PREM PRAKASH UMA SHANKER, Alwar V. INCOME TAX OFFICER, WARD-2-3, Alwar

ITA 982/JPR/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8723 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 21-08-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT A
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c); 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 982/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2014-15 SHRI PREM PRAKASH UMA SHANKER GB-34, KRISHI UPAJ MANDI, ALWAR (RAJ.)-301001. CUKE VS. THE ITO, WARD-2(3), ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAFFP 4000 N VIHYKFKHZ@ A PPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J. C. KULHARI (JCIT) A LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 13/12/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 21/12/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), ALWAR DATED 06.06.2018 FOR ASSESSMENT YEAR 2014-15 WHEREIN THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF PEN ALTY OF RS. 36,003/- U/S 271(1)(C) OF THE IT ACT. 2. THE LD AR SUBMITTED THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE AO MADE AN ADDITION ON ACCOUNT OF INTEREST ON INCOME ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 2 TAX REFUND AMOUNTING TO RS. 1485/-, ADDITION ON ACC OUNT OF DIFFERENCE IN COMMISSION INCOME AS PER FORM 26AS AND AS REPORTED IN THE RETURN OF INCOME AMOUNTING TO RS. 19,049/-, AND DIFFERENT IN THE INTEREST INCOME AS PER FORM 26AS AND AS SHOWN IN THE RETURN OF INCO ME AMOUNTING TO RS. 99,475/-. IT WAS FURTHER SUBMITTED BY THE LD. A R THAT IN RESPECT OF THESE THREE ADDITIONS, THE AO HAS INITIATED THE PEN ALTY AND WHILE INITIATING THE PENALTY, THE AO STATED THAT THE PENA LTY HAS BEEN INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS REGARDS ADDITION OF INTEREST ON INCOME TAX REFUND. REGARDING THE OTHER TWO ADDITIONS OF COMMISSION AND INTEREST INCOME, THE AO HAS INITIATE D THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF CONCEALED/ESCA PED INCOME. IT WAS FURTHER SUBMITTED THAT TOWARDS THE END OF THE ASSES SMENT ORDER, THE AO HAS STATED THAT THE PENALTY NOTICE U/S 271(1)(C) O F THE ACT IS ALSO ISSUED SEPARATELY FOR FURNISHING INACCURATE PARTICU LARS OF CONCEALED/ESCAPED COMMISSION AND INTEREST INCOME. O UR REFERENCE WAS DRAWN TO THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C ) OF THE ACT DATED 30.12.2016 WHICH IS ISSUED FOR CONCEALING THE PARTI CULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. F URTHER, OUR REFERENCE WAS DRAWN THE PENALTY ORDER DATED 29.06.2017 WHEREI N THE AO HAS LEVY THE PENALTY FOR CONCEALING THE INCOME AND LEVYING T HE PENALTY OF RS. 36,003/-. IT WAS ACCORDINGLY SUBMITTED THAT IN THE ABSENCE OF ANY SPECIFIC CHARGE AGAINST THE ASSESSEE IN THE ASSESSM ENT ORDER AND EVEN IN THE PENALTY NOTICE AND THEREAFTER, IN THE PENALT Y PROCEEDINGS, LEVYING THE PENALTY FOR CONCEALING THE PARTICULARS OF INCOM E, THE PENALTY ORDER PASSED BY THE AO IS ILLEGAL AND BAD IN LAW. IN THIS REGARD OUR REFERENCE WAS DRAWN TO THE DECISION OF THE THIRD MEMBER OF TH E TRIBUNAL IN CASE ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 3 OF HPCL MITTAL ENERGY LTD. VS. ACIT IN ITA NO. 554 &555/ASR./2014 DATED 07.05.2018. 3. PER CONTRA, THE LD. DR VEHEMENTLY ARGUED THE MAT TER AND SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. IT WA S FURTHER SUBMITTED THAT THE DECISION OF THE THIRD MEMBER OF THE TRIBUN AL IN CASE OF HPCL MITTAL ENERGY LTD. VS. ACIT (SUPRA) SUPPORTS THE CA SE OF THE REVENUE. 4. HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATE RIAL AVAILABLE ON RECORD. REGARDING THE CONTENTION OF THE LD. AR IN CONTEXT OF ISSUE OF VAGUE NOTICE WITH AN UNCERTAIN CHARGE AND SUBSEQUEN T FINDINGS GIVING IN THE PENALTY ORDER, WE FIND THAT A SIMILAR ISSUE HAS BEEN DEALT WITH BY THIS BENCH IN CASE OF SMT. SHIPRA JAIN AND ORS. VS. ACIT (ITA NO. 922/JP/2018 & OTHERS DATED 31.10.2018) WHEREIN WE HAVE EXAMINED THE ISSUE AT LENGTH IN CONTEXT OF VARIOUS AUTHORITIES (INCLUDING THE DECISION OF THE THIRD MEMBER OF THE TRIBUNAL RE LIED UPON BY THE LD AR) AND OUR FINDINGS ARE CONTAINED AT PARA 4.2 TO 4 .5 WHICH ARE REPRODUCED AS UNDER:- 4.2 NOW COMING TO THE FIRST CONTENTION SO RAISED B Y THE LD. AR THAT IN THE ABSENCE OF ANY SPECIFIC CHARGE AGAINST THE ASSE SSEE IN THE PENALTY NOTICE AND SUBSEQUENTLY IN THE PENALTY ORDER, CONSE QUENT PENALTY IMPOSED BY AO IS ILLEGAL AND BAD IN LAW. WE FIND TH AT EXPLANATION 5A TO SECTION 271(1)(C) IS A DEEMING PROVISION AND SUBJEC T TO FULFILLING THE REQUISITE CONDITIONS, IT DEEMS THE ASSESSEE TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME SIMILAR TO WHAT HAS BEEN PROVIDED IN CLAUSE (C) TO SECTION ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 4 271(1) OF THE ACT. IN SEARCH CASES AS WELL, THE LE GISLATURE HAS THUS ENVISAGED APPLICABILITY OF ONE OR BOTH OF THESE CHA RGES. IT IS SETTLED POSITION NOW AS HELD BY CATENA OF JUDICIAL PRONOUNC EMENTS THAT THE NOTICE INITIATING THE PENALTY PROCEEDINGS SHOULD SP ECIFY THE CHARGE AGAINST THE ASSESSEE AND EVEN WHERE THE CHARGE IS U NCERTAIN AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS, SUBSEQUE NTLY DURING THE PENALTY PROCEEDINGS, THE AO MUST GET DECISIVE, WHIC H SHOULD BE REFLECTED IN THE PENALTY ORDER, AS TO WHETHER THE A SSESSEE IS GUILTY OF 'CONCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHI NG OF INACCURATE PARTICULARS OF SUCH INCOME'. 4.3 IN THIS REGARD, USEFUL REFERENCE CAN BE DRAWN T O THE DECISION OF THE COORDINATE BENCH IN CASE OF HPCL MITTAL ENERGY VS ADD. CIT REPORTED IN 96 TAXMAN.COM 3 WHERE THE MATTER WAS RE FERRED TO THE THIRD MEMBER TO DECIDE ON THE ISSUE AS TO 'WHETHER, IN CASE WHERE THE SATISFACTION OF THE AO WHILE INITIATING PENALTY PRO CEEDINGS U/S. 271(L)(C) OF THE INCOME-TAX ACT, 1961 IS WITH REGARD TO ALLEG ED CONCEALMENT OF INCOME BY THE ASSESSEE, WHEREAS THE IMPOSITION OF T HE PENALTY IS FOR 'CONCEALMENT/FURNISHING INACCURATE PARTICULARS OF I NCOME', THE LEVY OF PENALTY IS NOT SUSTAINABLE?'. AFTER ANALYZING CATENA OF JUDICIAL PRONOUNCEMENTS I NCLUDING THE DECISIONS WHICH HAVE BEEN CITED BY THE LD AR, THE C OORDINATE BENCH SPEAKING THROUGH THE THIRD MEMBER HAS HELD AS UNDER : 9. ON AN ANALYSIS OF THE FACTUAL MATRIX NARRATED A BOVE, IT IS MANIFESTED THAT THE AO RECORDED SATISFACTION QUA TH E THREE ITEMS OF DISALLOWANCE/ADDITIONS LEADING TO PENALTY, AS 'C ONCEALMENT OF ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 5 INCOME' IN ALL THE ASSESSMENT ORDERS; INITIATED PEN ALTY IN ALL THE FOUR CASES BY TREATING THEM AS COVERED UNDER THE EX PRESSION 'CONCEALMENT OF PARTICULARS OF INCOME'; AND THEN FI NALLY PASSED PENALTY ORDERS ON THE ASSESSEES FINDING THEM GUILTY OF 'CONCEALMENT OF PARTICULARS OF INCOME/FURNISHING IN ACCURATE PARTICULARS OF SUCH INCOME'. AS AGAINST THAT, THE A CTUAL POSITION IS THAT ALL THE THREE ITEMS OF DISALLOWANCE/ADDITIONS FALL ONLY UNDER THE CATEGORY OF 'FURNISHING OF INACCURATE PARTICULA RS OF INCOME'. NOW THE QUESTION ARISES IF THE PENALTY IS SUSTAINAB LE IN SUCH CIRCUMSTANCES? 