATIONS. IN SUCH CIRCUMSTANCES, IT IS CATEGORICALLY A CASE O F CONCEALMENT. HOWEVER, THE ASSESSING OFFICER REFERS TO BOTH THE LIMBS OF S ECTION 271(1)(C) OF THE ACT AND THE SATISFACTION RECORDED IN THIS CASE SUFFERS FROM INFIRMITY. FURTHER, EVEN IN THE NOTICE ISSUED UNDER SECTION 274 OF THE ACT, IRRELEVANT PART HAS NOT BEEN STRUCK OFF. WHILE COMPLETING PENALTY PROCE EDINGS ALSO, THE ASSESSING OFFICER MAKES REFERENCE TO BOTH THE LIMB S I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AND IN THE FINAL, LEVIES PENALTY FOR CONCEALMENT OF INCOME. 23. HOWEVER, THE QUESTION WHICH IS RAISED BEFORE US BY WAY OF ADDITIONAL GROUND OF APPEAL IS ROOT OF START OF THE PROCEEDING S I.E. RECORDING OF SATISFACTION AND THE ISSUE OF NOTICE, WHICH HAS BEE N CHALLENGED BY THE ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 11 ASSESSEE TO BE INVALID. APPLYING THE RATIO LAID DOW N BY THE HON'BLE KARNATAKA HIGH COURT IN CIT & ANR. VS. MANJUNATH C OTTON AND GINNING FACTORY (SUPRA) AND CIT VS. SSA'S EMERALD MEADOWS ( SUPRA) AND IN VIEW OF SLP BEING DISMISSED, WE FIND MERIT IN THE PLEA OF A SSESSEE THAT THE SATISFACTION RECORDED IN THE PRESENT CASE TO INITIA TE PENALTY PROCEEDINGS BOTH FOR CONCEALMENT OF INCOME AND FURNISHING OF PARTICU LARS OF INCOME AGAINST ADDITIONAL INCOME OFFERED BY THE ASSESSEE IS INCORR ECT. FURTHER, WHERE THE ASSESSEE IS NOT AWARE OF EXACT CHARGE AGAINST HIM, THE AMBIGUITY IN THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT BY NOT STRIKING OF PORTION WHICH IS NOT APPLICABLE, PREJUDICE THE RIGH T OF REASONABLE OPPORTUNITY TO THE ASSESSEE, AS HE WAS NOT MADE AWARE OF EXACT CHARGE HE HAD TO FACE. IT IS A CLEAR-CUT CASE OF CONCEALMENT SINCE THE ASS ESSEE HAD OFFERED ADDITIONAL INCOME PURSUANT TO SEARCH CARRIED OUT AT ITS PREMISES. IT IS NOT THE CASE OF FURNISHING OF INACCURATE PARTICULARS OF INC OME AND HENCE, THE ASSESSING OFFICER SHOULD HAVE RECORDED THE SATISFAC TION ACCORDINGLY AND ISSUED THE NOTICE ACCORDINGLY. 16. FURTHER, THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KANHAIYALAL D. JAIN VS. ACIT (SUPRA), AT PARA NO.24, HAD FURTHER DELIBE RATED ON THE ISSUE OF NON STRIKING OF THE INAPPLICABLE PORTION IN THE NOTICE ISSUED UNDER SECTION 271(1)(C) OF THE ACT AND HAD APPLIED THE PROPOSITION LAID DOWN B Y THE HONBLE HIGH COURT IN THE CASE OF CIT VS. SMT. KAUSHALYA (1994) 75 TAXMANN 54 9 (BOM.). THE HONBLE BOMBAY HIGH COURT HELD THAT MERE MISTAKE IN THE LAN GUAGE USED OR MERE NON- STRIKING OF INAPPROPRIATE LIMB COULD NOT ITSELF INV ALIDATE THE NOTICE. HOWEVER, THE HONBLE HIGH COURT FURTHER HELD THAT WHERE THERE EX ISTED VAGUENESS AND AMBIGUITY IN THE NOTICE ISSUED WHICH COULD DEMONSTRATE NON-AP PLICATION OF MIND BY THE AUTHORITY AND THE PENALTY PROCEEDINGS INITIATED FOR ASSESSMENT YEARS 1967-68 WERE QUASHED BY THE HONBLE BOMBAY HIGH COURT. APPLYING THE SAID PRINCIPLE, IT WAS HELD BY THE TRIBUNAL IN THE CASE OF KANHAIYALAL D. JAIN VS. ACIT (SUPRA) THAT APPLICATION OF MIND BEFORE ISSUING THE NOTICE UNDER SECTION 274 OF THE ACT HAD TO BE CONSIDERED. IN A CASE, WHERE THERE WAS VAGUENES S AND AMBIGUITY IN THE NOTICE ISSUED, THEN THAT WOULD ULTIMATELY PREJUDICE THE RI GHT OF OPPORTUNITY OF HEARING OF THE ASSESSEE AS CONTEMPLATED UNDER SECTION 274 OF T HE ACT AND SUCH NOTICE WAS INVALID. 