Sri. H. Lakshminarayana, Bangalore V. ITO, Bangalore

ITA 992/BANG/2014

• Counselvise Citation: 99221114 RSA 2014
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 28-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR JT
• Assessee Lawyers: MRS SHEETAL BORKAR
• Keywords: Principle of natural justice; Initiation of penalty proceedings; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ , ACCOUNTANT MEMBER ITA NOS. 992 TO 996/BANG/2014 ASSESSMENT YEARS : 2004-05 TO 2008-09 SHRI H. LAKSHMINARAYANA, PROP. LAKSHMI ENTERPRISES, NO.44, 4 TH CROSS, A.D. HALLI, MAGADI MAIN ROAD, BANGALORE 560 040. PAN: AAPPL 2413F VS. THE INCOME TAX OFFICER, WARD 2(3), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : MRS. SHEETAL BORKAR, ADVOCATE RESPONDENT BY : SHRI P. DHIVAHAR, JT. CIT(DR) DATE OF HEARING : 29.06.2015 DATE OF PRONOUNCEMENT : 03.07.2015 O R D E R PER BENCH ITA NOS.992 TO 996/BANG/14 ARE APPEALS AGAINST TH E COMMON ORDER DATED 16.04.2014 OF CIT(APPEALS)-I, BANGALORE RELAT ING TO ASSESSMENT YEARS 2004-05 TO 2008-09. ITA NOS.992 TO 996/BANG/2014 PAGE 2 OF 11 2. IN ALL THESE APPEALS, THE ASSESSEE HAS CHALLENG ED THE ORDER OF THE CIT(APPEALS) CONFIRMING THE ORDERS OF THE ASSESSING OFFICER IMPOSING PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (ACT) ON THE ASSESSEE. 3. THE FACTS AND CIRCUMSTANCES UNDER WHICH PENALTY U/S. 271(1)(C) OF THE ACT WAS IMPOSED BY THE AO ON THE ASSESSEE ARE A S FOLLOWS. 4. THE ASSESSEE IS AN INDIVIDUAL. IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE A.Y. 2004-05, IT TRANSPIRED THA T THE ASSESSEE HAD DEPOSITED MONIES IN A CUMULATIVE DEPOSIT SCHEME WIT H THE NATIONAL CO- OPERATIVE BANK LTD. AND THE SAME HAD NOT BEEN DISCL OSED IN THE RETURNS OF INCOME FILED BY THE ASSESSEE. THE DEPOSITS HAD BEE N MADE IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2004-05. THIS DEPOSIT EARNED INTEREST INCOME IN A.Y. 2004-05 AND THE SUBSEQUENT A.YS. 2005-06 TO 2008-09 . THE INTEREST SO EARNED BY THE ASSESSEE HAD NOT BEEN OFFERED TO TAX BY THE ASSESSEE IN THE RETURNS OF INCOME FILED FOR A.YS. 2004-05 TO 2008-0 9. SIMILARLY, THE ASSESSEE ALSO DID NOT DECLARE INTEREST RECEIVED ON SB ACCOUNT FOR A.YS. 2004-05 TO 2008-09. 5. THE ASSESSEE FILED REVISED RETURNS OF INCOME OFF ERING THE VALUE OF FDS IN A.Y. 2004-05 AS WELL AS INTEREST ACCRUED ON FDS AND SB ACCOUNT FOR AYS 2004-05 TO 2008-09. THE FOLLOWING TABLE WO ULD EXPLAIN THE INCOME ORIGINALLY OFFERED AND THE INCOME OFFERED IN THE RE VISED RETURN FILED FOR THE VARIOUS ASSESSMENT YEARS:- ITA NOS.992 TO 996/BANG/2014 PAGE 3 OF 11 ASST. YEAR 2004-05 2005-06 2006-07 2007-08 2008-09 DATE OF FILING OF RETURN OF INCOME 29/10/04 30/10/05 30/10/05 30/10/07 28/09/08 INCOME DECLARED (IN RS.) 4,46,878 3,41,916 2,94,883 1,06,990 6,71,860 REVISED (BELATED RETURN FILED) 02/07/10 02/07/10 02/07/10 02/07/10 02/07/10 ADDITIONAL INCOME DECLARED (IN RS.) 13,66,704 3,25,392 15,42,099 4,15,766 5,62,361 DATE OF ASST. ORDER 21/07/10 21/07/10 21/07/10 21/07/10 21/07/10 TOTAL 18,06,180 7,24,350 19,17,950 9,90,890 14,17,770 6. IN RESPECT OF THE ADDITIONS MADE IN THE ASSESSME NT PROCEEDINGS FOR ALL THE AFORESAID ASSESSMENT YEARS, THE AO IMPOSED PENALTY U/S. 271(1)(C) OF THE ACT ON THE ASSESSEE, WHICH WAS CONFIRMED BY THE CIT(APPEALS). AGGRIEVED BY THE ORDERS OF THE CIT(APPEALS), THE AS SESSEE HAS PREFERRED APPEALS BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. DR. A TECHNICAL OBJECTION WITH REGARD TO VALIDITY OF THE ORDER PASSED U/S. 271(1)(C) OF THE ACT WAS RAISED BY THE ASSESSEE IN THE FORM OF AN ADDITIONAL GROUND FILED BEFORE THE TRIBUNAL. TH E SAID ADDITIONAL GROUND FILED BY THE ASSESSEE FOR ALL THE ASSESSMENT YEARS IN THESE APPEALS, IS COMMON AND IT READS AS FOLLOWS:- 1. THE ASSESSING OFFICER HAVING ISSUED THE NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT IN A MECHANICAL MANNER, THE PENALTY ORDER PASSED UNDER S ECTION 271(1)(C) OF THE ACT IS NOT SUSTAINABLE IN THE EYE OF LAW. ITA NOS.992 TO 996/BANG/2014 PAGE 4 OF 11 2. THE APPELLANT BEGS TO SUBMIT THAT THE DECISION O F THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MA NJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 (KARN) IS SQUARELY APPLICABLE AND THEREFORE THE IMPUGNED ORDER OF THE AUTHORITIES BELOW IS REQUIRED TO BE SET ASIDE. 8. THE ADDITIONAL GROUND BEING A PURE QUESTION OF L AW WHICH CAN BE DECIDED ON THE BASIS OF FACTS AVAILABLE ON RECORD I S ADMITTED FOR ADJUDICATION KEEPING IN VIEW THE DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF NTPC, 229 ITR 383 (SC). 9. WE DEEM IT APPROPRIATE TO CONSIDER THE OBJECTI ONS RAISED BY THE ASSESSEE ON THE VALIDITY OF THE ORDERS IMPOSING PEN ALTY ON THE GROUND THAT THE SHOW CAUSE NOTICE ISSUED U/S. 274 OF THE ACT WA S DEFECTIVE FOR ALL THE ASSESSMENT YEARS INVOLVED IN THESE APPEALS. 