10. AT THIS JUNCTURE, IT IS PERTINENT TO NOTE THAT PEN ALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEE DINGS. MERELY BECAUSE AN ADDITION HAS BEEN MADE OR CONFIRMED IN T HE ASSESSMENT, DOES NOT, PER SE, LEAD TO IMPOSITION OF PENALTY U/S. 271(L)(C). PENALTY PROCEEDINGS ARE SEPARATELY INITI ATED ON CONCLUSION OF THE ASSESSMENT, IN WHICH THE ASSESSEE IS GIVEN AN OPPORTUNITY TO EXPLAIN HIS POSITION QUA THE IMPOSIT ION OF PENALTY ON THE ADDITIONS/DISALLOWANCES MADE IN THE ASSESSME NT. THE AO CONSIDERS THE EXPLANATION OF THE ASSESSEE AND THEN DECIDES IF THE PENALTY IS IMPOSABLE OR NOT. FURTHER, THE OPINION O F THE AO AS TO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME HAS TO BE SEEN WITH REFE RENCE TO THE DAY ON WHICH HE INITIATES/IMPOSES PENALTY. LATER EV ENTS, LIKE CONFIRMATION OR DELETION OF ADDITIONS/DISALLOWANCES IN QUANTUM APPEALS, ARE IRRELEVANT IN THIS CONTEXT. ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 6 11. IT TRANSPIRES FROM THE ABOVE DISCUSSION THAT, INSO FAR AS THE ISSUE BEFORE ME IS CONCERNED, THERE ARE BROADLY TWO DIFFERENT STAGES HAVING BEARING ON THE IMPOSITION OF PENALTY, NAMELY, ASSESSMENT AND PENALTY. AT THE ASSESSMENT STAGE, TH E AO HAS TO RECORD A SATISFACTION IN THE ASSESSMENT ORDER AS TO WHETHER THE ADDITIONS/DISALLOWANCES, ON WHICH PENALTY IS LIKELY TO BE IMPOSED, REPRESENT CONCEALMENT OF PARTICULARS OF INCOME OR F URNISHING OF INACCURATE PARTICULARS OF INCOME. THERE CAN BE TWO SUB-STAGES IN PENALTY PROCEEDINGS REQUIRING THE AO TO RECORD SUCH SATISFACTION, VIZ., AT THE TIME OF INITIATING THE PENALTY PROCEED INGS AND AT THE TIME OF PASSING THE PENALTY ORDER. I WILL DEAL WITH SUCH TWO STAGES IN THE PRESENT CONTEXT. (A) RECORDING OF SATISFACTION AT THE ASSESSMENT STA GE. 12. IT HAS BEEN NOTICED HEREINABOVE THAT THE FIRST STA GE OF IMPOSITION OF PENALTY IS RECORDING OF SATISFACTION BY THE AO IN THE ASSESSMENT ORDER AS TO WHETHER THE ASSESSEE CONCEAL ED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME. THERE WAS A LOT OF LITIGATION ON THIS POINT . THE ASSESSEES WERE CONTENDING BEFORE THE APPELLATE COURTS THAT TH E AO HAD NOT RECORDED PROPER SATISFACTION IN THE ASSESSMENT ORDE R AND HENCE THE PENALTY SHOULD BE DELETED. ON THE OTHER HAND, T HE DEPARTMENT WAS CONTENDING THAT THE SATISFACTION WAS PROPERLY RECORDED. CONSIDERING THE MAGNITUDE OF LITIGATION O N THE POINT, THE FINANCE ACT, 2008, INSERTED SUB-SECTION (1B) TO SECTION 271, W.R.E.F. 1.4.1989, WHICH RUNS AS UNDER: ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 7 'WHERE ANY AMOUNT IS ADDED OR DISALLOWED IN COMPUTI NG THE TOTAL INCOME OR LOSS OF AN ASSESSEE IN ANY ORDER OF ASSES SMENT OR REASSESSMENT AND THE SAID ORDER CONTAINS A DIRECTIO N FOR INITIATION OF PENALTY PROCEEDINGS UNDER CLAUSE (C) OF SUB-SECT ION (1), SUCH AN ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE DEE MED TO CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FO R INITIATION OF THE PENALTY PROCEEDINGS UNDER THE SAID CLAUSE (C).' 