17. IN VIEW OF THE RATIO LAID DOWN BY THE JURISDICT IONAL HIGH COURT, WE FIND NO MERIT IN THE RELIANCE PLACED BY THE LD. DEPARTMENTA L REPRESENTATIVE FOR THE ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 12 REVENUE ON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF EARTHMOVING EQUIPMENT SERVICE CORPORATION VS. DC IT (SUPRA). 18. ANOTHER RELIANCE WHICH WAS PLACED BY THE LD. DE PARTMENTAL REPRESENTATIVE FOR THE REVENUE WAS ON THE RATIO LAID DOWN BY THE H ONBLE APEX COURT IN THE CASE OF MAK DATA PVT. LTD. VS. CIT REPORTED IN (2013) 35 8 ITR 593 (SC) JUDGMENT DATED 30.10.2013, WHEREIN IT WAS HELD THAT THE SATISFACTI ON OF THE ASSESSING OFFICE NEED NOT BE RECORDED IN A PARTICULAR MANNER. HOWEVER, T HE CONTEXT OF THE RATIO LAID DOWN BY THE HONBLE APEX COURT WAS DIFFERENT WHEREI N IT WAS HELD THAT MANNER OF RECORDING SATISFACTION COULD BE DIFFERENT. ON THE ISSUE BEFORE US, THE ISSUE IS NOT THE MANNER OF RECORDING SATISFACTION BUT SATISFACTI ON PER SE TO BE RECORDED BY THE ASSESSING OFFICER. 19. NOW COMING TO THE FACTS OF THE PRESENT CASE, WE FIND THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT HAS NOT REC ORDED PROPER SATISFACTION AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT HAS NOT BEEN FULFILLED BY THE ASSESSEE AND CONSEQUENTLY NO PROPER SHOW CAUSE NOTICE WAS GI VEN TO THE ASSESSEE BEFORE INITIATING THE PENALTY PROCEEDINGS UNDER SECTION 27 1(1)(C) OF THE ACT. EVEN OTHERWISE, THE SAID SATISFACTION WAS RECORDED IN RE SPECT OF THE NON DENIAL OF EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT AND NOT IN RESPECT OF OTHER ADDITIONS MADE BY THE ASSESSING OFFICER. FURTHER, THE ASSESSING OFFICER WHILE LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT, IN THE ORDER IMPOSING THE PENALTY FOR CONCEALMENT HAS HELD THE ASSESSEE TO HA VE CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IN OTH ER WORDS, THE ASSESSING OFFICER HAS FAILED TO COME TO A FINDING AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT HAS NOT BEEN FULFILLED BY THE ASSESSEE. IN THE ABSENCE OF THE SAME, WE FIND NO MERIT IN THE ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) O F THE ACT. FIRST, THE SATISFACTION RECORDED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT IS INCOMPLETE AND FURTHER EVEN THE ORDER PASSED FOR LEVYING THE P ENALTY FOR CONCEALMENT IS BOTH ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 13 IN VALID AND BAD IN LAW. ACCORDINGLY, WE HOLD SO A ND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C ) OF THE ACT FOR ASSESSMENT YEARS 2001-02 TO 2004-05 AND 2006-07 TO 2007-08. 