10. ON THE ABOVE OBJECTIONS, WE HAVE HEARD THE PART IES AT LENGTH. A COPY OF THE SHOW CAUSE NOTICE ISSUED U/S. 274 OF TH E ACT FOR THE ASSESSMENT YEARS INVOLVED IN THESE APPEALS, IS PLAC ED AT PAGES 1 TO 5 OF THE ASSESSEES PAPERBOOK, THE SAME IS GIVEN AS ANNEXURES-I TO V TO THIS ORDER . 11. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFO RE US THAT THE SHOW CAUSE NOTICE ISSUED U/S. 274 OF THE ACT DOES NOT SP ECIFY AS TO WHETHER PENALTY PROCEEDING IS BEING INITIATED FOR CONCEALIN G PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR ANY OTHER REASON AS ITA NOS.992 TO 996/BANG/2014 PAGE 5 OF 11 IRRELEVANT COLUMNS OF THE PRINTED FORM OF NOTICE U/ S. 274 HAVE NOT BEEN STRUCK OFF BY THE AO. 12. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTEN TION TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KARN) , WHEREIN THE HONBLE HIGH COURT HAS HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT HAS FURTHER LAID DOWN THAT CERTAIN PRINTED FORM WHERE ALL THE GROUND S GIVEN IN SECTION 271 ARE GIVEN WOULD NOT SATISFY THE REQUIREMENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PENALTY PROCEEDINGS ON ONE LIMB AND FIND THE ASSESSEE GUILTY IN ANOTHER LIMB IS BAD IN LAW. IT WAS SUBMITTED TH AT IN THE PRESENT CASE, THE AFORESAID DECISION WILL SQUARELY APPLY AND ALL THE ORDERS IMPOSING PENALTY HAVE TO BE HELD AS BAD IN LAW AND LIABLE TO BE QUAS HED. 13. THE LD. DR RELIED ON THE ORDER OF THE CIT(APPEA LS) WHEREIN THE CIT(A) HAS EXPRESSED HIS OPINION THAT THE ASSESSEE WAS FULLY AWARE OF THE CHARGE AGAINST HIM AND HE CANNOT TAKE SHELTER ON TE CHNICAL GROUNDS. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE HONB LE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING ITA NOS.992 TO 996/BANG/2014 PAGE 6 OF 11 FACTORY (SUPRA) HAS LAID DOWN THE FOLLOWING PRINCIPLES TO BE FOLLO WED IN THE MATTER OF IMPOSING PENALTY U/S.271(1)(C) OF THE ACT. NOTICE UNDER SECTION 274 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDING S CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGAR DING THE EXISTENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUE D UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDE R WHICH CONTAINS THE SATISFACTION OF THE AUTHORITY WHICH HA S PASSED THE ORDER. HOWEVER, IF THE EXISTENCE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE O F RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 OR IN EXPLANATION- 1(B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NA TURE OF CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHE R EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTI ON 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THE Y 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 N OT EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF TH E DEPARTMENT SENDING A PRINTED FARM WHERE ALL THE GROUND MENTION ED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INIT IAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE T O BE HELD TO BE STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHE RWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SH OW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH 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 ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE M AY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES T HE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE O FFENCES. BUT ITA NOS.992 TO 996/BANG/2014 PAGE 7 OF 11 DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM G UILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROU NDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONF INED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECI FICALLY STATED SO THAT THE ASSESSEE WOULD 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 SHOU LD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO A NSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSES SEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATIO N OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE S AME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALT Y PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHI CH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS N OT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERM INED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS I N THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME T HE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUEN T TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE AC T TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE 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 I NCOME ARE DIFFERENT. 