13. THE EFFECT OF THIS INSERTION IS THAT WHEN AN AMOUN T IS ADDED OR DISALLOWED IN AN ASSESSMENT AND THE ORDER CONTAI NS A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS U/S. 271(L)(C ), IT SHALL BE DEEMED TO CONSTITUTE SATISFACTION OF THE AO FOR INI TIATION OF THE PENALTY PROCEEDINGS. CRUX OF THE NEW PROVISION IS T HAT A MERE DIRECTION IN THE ASSESSMENT ORDER TO INITIATE PENAL TY PROCEEDINGS UNDER CLAUSE (C) IS SUFFICIENT TO CONCLUDE THAT THE AO RECORDED PROPER SATISFACTION AS TO WHETHER THE ADDITIONS/DIS ALLOWANCES ARE 'CONCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHI NG OF INACCURATE PARTICULARS OF INCOME' OR BOTH. IT IS INCORRECT TO ARGUE THAT EVEN AFTER THE INSERTION OF SUB-SECTION (1B), THE AO STI LL NEEDS TO SPECIFICALLY RECORD AS TO WHETHER EACH ITEM OF ADDITION/DISALLOWANCE IS A CASE OF CONCEALMENT OF P ARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. DEEMING 'SATISFACTION' UNDER CLAUSE (C) IN TERMS OF SUB-SEC TION (1B) MEANS DEEMING 'PROPER SATISFACTION' AND 'PROPER SATISFACT ION' MEANS GETTING SATISFIED AS TO WHETHER IT IS A CASE OF CON CEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF SUCH INCOME. IT CANNOT BE CONCEIVED THAT A DIRECTIO N TO INITIATE ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 8 PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER IS ONLY 'SATISFACTION' AND NOT 'PROPER SATISFACTION'. THIS CONTENTION, IF TAKEN TO A LOGICAL CONCLUSION, WOULD MEAN THAT AFTER SUCH A DIRECTION IN THE ASSESSMENT ORDER CONSTITUTING HIS SATISFACTION, THE AO SHOULD ONCE AGAIN SPECIFICALLY RECORD SATISFACTION WITH RE FERENCE TO EACH ADDITION OR DISALLOWANCE AS TO WHETHER IT IS A CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. IT IS OBVI OUSLY AN ABSURD PROPOSITION AND GOES AGAINST THE UNAMBIGUOUS LANGUA GE OF THE PROVISION. THUS, IT IS OVERT THAT AFTER INSERTION O F SUB-SECTION (1B) TO SECTION 271, INVARIABLY, THE AO SHOULD BE DEEMED TO HAVE RECORDED PROPER SATISFACTION WITH REFERENCE TO EACH ADDITION/DISALLOWANCE AS TO CONCEALMENT OR FURNISHI NG OF INACCURATE PARTICULARS, ONCE A DIRECTION IS CONTAIN ED IN THE ASSESSMENT ORDER TO INITIATE PENALTY U/S. 271(L)(C) OF THE ACT. REQUIRING THE RECORDING OF SEPARATE SATISFACTION, O NCE AGAIN, BY THE AO WOULD MILITATE AGAINST THE DEEMING PROVISION CONTAINED IN SUB-SECTION (1B). ADMITTEDLY, IN ALL THE FOUR APPEA LS UNDER CONSIDERATION, THE AO DIRECTED TO INITIATE PENALTY U/S. 271(L)(C) OF THE ACT IN THE ASSESSMENT ORDERS. THUS, THE REVENUE CAN BE SAFELY CONSIDERED TO HAVE SUCCESSFULLY PASSED OUT T HE FIRST STAGE. (B) RECORDING OF SATISFACTION AT THE PENALTY STAGE 14. IT HAS BEEN NOTED ABOVE THAT PENALTY PROCEEDINGS A RE SEPARATE FROM ASSESSMENT PROCEEDINGS, WHICH GET KIC KED WITH THE ISSUE OF NOTICE U/S. 274 AND CULMINATE IN THE PENAL TY ORDER U/S. 271(L)(C) OF THE ACT. MANY A TIMES, PENALTY INITIAT ED IN THE ASSESSMENT ORDER ON ONE OR MORE COUNTS BY MEANS OF NOTICE U/S. ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 9 274, IS NOT EVENTUALLY IMPOSED BY THE AO ON GETTING SATISFIED WITH THE EXPLANATION TENDERED BY THE ASSESSEE IN THE PEN ALTY PROCEEDINGS. IN ANY CASE, CONFRONTING THE ASSESSEE WITH THE CHARGE AGAINST HIM IS SINE QUA NON FOR ANY VALID PE NALTY PROCEEDINGS. IT IS ONLY WHEN THE ASSESSEE IS MADE A WARE OF SUCH A CHARGE AGAINST HIM THAT HE CAN PRESENT HIS SIDE. THUS PRESCRIBING THE CHARGE IN THE PENALTY NOTICE AND PE NALTY ORDER IS MUST. ABSENCE OF A CHARGE IN THE PENALTY NOTICE OR NOT FINDING THE ASSESSEE GUILTY OF A CLEAR OFFENCE IN THE PENALTY O RDER, VITIATES THE PENALTY ORDER. 