20. BEFORE PARTING WITH THIS ISSUE, IT MAY ALSO BE MENTIONED THAT THE PENALTY WAS LEVIED BY THE ASSESSING OFFICER ON DENIAL OF EX EMPTION UNDER SECTION 10(23C)(VI) OF THE ACT AND/OR EXEMPTION UNDER SECTI ON 11 OF THE ACT. HOWEVER, THE TRIBUNAL IN THE ASSESSEES OWN CASE VIDE ITS ORDER S DATED 10.02.2017 AND 16.05.2017 HAS ALLOWED THE SAID EXEMPTION UNDER SEC TION 11 AND 12 OF THE ACT EXCEPT FOR CERTAIN ITEMS FOR VIOLATION OF THE PROVI SIONS OF SECTION 13(1) (C), I.E. ON ACCOUNT OF FACILITIES TO THE DIRECTORS, EXPENDITURE OF FOREIGN TOURS OF THE TRUSTEES AND CONCESSIONAL EDUCATION TO THE RELATIVES OF THE ASSESSEE. 21. THE FACTS AND ISSUE IN ITA NOS.969 TO 971 & 973 TO 974/PUN/2015 ARE IDENTICAL TO THE FACTS AND ISSUE IN ITA NO.968/PUN/ 2015 AND OUR DECISION IN ITA NO. NO.968/PUN/2015 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.969 TO 971 & 973 TO 974/PUN/2015. 22. SINCE WE HAVE DECIDED THE JURISDICTIONAL ISSUE RAISED BY THE ASSESSEE BY WAY OF ADDITIONAL GROUND AND THE PENALTY PROCEEDING S HAVE BEEN HELD TO BE INVALID AND BAD IN LAW, WE FIND ADJUDICATION OF THE GROUNDS OF APPEAL ON MERITS OF THE CASE BECOME ACADEMIC IN NATURE. THEREFORE, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE DISMISSED AS ACADEMIC. 23. NOW COMING TO THE BUNCH OF APPEALS IN ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 FILED BY THE ASSESSEE AGAINST THE LEV Y OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT WHICH IS ON THE ENHANCEMENT MADE BY THE CIT(A) ON DIFFERENT GROUNDS, PART OF WHICH HAS BEEN SUSTAINED BY THE TRIBUNAL. THE CIT(A) INITIATED THE PENALTY PROCEEDINGS IN THE APPELLATE ORDER PASSED. THEREAFTER, ORDER IMPOSING PENALTY UNDER SECTION 27 1(1)(C) OF THE ACT WAS PASSED ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 14 BY THE CIT(A) VIDE ORDER DATED 27.08.2012 AGAINST W HICH THE ASSESSEE HAS PREFERRED THE PRESENT BUNCH OF APPEALS. THE SAID P ENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN LEVIED IN THE CASE OF THE ASSES SEE ON ACCOUNT OF THE FOLLOWING ISSUES : (I) DISALLOWANCE OF PART EXPENSES, (II) EXPENDITURE ON FOREIGN TOUR EXPENSES WHERE TH E ASSESSEE HAD FAILED TO PROVIDE PROPER PROOF FOR INCURRING THE EX PENDITURE OTHER THAN THE TRAVELLING EXPENSES. (III) EXPENDITURE ON CONCESSIONAL EDUCATION GIVEN T O MR. RAHUL KARAD 24. THE ASSESSEE IS AGGRIEVED BY THE AFORESAID ORDE R OF THE CIT(A), FIRSTLY, ON THE GROUND OF ADHOC DISALLOWANCE OF EXPENSES AND IT HAS BEEN POINTED OUT THAT THERE IS NO MERIT IN LEVYING PENALTY ON SUCH DISALL OWANCES. THE SECOND ISSUE IS THE EXPENDITURE ON FOREIGN TOURS OF THE TRUSTEES WH ERE THE PLEA OF THE ASSESSEE IS THAT THOUGH IT HAD INCURRED FOREIGN TOUR EXPENSE S DURING THE RESPECTIVE YEARS BUT PART OF THE EXPENSES WERE DISALLOWED ON THE GRO UND THAT THE ACTIVITIES WERE NOT FOR APPROVED OBJECTS. IN RESPECT OF THE CONCESSION AL EDUCATION GRANTED TO THE RELATIVES OF THE TRUSTEES, THE CASE OF THE ASSESSEE IS THAT THE SAID CONCESSION WAS GIVEN TO THE CHILDREN OF EMPLOYEES AND TRUSTEES AND WHERE THE TRUSTEES WERE NOT GIVEN ANY SPECIFIC BENEFIT, THERE WAS NO MERIT IN D ISALLOWING THE SAME AND LEVYING THE PENALTY FOR CONCEALMENT ON SUCH DISALLOWANCE. 25. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSES SEE SUBMITTED THAT THE ISSUE WAS WHETHER SUCH DISALLOWANCES MADE BY THE CI T(A) AND UPHELD BY THE TRIBUNAL, MERITS LEVY OF PENALTY UNDER SECTION 271( 1)(C) OF THE ACT. IT WAS STRESSED BY HIM THAT ORIGINALLY THE ASSESSING OFFICER MADE C ERTAIN ADDITIONS ON ACCOUNT OF VARIOUS HEADS OF DISALLOWANCES AND THE AMOUNT WAS E NHANCED BY THE CIT(A). IN RESPECT OF THE ADDITIONS MADE BY THE ASSESSING OFFI CER AND THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT, HAS BEEN CLAIME D TO BE NOT LEVIABLE ON THE JURISDICTIONAL ISSUE, WHICH IS ARGUED IN THE FIRST BUNCH OF APPEALS. IN THE SECOND ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 15 BUNCH OF APPEALS, THE AMOUNT WHICH HAS BEEN ENHANCE D BY THE CIT(A) AND CONFIRMED BY THE TRIBUNAL, I.E. DISALLOWANCE OF CER TAIN EXPENDITURE IS CHALLENGED AND SUCH DISALLOWANCES DOES NOT MERIT THE LEVY OF P ENALTY FOR CONCEALMENT. 26. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE ON THE OTHER HAND STRESSED THAT ONCE THE ENHANCEMENT OF DISALLOWANCE MADE BY THE CIT(A) HAS BEEN CONFIRMED BY THE TRIBUNAL AND WHERE THE ASSESS EE HAS FAILED TO ESTABLISH ITS CLAIM OF EXPENDITURE, THEN THERE IS NO MERIT IN THE PLEA OF THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD. 27. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE SECOND BUNCH OF APPEALS IS ALSO AGAINST THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY THE CIT(A) ON SUCH ENHANCED INCOME WHICH WERE MADE BY HIM WHILE PASSING THE APPELLATE ORDER FOR THE INSTANT ASSESSMENT YEARS. FOR READY REFERENCE AND IN ORDER TO ADJUDIC ATE THE ISSUE WE WOULD MAKE A REFERENCE TO THE TABULATED CHART FILED BY THE ASSES SEE FOR THE RESPECTIVE ASSESSMENT YEARS WHICH BRIEFLY GIVES THE DETAILS OF AMOUNTS ORIGINALLY ASSESSED IN THE HANDS OF THE ASSESSEE, AGAIN ENHANCED BY THE CI T(A) AND INCOME SUSTAINED BY THE TRIBUNAL. THE ASSESSEE IN THIS REGARD HAS F ILED THE TABULATED CHART WHICH READS AS UNDER : A.Y. DESCRIPTION AMOUNT ORIGINALLY ASSESSED & PENALTY LEVIED BY AO AMOUNT ENHANCED AND PENALTY LEVIED BY CIT(A) INCOME SUSTAINED BY ITAT 2001-02 1. FACILITIES TO SHRI B.E. AVHAD VEHICLE MAINTENANCE (50% DISALLOWED 21,850 - 10,925 DEPRECIATION ON CAR (0% DISALLOWED) - - - CREDIT CARD EXPENSES (50% DISALLOWED) 180,004 - 90,002 HONORARIUM PAID (50% DISALLOWED) - - - 2. EXPENDITURE ON FOREIGN TOURS OF TRUSTEES 152,930 130,492 283,422 3. CONCESSIONAL EDUCATION