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 COURT IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FUR NISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CO NNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMAN 156, HAS HEL D THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS ITA NOS.992 TO 996/BANG/2014 PAGE 8 OF 11 LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NO T SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO I NVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS T O BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNI SHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROF ORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN IN FERENCE AS TO NON- APPLICATION OF MIND. 15. THE FINAL CONCLUSION OF THE HONBLE COURT WAS A S FOLLOWS: 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EME RGES IS AS UNDER:- A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIAB ILITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSING PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDI ENT FOR ATTRACTING CIVIL LIABILITY. D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 2 71(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271. E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISC ERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTH ORITY OR REVISIONAL AUTHORITY. F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), A T LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD B E DISCERNIBLE FROM THE SAID ORDER WHICH WOULD BY A LE GAL FICTION CONSTITUTE CONCEALMENT BECAUSE OF DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE AS SESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDIN GS UNDER SECTION 271(L)(C) IS A SINE QUA NON FOR THE ASSESSM ENT OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). ITA NOS.992 TO 996/BANG/2014 PAGE 9 OF 11 H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMISSIONER. I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORD ER OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TA X AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSME NT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIR Y CONCLUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITTED AND I F NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY TH E ASSESSING OFFICER IN THE ASSESSMENT ORDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPL ANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE F AILS TO PROVE THAT THE EXPLANATION OFFERED IS NOT BONAFIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUB STANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONAFIDE AND ALL F ACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY S ATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PR OCEEDINGS, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATIS FACTION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY. P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPEC IFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., W HETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF I NCORRECT PARTICULARS OF INCOME. ITA NOS.992 TO 996/BANG/2014 PAGE 10 OF 11 Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTI ONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIRE MENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE H AS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUST ICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENA LTY COULD BE IMPOSED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AN D FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE A SSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENA LTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT I S INDEPENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEED INGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF I NCORRECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN T HE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PE NALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PRO CEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS. 16. IT IS CLEAR FROM THE AFORESAID DECISION THAT ON THE FACTS OF THE PRESENT CASE THAT THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT IS DEFECTIVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS S OUGHT TO BE IMPOSED. IN OUR VIEW, THE AFORESAID DEFECT CANNOT BE SAID TO BE CURABLE U/S. 292BB OF THE ACT, AS THE DEFECT CANNOT BE SAID TO BE A NOTIC E WHICH IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE I NTENT AND PURPOSE OF THE ACT. FOLLOWING THE DECISION OF THE HONBLE KARNATA KA HIGH COURT, WE HOLD ITA NOS.992 TO 996/BANG/2014 PAGE 11 OF 11 THAT THE ORDERS IMPOSING PENALTY IN ALL THE ASSESSM ENT YEARS HAVE TO BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPOSED IS CANCELLED. 17. SINCE THE APPEALS ARE DECIDED ON THE TECHNICAL GROUND, THE GROUNDS RAISED ON MERITS ARE NOT BEING GONE INTO. 18. IN THE RESULT, THE APPEALS ARE ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF JULY , 2015 . SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R ENCL: ANNEXURES I TO V. BANGALORE, DATED, THE 3 RD JULY , 2015 . /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR/ SENIOR PRIVATE SECRETARY ITAT, BANGALORE.