15. THE MOOT QUESTION IS THAT WHAT SHOULD BE THE NATUR E OF SPECIFICATION OF A CHARGE BY THE AO AT THE STAGE OF INITIATION OF PENALTY PROCEEDINGS AND AT THE TIME OF PASSING THE PENALTY ORDER. IS THE AO REQUIRED TO SPECIFY IN THE PENALTY NOTICE /ORDER AS TO WHETHER IT IS A CASE OF 'CONCEALMENT OF PARTICULARS OF INCOME'; OR 'FURNISHING OF INACCURATE PARTICULARS OF INCOME'; O R BOTH OF THEM, WHICH CAN BE EXPRESSED BY USING THE WORD 'AND' BETW EEN THE TWO EXPRESSIONS. WHEN THE AO IS SATISFIED THAT IT IS A CLEAR-CUT CASE OF CONCEALMENT OF PARTICULARS OF INCOME, HE MUST SPECI FY IT SO IN THE NOTICE AT THE TIME OF INITIATION OF PENALTY PROCEED INGS AND ALSO IN THE PENALTY ORDER. THE AO CANNOT INITIATE PENALTY O N THE CHARGE OF 'CONCEALMENT OF PARTICULARS OF INCOME', BUT ULTI MATELY FIND THE ASSESSEE GUILTY IN THE PENALTY ORDER OF 'FURNISHING INACCURATE PARTICULARS OF INCOME'. IN THE SAME MANNER, HE CANN OT BE UNCERTAIN IN THE PENALTY ORDER AS TO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY USING SLASH BET WEEN THE TWO ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 10 EXPRESSIONS. WHEN THE AO IS SATISFIED THAT IT IS A CLEAR-CUT CASE OF 'FURNISHING OF INACCURATE PARTICULARS OF INCOME', H E MUST AGAIN SPECIFY IT SO IN THE NOTICE AT THE TIME OF INITIATI ON OF PENALTY PROCEEDINGS AND ALSO IN THE PENALTY ORDER. AFTER IN ITIATING PENALTY ON THE CHARGE OF 'FURNISHING OF INACCURATE PARTICUL ARS OF INCOME', HE CANNOT IMPOSE PENALTY BY FINDING THE ASSESSEE GU ILTY OF 'CONCEALMENT OF PARTICULARS OF INCOME'. AGAIN, HE C ANNOT BE UNCERTAIN IN THE PENALTY ORDER AS TO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY USING SLASH BET WEEN THE TWO EXPRESSIONS. WHEN THE AO IS SATISFIED THAT IT IS A CLEAR-CUT CASE OF IMPOSITION OF PENALTY U/S. 271(L)(C) OF THE ACT ON TWO OR MORE ADDITIONS/DISALLOWANCES, ONE OR MORE FALLING UNDER THE EXPRESSION 'CONCEALMENT OF PARTICULARS OF INCOME' AND THE OTHE R UNDER THE 'FURNISHING OF INACCURATE PARTICULARS OF INCOME', H E MUST SPECIFY IT SO BY USING THE WORD 'AND' BETWEEN THE TWO EXPRESSI ONS IN THE NOTICE AT THE TIME OF INITIATION OF PENALTY PROCEED INGS. IF HE REMAINS CONVINCED IN THE PENALTY PROCEEDINGS THAT T HE PENALTY WAS RIGHTLY INITIATED ON SUCH COUNTS AND IMPOSES PE NALTY ACCORDINGLY, HE MUST SPECIFICALLY FIND THE ASSESSEE GUILTY OF 'CONCEALMENT OF PARTICULARS OF INCOME' AND ALSO 'FU RNISHING OF INACCURATE PARTICULARS OF INCOME' IN THE PENALTY OR DER. IF THE CHARGE IS NOT LEVIED IN THE ABOVE MANNER IN ALL THE THREE CLEAR-CUT SITUATIONS DISCUSSED ABOVE IN THE PENALTY NOTICE AN D ALSO IN THE PENALTY ORDER, THE PENALTY ORDER BECOMES UNSUSTAINA BLE IN LAW. 16. THE HON'BLE KARNATAKA HIGH COURT IN CIT V. MANJUNA THA COTTON AND GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 11 423/35 TAXMANN.COM 250 HAS HELD THAT A PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD B E MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSI NG PENALTY ON HIM AS SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPOR TUNITY TO MEET THE CASE OF THE DEPARTMENT AND SHOW THAT THE C ONDITIONS STIPULATED IN SECTION 271(L)(C) DO NOT EXIST AS SUC H HE IS NOT LIABLE TO PAY PENALTY. THE HON'BLE HIGH COURT WENT ON TO H OLD THAT: 'CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INAC CURATE PARTICULARS OF INCOME.... BUT DRAWING UP PENALTY PR OCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOT HER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW.. THUS ONCE THE PROCEEDINGS ARE I NITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON T HE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALT Y PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID'. 