TO RELATIVE OF TRUSTEES 92,400 62,320 154,720 ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 16 4. OTHER INCOME ASSESSED IN VIEW OF DENIAL OF EXEMPTION U/S.11 & 12 BUT DELETED BY ITAT 80,763,536 ASSESSED INCOME 81,120,720 192,812 539,069 PENALTY LEVIED ON INCOME 28,473,372 28,473,372 57,844 2002-03 1. FACILITIES TO SHRI B.E. AVHAD VEHICLE MAINTENANCE (50% DISALLOWED - 143,893 71,947 DEPRECIATION ON CAR (0% DISALLOWED) - 171,388 - CREDIT CARD EXPENSES (50% DISALLOWED) - 242,566 121,283 HONORARIUM PAID (50% DISALLOWED) - - - 2. EXPENDITURE ON FOREIGN TOURS OF TRUSTEES - 24,700 24,700 3. CONCESSIONAL EDUCATION TO RELATIVE OF TRUSTEES - 88,680 88,680 4. OTHER INCOME ASSESSED IN VIEW OF DENIAL OF EXEMPTION U/S.11 & 12 BUT DELETED BY ITAT 19,862,618 ASSESSED INCOME 19,862,618 671,227 306,610 PENALTY LEVIED ON INCOME 28,473,372 6,077,960 201,368 2006-07 1. FACILITIES TO SHRI B.E. AVHAD VEHICLE MAINTENANCE (50% DISALLOWED - 236,191 118,096 DEPRECIATION ON CAR (50% DISALLOWED) - 280,057 140,029 CREDIT CARD EXPENSES (50% DISALLOWED) - 210,636 105,318 HONORARIUM PAID (50% DISALLOWED) - 180,000 90,000 2. EXPENDITURE ON FOREIGN TOURS OF TRUSTEES - 1,057,333 1,057,333 3. SCHOLARSHIP GIVEN TO SHRI RAHUL KARAD - 544,797 544,797 4. INTEREST ON LOAN GIVEN TO SHRI RAHUL KARAD - 127,529 127,529 5. ON MONEY PAYMENT FOR PURCHASE OF LAND 7,358,000 - 7,358,000 6. OTHER INCOME ASSESSED IN VIEW OF DENIAL OF EXEMPTION U/S.11 & 12, BUT DELETED BY ITAT 178,023,290 - - ASSESSED INCOME 185,381,290 2,636,543 9,541,101 PENALTY LEVIED ON INCOME 59,223,057 806,782 28. IN ASSESSMENT YEARS 2003-04, 2004-05 AND 2007-0 8 THE ADDITIONS ARE SIMILAR TO THE ADDITIONS MADE IN ASSESSMENT YEAR 20 02-03. THE PERUSAL OF THE ABOVE DETAILS IN ASSESSMENT YEAR 2001-02 WOULD REFL ECT THAT IN RESPECT OF ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 17 EXPENDITURE ON FOREIGN TOURS OF THE TRUSTEES, THE A SSESSING OFFICER MADE DISALLOWANCE OF RS.1,52,930/-. THE CIT(A) ENHANCED THE SAME BY RS.1,30,492/- AND THE TOTAL DISALLOWANCE WHICH IS SUSTAINED BY TH E TRIBUNAL IS RS.2,83,422/-. SIMILARLY, IN RESPECT OF THE EXPENDITURE INCURRED O N CONCESSIONAL EDUCATION TO RELATIVES OF THE TRUSTEES, THE AO MADE DISALLOWANCE OF RS.92,400/- WHICH WAS ENHANCED BY THE CIT(A) BY RS.62,320/- AND THE DISAL LOWANCE WHICH WAS SUSTAINED BY THE TRIBUNAL WAS AT RS.1,54,720/-. THE RELEVANT FINDINGS OF THE TRIBUNAL (SUPRA) ARE GIVEN AT PAGES 155 TO 157 OF THE ORDER OF THE T RIBUNAL DATED 10.02.2017. THE PERUSAL OF THE SAME REFLECTS THAT WHILE DECIDING TH E ISSUE OF EXPENDITURE INCURRED ON FOREIGN TOURS OF THE TRUSTEES BY MR. RAHUL V. KA RAD AND MR. V. D. KARAD IT WAS OBSERVED THAT THE ASSESSEE IN ADDITION TO THE PLANE TICKETS, PURCHASED PERSONAL ARTICLES LIKE SUNGLASSES, PERFUMES AND SHIRTS ETC. AND WAS UNABLE TO EXPLAIN THE SOURCE. THE TRIBUNAL (SUPRA) NOTED THAT THE DAUGHT ER OF MR. V.D. KARAD, MANAGING TRUSTEE WAS STAYING IN AUSTRALIA AND THOUGH THE ASS ESSEE CLAIMED THAT SUCH EXPENDITURE WAS ON ACCOUNT OF ATTENDING THE WORLD P EACE TOUR, BUT NO MERIT WAS FOUND IN THE ARGUMENT OF THE ASSESSEE AND THE EXPEN DITURE OF RS.1,52,930/- FOR ASSESSMENT YEAR 2001-02 WAS HELD TO BE NOT FOR THE OBJECTS OF THE TRUST. SIMILARLY, THE FOREIGN TRAVEL EXPENSES IN OTHER YEARS WERE HEL D TO BE NOT FOR THE OBJECTS OF THE TRUST AND THE SAME WERE BROUGHT TO TAX BY TRIBU NAL (SUPRA) VIDE PARA NO. 156 AT PAGE 113 OF THE ORDER. THE TRIBUNAL FURTHER CON SIDERED THE CLAIM OF THE ASSESSEE, VIS-A-VIS CONCESSIONAL EDUCATION GIVEN TO EMPLOYEES OF TRUST WHEREIN IT WAS HELD THAT THE SAME WAS NOT COVERED BY THE PROVI SIONS OF SECTION 13(1)(C) OF THE ACT AND HENCE THE SAME WERE ALLOWED IN THE HAND S OF THE ASSESSEE. HOWEVER, IN RESPECT OF THE RELATIVES OF THE TRUSTEE S, AS DEFINED IN EXPLANATION TO SECTION 13, THE TRIBUNAL (SUPRA) HELD THAT THE SAME CANNOT BE ALLOWED AS AN EXPENDITURE IN THE HANDS OF THE ASSESSEE. 29. IN THE ASSESSMENT YEAR 2002-03, FURTHER DISALLO WANCE WAS MADE IN ADDITION ON THE FACILITIES PROVIDED TO MR. B.E. AVHAD, WHO W AS A SENIOR ADVOCATE. THE ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 18 TRIBUNAL (SUPRA) VIDE PARA NO.158 OF THE ORDER OBSE RVED THAT IN THE ABSENCE OF FULL PARTICULARS GIVEN ON ACCOUNT OF EACH AND EVERY EXPE NDITURE INCURRED BY MR. B.E. AVHAD THROUGH HIS CREDIT CARD, 50% OF THE EXPENDITU RE WAS FOR THE OBJECTS OF THE TRUST AND THE BALANCE 50% WAS TOWARDS HIS PERSONAL EXPENDITURE WHICH WAS DISALLOWED. FURTHER, THE TRIBUNAL WHILE ALLOWING T HE EXEMPTION U/S.11 OF THE ACT, HELD THAT THERE COULD NOT BE WHOLESALE DENIAL OF TH E SAID EXEMPTION FOR VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT. THE INC OME WHICH WAS SUBJECT MATTER OF VIOLATION UNDER SECTION 13(1)(C) OF THE ACT WERE BR OUGHT TO TAX. THE TRIBUNAL (SUPRA) VIDE PARA NO.152 HELD SO. FURTHER, THE TRI BUNAL (SUPRA) CONSIDERED THE EXPENSES INCURRED BY THE TRUST WHICH WAS COVERED BY THE AFORESAID VIOLATION OF SECTION 13(1)(C) OF THE ACT AND THE FIRST EXPENDITU RE WAS TOWARDS THE VEHICLE EXPENSES, I.E. EXPENDITURE INCURRED ON MR. B.E. AVH AD WHO WAS A LAWYER AND WAS ALSO ATTENDING TO VARIOUS WORKS OF THE TRUST. THE TRIBUNAL HELD THAT 50% OF THE VEHICLE MAINTENANCE EXPENSES SHOULD BE HELD FOR THE OBJECTS OF THE TRUST AND THE BALANCE 50% WAS DISALLOWED. FURTHER, DEPRECIATION ON MOTOR CAR WHICH WAS OWNED BY THE TRUST AND WHICH WAS USED BY MR. B.E. A VHAD WAS ALLOWED IN THE HANDS OF THE ASSESSEE TRUST. IN VIEW THEREOF, THE TRIBUNAL HAS DISALLOWED THE EXPENSES ON FACILITIES PROVIDED TO MR. B.E. AVHAD B EING IN VIOLATION OF THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT IN RESPEC T OF VEHICLE MAINTENANCE EXPENSES. FURTHER, THE DISALLOWANCE HAS BEEN MADE ON ACCOUNT OF CREDIT CARD EXPENSES AS TOTAL CREDIT CARD EXPENSES WERE DEBITED TO THE TRUST, WHEREAS MR. B.E. AVHAD WAS A PRACTICING LAWYER AND WAS TRAVELLING TO SUPREME COURT AND BOMBAY HIGH COURT, BOTH ON HIS OWN ACCOUNT AND ON ACCOUNT OF THE TRUST. SIMILARLY, THE EXPENDITURE INCURRED ON FOREIGN TRAVEL OF THE TRUST EES ALSO HAS BEEN DISALLOWED IN THE ABSENCE OF THE ASSESSEE FURNISHING COMPLETE DOC UMENTATION AS TO WHETHER THE SAME WAS INCURRED FOR CARRYING ON THE BUSINESS OF T HE ASSESSEE. IT WAS OBSERVED BY THE TRIBUNAL THAT THE ASSESSEE HAS FAILED TO GIV E EVIDENCE IN THIS REGARD. ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 19 30. THE NEXT ISSUE ON WHICH THE DISALLOWANCE WAS UP HELD BY THE TRIBUNAL WAS ON CONCESSIONAL EDUCATION GIVEN TO THE SON OF THE T RUSTEE WHICH WAS IN VIOLATION OF THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT . IN LATER YEARS, THE DISALLOWANCE WAS MADE ON ACCOUNT OF INTEREST FREE LOAN GIVEN TO MR. RAHUL KARAD AGAIN IN VIOLATION OF SECTION 13(1)(C) OF THE ACT. THE TRIBUNAL HAD H ELD THAT THE CONCESSION IN EDUCATION GIVEN TO THE EMPLOYEES OR THEIR RELATIVES IS ALLOWABLE IN THE HANDS OF THE ASSESSEE. HOWEVER, CONCESSION GIVEN TO THE RELATIV ES OF THE DIRECTORS OF THE ASSESSEE TRUST ATTRACTS THE PROVISIONS OF SECTION 1 3(1)(C) OF THE ACT AND HENCE THE DISALLOWANCE IN THE HANDS OF THE ASSESSEE TRUST. 31. ONCE THE DISALLOWANCE HAS BEEN UPHELD IN THE HA NDS OF THE ASSESSEE TRUST ON ACCOUNT OF NON-FULFILMENT OF THE PROVISIONS OF T HE ACT, THE SAID DISALLOWANCES MAY BE CONCESSIONAL EDUCATIONAL EXPENSES OR LOAN GI VEN TO RELATIVES OF TRUSTEES AND FOREIGN TRAVEL EXPENSES OF TRUSTEES CANNOT BE S AID TO BE MERE ADHOC DISALLOWANCE OF EXPENSES IN THE HANDS OF THE ASSESS EE TRUST. ACCORDINGLY, WE HOLD THAT THERE IS NO MERIT IN THE PLEA OF THE ASSE SSEE IN THIS REGARD. THE ASSESSEE IS LIABLE TO LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF THE ENHANCEMENT OF DISALLOWANCE MADE BY THE CIT(A) IN THIS REGARD. 32. VARIOUS COURTS HAVE TIME AND AGAIN HELD THAT WH ERE THE ASSESSEE HAS FAILED TO COMPLY WITH THE PROVISIONS OF THE ACT, TH EN PENALTY FOR CONCEALMENT IS LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. AS PO INTED OUT IN THE PARAS ABOVE, THE DISALLOWANCE WHICH WAS MADE ON ACCOUNT OF TRAVELLIN G, WHERE THE ASSESSEE HAS FAILED TO EXPLAIN THE NECESSITY OF THE EXPENDITURE AND ITS RELATION TO THE OBJECTS OF THE TRUST; THE DISALLOWANCE MADE ON ACCOUNT OF THE CONCESSION IN EDUCATION OR LOAN GIVEN TO THE RELATIVES OF THE EMPLOYEES WAS FOR THE VIOLATION OF THE PROVISIONS UNDER SECTION 13(1)(C) OF THE ACT AND THE SAME WAS HELD T O BE NOT FOR THE OBJECTS OF THE TRUST. THE PROVISIONS OF SECTION 13(6) OF THE ACT CLEARLY PROVIDE THAT ON SUCH VIOLATION, THE ASSESSEE, AN EDUCATIONAL INSTITUTION , IS NOT ENTITLED TO CLAIM ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 20 EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT. ONCE THE EXPENDITURE IS DISALLOWED IN THE HANDS OF THE ASSESSEE FOR VIOLATION OF THE C LEAR CUT PROVISIONS OF THE ACT, THEN THE ISSUE OF LEVY OF PENALTY FOR CONCEALMENT S TANDS ESTABLISHED AND ASSESSEE IS LIABLE TO THE SAME. SIMILARLY WHERE THE TRAVELL ING EXPENSES ON DIRECTORS HAVE BEEN DISALLOWED FOR WANT OF IT BEING FOR OBJECTS OF TRUST, THE LEVY OF PENALTY FOR CONCEALMENT STANDS ESTABLISHED. 33. ANOTHER GROUND ON WHICH PENALTY HAS BEEN LEVIED IS THE EXPENDITURE INCURRED ON ACCOUNT OF VEHICLE MAINTENANCE AND CRED IT CARD EXPENSES OF MR. B.E. AVHAD. THE SAID PERSON WAS A SENIOR ADVOCATE AND T HE ASSESSEE TRUST HAD INCURRED EXPENDITURE ON HIS TRAVEL TO BOMBAY HIGH C OURT AND SUPREME COURT. HOWEVER, THE FINDINGS OF THE TRIBUNAL THAT BESIDE A TTENDING TO THE DISPUTES OF THE ASSESSEE BEFORE THE HONBLE BOMBAY HIGH COURT AND T HE APEX COURT, THE SAID PERSON WAS ALSO CARRYING ON HIS PROFESSION OF ADVOC ATE. IN THE ABSENCE OF THE DETAILS BEING GIVEN BY THE TRUST ON ACCOUNT OF EACH AND EVERY EXPENDITURE BOOKED, 50% OF SUCH EXPENDITURE WAS DISALLOWED BEING HIS PE RSONAL EXPENDITURE. VIS-A-VIS THE SAID DISALLOWANCE, WE HOLD THAT SAME HAS BEEN U PHELD IN THE HANDS OF THE ASSESSEE FOR WANT OF PROOF AND NOT FOR VIOLATION OF ANY OF THE PROVISIONS OF THE ACT. IN VIEW THEREOF, WE FIND NO MERIT IN THE LEVY OF PE NALTY UNDER SECTION 271(1)(C) OF THE ACT ON SUCH PARTIAL DISALLOWANCE OF EXPENDITURE ON MAINTENANCE OF CAR AND CREDIT CARD EXPENSES OF MR. B.E. AVHAD. IN ASSESSM ENT YEAR 2006-07, DISALLOWANCE ON DEPRECIATION OF CAR AND HONORARIUM PAID, I.E. FACILITIES TO MR. B.E. AVHAD HAVE BEEN UPHELD TO THE EXTENT OF 50%. WE HO LD THAT THE ASSESSEE IS NOT LIABLE TO LEVY OF PENALTY ON PARTIAL DISALLOWANCE O F FACILITIES PROVIDED TO MR. B.E. AVHAD. 34. HOWEVER, THE ASSESSEE IS LIABLE TO LEVY OF PENA LTY UNDER SECTION 271(1)(C) OF THE ACT ON THE EXPENDITURE INCURRED ON FOREIGN TOUR OF THE TRUSTEES, SCHOLARSHIP GIVEN TO THE RELATIVES OF THE TRUSTEES AND ALSO ON THE INTEREST ON LOAN GIVEN TO ITA NOS.968 TO 971 & 973 TO 974/PUN/2015 & ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 MAHARASHTRA ACADEMY OF ENGG. & EDUCATION RESEARCH 21 RELATIVES OF THE TRUSTEES, DISALLOWANCE OF WHICH UN DER SECTION 13(1)(C) OF THE ACT HAS BEEN UPHELD IN THE HANDS OF THE ASSESSEE. HENC E, GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 35. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN I TA NOS. 968 TO 971 & 973 TO 974/PUN/2015 AND IN ITA NOS. 2018 TO 2021 & 2023 TO 2024/PUN/2012 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 08 TH DAY OF DECEMBER, 2017. SD/- SD/- (D.KARUNAKARA RAO) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER PUNE; DATED : 08 TH DECEMBER, 2017. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A) - 3 & 10 , PUNE CIT - 3 & 10 , PUNE , , B BENCH PUNE; / GUARD FILE.