17. IN MANU ENGG. WORKS (SUPRA) PENALTY WAS IMPOSED BY NOTING: 'THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME '. STRIKING DOWN THE PENALTY, THE HON'BLE HIGH COURT HELD THAT: 'IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDIN G AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSE SSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME H AD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR-CUT FINDIN G WAS REACHED ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 12 BY THE IAC AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE IAC WAS LIABLE TO BE STRUCK DOWN.' 18. IN PADMA RAM BHARALI (SUPRA), THE HON'BLE HIGH COU RT DID NOT SUSTAIN PENALTY LEVIED U/S. 271(L)(C) WHEN: 'TH E INITIATION OF THE PENALTY PROCEEDING WAS FOR CONCEALMENT OF THE P ARTICULARS OF INCOME. BUT THE TRIBUNAL FINALLY HELD THAT THE ASSE SSEE WOULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR TO HAVE FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' 19. THUS IT IS EVIDENT THAT WHEN THE AO IS SATISFIED A T THE STAGE OF INITIATION OF PENALTY PROCEEDINGS OF A CLEAR-CUT CHARGE AGAINST THE ASSESSEE IN ANY OF THE THREE SITUATIONS DISCUSS ED ABOVE (SAY, CONCEALMENT OF PARTICULARS OF INCOME), BUT IMPOSES PENALTY BY HOLDING THE ASSESSEE AS GUILTY OF THE OTHER CHARGE (SAY, FURNISHING OF INACCURATE PARTICULARS OF INCOME) OR AN UNCERTAI N CHARGE (CONCEALMENT OF PARTICULARS OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCOME), THE PENALTY CANNOT BE SUSTA INED. 20. ANOTHER CRUCIAL FACTOR TO BE KEPT IN MIND IS THAT THE SATISFACTION OF THE AO AS TO A CLEAR-CUT CHARGE LEV ELED BY HIM IN THE PENALTY NOTICE OR THE PENALTY ORDER MUST CONCUR WITH THE ACTUAL DEFAULT. IF THE CLEAR-CUT CHARGE IN THE PENA LTY NOTICE OR THE PENALTY ORDER IS THAT OF 'CONCEALMENT OF PARTICULAR S OF INCOME', BUT IT TURNS OUT TO BE A CASE OF 'FURNISHING OF INACCUR ATE PARTICULARS OF SUCH INCOME' OR VICE-VERSA, THEN ALSO THE PENALTY O RDER CANNOT LEGALLY STAND. ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 13 21. APART FROM THE ABOVE THREE SITUATIONS IN WHICH THE AO HAS CLEAR-CUT SATISFACTION, THERE CAN BE ANOTHER FOURTH SITUATION AS WELL. IT MAY BE WHEN IT IS DEFINITELY A CASE OF UND ER-REPORTING OF INCOME BY THE ASSESSEE FOR WHICH AN ADDITION/DISALL OWANCE HAS BEEN MADE, BUT THE AO IS NOT SURE AT THE STAGE OF I NITIATION OF PENALTY PROCEEDINGS OF THE PRECISE CHARGE AS TO 'CO NCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS OF INCOME'. IN SUCH CIRCUMSTANCES, HE MAY USE SLASH BE TWEEN THE TWO EXPRESSIONS AT THE TIME OF INITIATION OF PENALT Y PROCEEDINGS. HOWEVER, DURING THE PENALTY PROCEEDINGS, HE MUST GE T DECISIVE, WHICH SHOULD BE REFLECTED IN THE PENALTY ORDER, AS TO WHETHER THE ASSESSEE IS GUILTY OF 'CONCEALMENT OF PARTICULARS O F INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOM E'. UNCERTAIN CHARGE AT THE TIME OF INITIATION OF PENALTY, MUST N ECESSARILY BE SUBSTITUTED WITH A CONCLUSIVE DEFAULT AT THE TIME O F PASSING THE PENALTY ORDER. IF THE PENALTY IS INITIATED WITH DOU BT AND ALSO CONCLUDED WITH A DOUBT AS TO THE CONCEALMENT OF PAR TICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF S UCH INCOME ETC., THE PENALTY ORDER IS VITIATED. IF ON THE OTHER HAND , IF THE PENALTY IS INITIATED WITH AN UNCERTAIN CHARGE OF 'CONCEALMENT OF PARTICULARS OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF I NCOME' ETC., BUT THE ASSESSEE IS ULTIMATELY FOUND TO BE GUILTY OF A SPECIFIC CHARGE OF EITHER 'CONCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS OF INCOME', THEN NO FAULT CA N BE FOUND IN THE PENALTY ORDER. ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 14 22. IN MANU ENGINEERING WORKS (SUPRA), THE HON'BLE GUJ ARAT HIGH COURT NOTICED THAT THE CHARGE AT THE STAGE OF INITI ATION OF PENALTY PROCEEDINGS AS WELL IN THE PENALTY ORDER WAS UNCERT AIN AND THE EXPRESSION USED AT BOTH THE STAGES WAS CONCEALMENT OF PARTICULARS OF INCOME AND/OR FURNISHING OF INACCURA TE PARTICULARS OF SUCH INCOME. IT STRUCK DOWN THE PENALTY BY HOLDI NG THAT THE ASSESSEE MUST HAVE BEEN FOUND TO BE GUILTY OF A CER TAIN CHARGE IN THE PENALTY ORDER. IT, HOWEVER, DID NOT FIND ANYTHI NG AMISS WITH THE INITIATION OF PENALTY ON SUCH UNCERTAIN CHARGE, WHICH IS VIVID FROM THE FOLLOWING OBSERVATIONS : 'WE FIND FROM THE ORDER OF THE IAC, IN THE PENALTY PROCEEDINGS, THAT IS, THE FINAL CONCLUSION AS EXPRESSED IN PARA. 4 OF THE ORDER: 'I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID T HAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FINISHE D INACCURATE PARTICULARS OF SUCH INCOME'. NOW, THE LANGUAGE OF ' AND/OR' MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER O R FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI-CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDIN G AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSE SSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME H AD BEEN FURNISHED BY THE ASSESSEE.' 23. IT IS THUS EVIDENT THAT UNCERTAIN CHARGE AT THE STAGE OF INITIATION OF PENALTY PROCEEDINGS CAN BE MADE GOOD WITH A CLEAR- CUT CHARGE IN THE PENALTY ORDER. IN ANY CASE, EXIST ENCE OF A CLEAR- CUT CHARGE IN PENALTY ORDER IS A MUST SO AS TO VALI DATE ANY PENALTY ORDER. ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 15 4.4 IN THE INSTANT CASE, THE ASSESSING OFFICER HAS RECORDED HIS SATISFACTION IN RESPECT OF THE FIVE ITEMS OF DISALL OWANCE/ADDITIONS INCLUDING UNDISCLOSED INVESTMENT ON CONSTRUCTION OF HOUSE AMOUNTING TO RS 938,800 LEADING TO PENALTY, AS 'CONCEALMENT OF I NCOME' IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R/W 15 3A, THEREAFTER INITIATED PENALTY BY ISSUANCE OF NOTICE U/S 274 R/W 271 DATED 21.30.2014 IN RESPECT OF ALL THE FIVE ITEMS OF DISA LLOWANCE/ADDITIONS BY TREATING THEM AS COVERED UNDER THE EXPRESSION CONC EALMENT PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF IN COME AND THEN FINALLY PASSED THE IMPUNGED PENALTY ORDER U/S 271(1)(C) IN RESPECT OF UNDISCLOSED INVESTMENT ON CONSTRUCTION OF HOUSE AMO UNTING TO RS 134,025 (TO THE EXTENT SUSTAINED BY THE LD CIT(A) O UT OF RS 938,800) AND LEVIED PENALTY U/S 271(1)(C) AMOUNTING TO RS 45 ,555 BY STATING AS UNDER: 6. IN VIEW OF ABOVE STATED FACTS AND LEGAL POSITIO N, THE ASSESSEE UNDER CONSIDERATION IS, CLEARLY LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT IS IMPOSED UPON HIM AS PER FOLLOWING COMPUTATION:- TOTAL UNDISCLOSED/CONCEALED INCOME LIABLE TO PENALT Y U/S 271(1)(C) RS. 1,34,025 PENALTY IMPOSABLE (100% OF TAX SOUGHT TO EVADED) PENALTY IMPOSABLE (300% OF TAX SOUGHT TO EVADED) RS. 45,555/- RS. 1,36,665/- PENALTY LEVIED (100% OF THE TAX SOUGHT TO EVADED R S. 45,555/- IN VIEW OF THE ABOVE, A PENALTY OF RS. 45,555/- IS HEREBY LEVIED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. ISSUED D EMAND NOTICE. ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 16 4.5 IT IS THUS A CASE WHERE THE AO HAS RECORDED THE SATISFACTION IN THE ASSESSMENT ORDER STATING THAT THE ASSESSEE HAS CONCEALED HIS PARTICULARS OF INCOME WHEREBY THE ASSESSEE HAS NOT DISCLOSED HIS INVESTMENT IN CONSTRUCTION OF THE HOUSE TO THE EXTE NT OF EXPENDITURE INCURRED DURING THE PREVIOUS YEAR RELEVANT TO IMPUN GED ASSESSMENT YEAR. THEREFORE, THE NOTICE INITIATING THE PENALTY PROCEEDINGS IS UNCERTAIN WHERE HE USES THE EXPRESSION CONCEALMENT PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. HOWEVER, DURING THE PENALTY PROCEEDINGS, HE HAS GIVEN A DECISIVE FI NDING AS REFLECTED IN THE PENALTY ORDER THAT THE ASSESSEE IS GUILTY OF 'C ONCEALMENT OF PARTICULARS OF INCOME' BY NOT DISCLOSING THE INVEST MENT IN THE CONSTRUCTION OF HIS HOUSE. AS HELD BY THE COORDINA TE BENCH (SUPRA), THE UNCERTAIN CHARGE AT THE TIME OF INITIATION OF PENAL TY HAS BEEN MADE GOOD AND SUBSTITUTED WITH A CONCLUSIVE DEFAULT AT T HE TIME OF PASSING THE PENALTY ORDER AND THAT IN SUCH A CASE, NO FAULT CAN BE FOUND IN THE PENALTY ORDER. IN SUCH A CASE, WE DONOT SEE ANY I NFIRMITY IN THE PENALTY ORDER SO PASSED BY THE ASSESSING OFFICER AN D THE CONTENTIONS SO RAISED BY THE LD AR IN THIS REGARD ARE NOT ACCEPTED . 5. IN THE INSTANT CASE, WE FIND THAT THE AO HAS RE CORDED THE SATISFACTION IN THE ASSESSMENT ORDER FOR INITIATING THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THEREAFTER, THE NOTICE INITIATING THE PENALTY PROCEEDINGS IS UNCERTAIN WHERE THE AO U SES THE EXPRESSION CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HOWEVER, DURING THE PE NALTY PROCEEDINGS, HE HAS GIVEN A DECISIVE AND CLEAR FINDING AS REFLEC TED IN THE PENALTY ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 17 ORDER THAT THE ASSESSEE IS GUILTY OF CONCEALMENT OF PARTICULARS OF INCOME WHERE THE AO SAYS THAT AFTER CONSIDERING ALL THE FACTS THAT THE AMOUNT OF SUBJECT INCOME UNDER CONSIDERATION WERE CONCEALE D BY THE ASSESSEE EITHER BY NOT DISCLOSING OR WITH THE INTENTION TO E VADE THE TAX.THEREFORE, I AM SATISFIED THAT THE ASSESSEE HAS INTENTIONALLY CONCEALED THE TOTAL INCOME OF RS 1,20,009, HENCE, A NOTIONAL PENALTY U/ S 271(1)(C) TO THE TUNE OF RS 36,003 IS HEREBY IMPOSED. 6. THEREFORE, FOLLOWING THE LEGAL PROPOSITION AS DI SCUSSED ABOVE, WE ARE UNABLE TO ACCEDE TO THE AFORESAID CONTENTION OF THE LD AR AND PENALTY ORDER CANNOT BE HELD BAD IN LAW MERELY ON A CCOUNT OF UNCERTAIN CHARGE AT THE STAGE OF PENALTY NOTICE. GIVEN THAT T HE AO HAS FOUND THE ASSESSEE GUILTY OF SPECIFIC CHARGE OF CONCEALMENT O F PARTICULARS OF INCOME AT THE TIME OF PASSING THE PENALTY ORDER WHI CH IS FOUND TO BE FACTUALLY CORRECT, THE PENALTY LEVIED U/S 271(1)(C) IS HEREBY CONFIRMED AND THE GROUND OF APPEAL IS DISMISSED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/12/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21/12/2018. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI PREM PRAKASH UMA SHANKER, ALWAR . ITA NO. 982/JP/2018 SHRI PREM PRAKASH UMA SHANKER VS. ITO 18 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-2(3), ALWAR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 982/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR.