M/s. Sai Venkata Construction, Pune V. Asst. CIT, Circle-9, Pune

ITA 995/PUN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2532 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Principle of natural justice; Initiation of penalty proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 994 /PN/2013 %' ( ')( / ASSESSMENT YEAR : 2008-09 M/S. SAI VENKATA CONSTRUCTION, SNEH APARTMENT, PUNE-MUMBAI ROAD, NIGADI, PUNE 411044 PAN : AAXFS8658K ....... / APPELLANT ' / V/S. ADDL. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE / RESPONDENT / ITA NO. 995 /PN/2013 %' ( ')( / ASSESSMENT YEAR : 2008-09 SAI VENKATA CONSTRUCTION, SNEH APARTMENT, PUNE-MUMBAI ROAD, NIGADI, PUNE 411044 PAN : AAXFS8658K ....... / APPELLANT ' / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE / RESPONDENT ASSESSEE BY : SHRI PRAYAG JHA & SHRI PRATIK JHA REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 12-01-2016 / DATE OF PRONOUNCEMENT : 11-03-2016 2 ITA NOS. 994 & 995/PN/2013, A.Y. 2008-09 * / ORDER PER VIKAS AWASTHY, JM : THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE FOR T HE ASSESSMENT YEAR 2008-09. BOTH THE ORDERS ARE DATED 12-02-2013. IN ITA NO. 995/PN/2013, THE ASSESSEE HAS ASSAILED THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE DISALLOW ANCE OF ` 58,40,941/- ON ACCOUNT OF DEVELOPMENT EXPENSES. IN IT A NO. 994/PN/2013, THE ASSESSEE HAS IMPUGNED THE ORDER OF CO MMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE PENALTY LEVIED U/S. 2 71(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RE CORDS ARE: THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF CONSTRUCTION A ND LAND DEALINGS. THE ASSESSEE DEVELOPED A PROJECT KNOWN AS M ADHUBAN SAICITY IN TALEGAON. THE ASSESSEE IS ALSO ENGAGED IN THE PURCHASE AND SALE OF LAND. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 13-10-2008 DECLARING TOTAL INCOME OF ` 27,61,300/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE ON 21-08-2 009. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS THE ASSE SSING OFFICER OBSERVED THAT THE ASSESSEE HAD SOLD TWO PLOTS I.E. PLOT N O. A-70 MIDC AND PLOT NO. D-3/P-1 MIDC. IN THE PROFIT AND LOSS ACCOUN T THE ASSESSEE DECLARED PROFIT FROM SALE OF ABOVE PLOTS AS ` 16,22,159/-. THE ASSESSEE HAD CLAIMED CERTAIN EXPENSES FOR THE DEVELOPME NT OF THE PLOTS. ON EXAMINATION OF THE RECORDS, THE ASSESSING OFFICER FOUND T HAT PLOT NO. A-70 MIDC WAS PURCHASED BY THE ASSESSEE ALONG WITH THE BUILDING MEASURING 883 SQ. MTRS. THE SAME WAS SOLD WITHOUT MAKING ANY 3 ITA NOS. 994 & 995/PN/2013, A.Y. 2008-09 FURTHER ADDITION. PLOT NO. D-3/P-1 IN MIDC WAS PURCHASE D ALONG WITH BUILDING MEASURING 2455 SQ. FT. THE SAID PLOT WAS SOLD ALONG WITH BUILDING ON AS IS WHERE AS BASIS. THE EXPENDITURE CLAIMED B Y THE ASSESSEE FOR THE DEVELOPMENT OF THE ABOVE SAID PLOTS WERE NOT SUPP ORTED BY THE VOUCHERS. THE ASSESSEE VIDE LETTER DATED 30-1 1-2010 CONCEDED BEFORE THE ASSESSING OFFICER THAT THEY ARE NOT ABLE TO SU BSTANTIATE THE DEVELOPMENT EXPENDITURE CLAIMED IN RESPECT OF AFOREMENTIONE D PLOTS AND THEREFORE OFFERED ` 58,40,941/- FOR TAX. ON THE BASIS OF ADMISSION OF THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED THE EXPEND ITURE TO THE TUNE OF ` 58,40,941/-. AGGRIEVED BY THE ASSESSMENT ORDER DATED 30-11-2010, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS), INTER ALIA ASSAILING THE DISALLOWANCE OF DEVELOPMENT EXPENDITURE. THE COMMISSIONER OF INCOME TAX (APPEALS) UPH ELD THE FINDINGS OF THE ASSESSING OFFICER IN DISALLOWING THE DEVELOPMENT EXPENSES OF ` 58,40,941/-. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL AGAINST THE FINDINGS OF COMMISSIONER OF INCOME T AX (APPEALS) ON THIS ISSUE. PENALTY PROCEEDINGS U/S. 271(1)(C) WERE SEPARATELY INITIATED AGAINST THE ASSESSEE ON ACCOUNT OF DISALLOWANCE OF DEVELOP MENT EXPENDITURE. THE ASSESSING OFFICER VIDE ORDER DATED 27-05 -2011 LEVIED THE PENALTY OF ` 19,85,336/- U/S. 271(1)(C) ON THE GROUND THAT THE ASSESSEE HAS WRONGFULLY CLAIMED PLOT DEVELOPMENT EXPENSES . THE WRONGFUL CLAIM MADE BY THE ASSESSEE AMOUNTS TO CONCEALM ENT OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE PENALTY ORDER U/S. 271(1)(C) DATED 27-05- 2011, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME 4 ITA NOS. 994 & 995/PN/2013, A.Y. 2008-09 TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) CON FIRMED THE LEVY OF PENALTY. AGAINST THE ORDER OF COMMISSIONER OF I NCOME TAX (APPEALS) CONFIRMING PENALTY, THE ASSESSEE FILED AN APPEAL BEFO RE THE TRIBUNAL. WE WILL FIRST TAKE UP THE APPEAL OF ASSESSEE ARIS ING FROM ASSESSMENT PROCEEDINGS. ITA NO. 995/PN/2013 (A.Y. 2008-09) 3. SHRI PRAYAG JHA AND SHRI PRATIK JHA APPEARING ON BEH ALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS AGREED FOR T HE ADDITION ON THE GROUND THAT NO PENALTY SHALL BE LEVIED U/S. 271(1)(C) OF THE A CT. THE ASSESSEE HAD OFFERED THE AMOUNT IN ORDER TO AVOID LITIGATIO N AND TO BUY MENTAL PEACE. THE LD. AR REFERRED TO LETTER DATED 30-11 -2010 WRITTEN BY THE ASSESSEE TO ADDL. COMMISSIONER OF INCOME TAX DURING THE SCRUTINY ASSESSMENT PROCEEDINGS. THE SAME IS PLACED ON RECORD AT PAGES 1 AND 2 OF THE PAPER BOOK. THE LD. AR SUBMITTED THAT THE ASS ESSEE HAS MADE ALL PAYMENTS THROUGH CHEQUES. ALL THE TRANSACTIONS ARE R ECORDED IN THE BOOKS. HOWEVER, THE ASSESSEE IS NOT HAVING VOUCHERS IN SUPPORT OF EXPENDITURE CLAIMED. 4. SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT VEH EMENTLY SUPPORTED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEA LS) IN CONFIRMING THE DISALLOWANCE. THE LD. DR SUBMITTED THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE EXPENDITURE CLAIMED FOR THE DEVELOPMENT OF PLOTS. THE ASSESSING OFFICER HAS RECORDED A CATEGORIC FINDING THAT NO DEVELOPMENT ACTIVITY WAS CARRIED OUT BY T HE ASSESSEE ON THE PLOTS OR THE BUILDINGS. MOREOVER, THE ASSESSEE CON CEDED BEFORE THE ASSESSING OFFICER THAT HE IS NOT ABLE TO SUPPORT THE EXPE NDITURE CLAIMED FOR DEVELOPMENT OF THE PLOTS. 5 ITA NOS. 994 & 995/PN/2013, A.Y. 2008-09 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. A PERUSAL OF THE IMPUGNED ORDER AND THE ASSESSMENT ORDER SHOWS THAT THE ADDITION OF ` 58,40,941/- HAS BEEN MADE ON THE BASIS OF LETTER DATED 30-11-2010 FILED BY THE ASSESSEE BEFORE THE ASSESSING OFF ICER. THE ASSESSEE HAS ADMITTED IN THE SAID LETTER THAT THEY ARE UNABLE TO SUPPORT THE EXPENDITURE INCURRED ON THE DEVELOPMENT OF LAND. ONC E, THE ADDITION HAS BEEN MADE ON THE BASIS OF VOLUNTARY ADMISSIO N OF ASSESSEE, WE ARE OF THE VIEW THAT NO ROOM IS LEFT FOR THE ASSESSEE TO ASSAIL THE ADDITION. THE ASSESSEE HAS NOT BROUGHT ON R ECORD ANY EVIDENCE WHATSOEVER EITHER BEFORE THE LOWER AUTHORITIES O R BEFORE THE TRIBUNAL TO SUBSTANTIATE THE DEVELOPMENT EXPENDITURE CLAIMED. WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THE IMPUGNED ORDER IS UPHELD AND THE APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO. 994/PN/2013 (A.Y. 2008-09) 6. IN APPEAL AGAINST THE ORDER CONFIRMING PENALTY U/S. 271 (1)(C) THE LD. AR HAS MADE TWO FOLD SUBMISSIONS. THE FIRST SUBMISSIONS OF THE LD. AR IS THAT SHOW CAUSE NOTICE DATED 28-04-2011 ISSUED U /S. 274 R.W.S. 271(1)(C) OF THE ACT FOR IMPOSING PENALTY DOES NOT SPECIFY, W HETHER THE PENALTY IS LEVIED FOR FURNISHING INACCURATE PARTICULARS OR CON CEALMENT OF INCOME. THE NOTICE HAS BEEN ISSUED ON PRE-PRINTED PROFOR MA, WITHOUT STRIKING OF THE REASONS WHICH ARE NOT APPLICABLE TO THE AS SESSEE. A PERUSAL OF THE NOTICE (AT PAGE 16 OF THE PAPER BOOK) WOULD SHOW THAT THE ASSESSING OFFICER WAS HIMSELF NOT CLEAR, WHETHER THE PENALTY IS TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONC EALMENT OF INCOME. THE LD. AR CONTENDED THAT THE ASSESSING OFFICER HA S NOT CLEARLY MENTIONED IN THE SHOW CAUSE NOTICE, THE REASONS FOR LEVY OF 6 ITA NOS. 994 & 995/PN/2013, A.Y. 2008-09 PENALTY U/S. 271(1)(C) OF THE ACT. THE LD. AR SUBMITTED THAT THE NOTICE ITSELF IS DEFECTIVE, THEREFORE PROCEEDINGS ARISING FROM SUCH DE FECTIVE NOTICE ARE NULL AND VOID. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR PLACED RELIANCE ON THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA C OTTON & GINNING FACTORY REPORTED AS 359 ITR 565 (KAR). 7. IN THE SECOND LIMB OF HIS ARGUMENT, THE LD. AR SUBMITTED THAT EXISTENCE OF CONDITIONS STIPULATED IN SECTION 271(1)(C) IS SINE Q UA NON FOR INITIATION OF PENALTY PROCEEDINGS. IMPOSITION OF PENALTY U/ S. 271(1)(C) IS NOT AUTOMATIC. THE LD. AR SUBMITTED THAT ADDITION HAS BEEN MADE ON ESTIMATION BASIS ON THE GROUND THAT THE ASSESS EE IS UNABLE TO SUBSTANTIATE EXPENDITURE, BUT NO PENALTY CAN BE LEVIED ON THE ADDITIONS MADE ON THE BASIS OF ESTIMATIONS. TO STRENGTHEN HIS SUBM ISSIONS, THE LD. AR DRAWS SUPPORT FROM THE FOLLOWING DECISIONS: I. HINDUSTAN STEEL LTD. VS. STATE OF ORISSA, 83 ITR 26 (SC); II. COMMISSIONER OF INCOME TAX VS. GEM GRANITES, 86 CCH 160 (MAD.); III. AJIT KUMAR SURANA VS. ASSISTANT COMMISSIONER OF INCOME TA X, 39 CCH 138 (KOL-TRIB.); IV. GODAVARI TOWNSHIPS (P.) LTD. VS. DEPUTY COMMISSIONER OF INCOM E TAX, 148 ITD 463 (VISAKHA-TRIB.); V. HERANBA INDUSTRIES LTD. VS. DCIT, ITA NO. 2292/MUM/2013 FOR ASSESSMENT YEAR 2009-10 DECIDED ON 08-04-2015. 8. ON THE OTHER HAND THE LD. DR SUBMITTED THAT IT IS NOT A CASE WHERE THE ADDITIONS HAVE BEEN MADE ON MERE ESTIMATIONS . THE ASSESSEE VOLUNTARILY ADMITTED THAT THEY ARE UNABLE TO S UBSTANTIATE THE EXPENDITURE. SINCE, THE ASSESSEE HAD WRONGFULLY CLAIMED EX CESSIVE 7 ITA NOS. 994 & 995/PN/2013, A.Y. 2008-09 DEVELOPMENT EXPENDITURE, PENALTY U/S. 271(1)(C) HAS BEEN RIGH TLY LEVIED. THE LD. DR SUBMITTED THAT THE HON'BLE SUPREME COURT OF I NDIA IN THE CASE OF MAK DATA (P.) LTD. VS. COMMISSIONER OF INCOME TAX REPORTED AS 358 ITR 593 (SC) HAS HELD THAT VOLUNTARY DISCLOSURE DOES NOT RELEASE ASSESSEE FROM MISCHIEF OF PENAL PROCEEDINGS U/S. 271(1)(C) OF THE ACT. 9. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH RELIANCE HAS B EEN PLACED DURING THE COURSE OF SUBMISSIONS. THE LD. AR OF THE ASSES SEE HAS CHALLENGED THE PENALTY PROCEEDINGS ON THE GROUND THAT T HE NOTICE ISSUED U/S. 274 R.W.S. 271(1)(C) OF THE ACT DOES NOT SPECIFY THE REASONS FOR LEVY OF PENALTY. THE SHOW CAUSE NOTICE IS PLACED ON RE CORD AT PAGE 16 OF THE PAPER BOOK. A PERUSAL OF SAME SHOWS THAT TH E ASSESSING OFFICER HAS ISSUED THE NOTICE ON PRE-PRINTED PROFORMA AFTER FILLING THE BLANKS. THE IRRELEVANT CLAUSES MENTIONED IN THE PROFORMA H AVE NOT BEEN STRIKED OF. THEREFORE, THE REASONS FOR INITIATING PENA LTY PROCEEDINGS ARE NOT CLEAR. IT IS NOT EVIDENT FROM NOTICE , WHETHER THE PENALTY U/S. 271(1)(C) HAS BEEN LEVIED FOR FURNISHING INACCURATE PARTICULAR OR CONCEALMENT OF INCOME. 10. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF COM MISSIONER OF INCOME TAX VS. MANJUNATHA COTTON & GINNING FACTORY ( SUPRA) HAS HELD THAT WHERE IT IS NOT CLEAR FROM THE NOTICE ISSUED U/S. 274 OF THE AC T THE REASONS FOR LEVYING PENALTY THE NOTICE ITSELF IS BAD IN LAW AND THE PENALTY ORDER PASSED ON THE BASIS OF SUCH NOTICE IS NOT SUSTAINABLE. THE HON'BLE HIGH COURT HAS SPECIFICALLY POINTED THAT WHERE THE NOTICE HAS BEEN ISSUED IN STANDARD PROFORMA WITHOUT STRIKING OF T HE IRRELEVANT CLAUSES, IT CAN BE INFERRED THAT THE NOTICE HAS BEEN ISSU ED WITHOUT 8 ITA NOS. 994 & 995/PN/2013, A.Y. 2008-09 APPLICATION OF MIND. THE RELEVANT EXTRACT OF THE JUDGMENT OF HON'BLE HIGH COURT READS AS UNDER: 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDIN GS CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGARDING THE EXIST ENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDI NGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COU LD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION O F THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF THE EXISTENCE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 OR IN EXPLANATION-1(B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE O F CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY ON HI M AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CON TEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE O F THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271( 1)(C) DO NOT EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF THE DEPARTMENT SENDING A PRINTED FARM WHERE ALL THE 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 10 0% TO 300% OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE TO BE HE LD TO BE STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD S ATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY OTHERWISE, PRINCI PLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAGUE. ON T HE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASS ESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, TH AT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT 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 NEED LESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIO NED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEED INGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUND S AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE 9 ITA NOS. 994 & 995/PN/2013, A.Y. 2008-09 THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PL ACES 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 IS CALLE D UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSI NG PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PR OCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY W OULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ON CE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALS O BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF P ENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATIO N, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING TH E PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT 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 COURSE OF A NY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INA CCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHI NG INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSES SING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT W HETHER 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 PA I REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALMEN T OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY D IFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEER ING WORKS REPORTED IN [1980] 122 ITR 306 (GUJ) AND THE DELHI HIGH COUR T IN THE CASE OF CIT V. VIRGO MARKETING P. LTD. REPORTED IN [2008] 171 TAXM AN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTA INABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE F IRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATEL Y MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF I NCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES W ILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND . IN THE PRESENT CASE THE ASSESSING OFFICER HAS ISSUED NOT ICE U/S. 274 R.W.S. 271(1)(C) OF THE ACT WITHOUT STRIKING OF THE CLAUSES WHICH ARE 10 ITA NOS. 994 & 995/PN/2013, A.Y. 2008-09 NOT RELEVANT. THE NOTICE IS AMBIGUOUS. FURTHER A PERUS AL OF PENALTY ORDER SHOWS THAT THE ASSESSING OFFICER HAS NOT SPECIFIED THE INFORMAT ION CONCEALED BY THE ASSESSEE. MERE MENTIONING OF THE PHRAS E THAT THE ASSESSEE HAS CONCEALED INCOME AS WELL AS FURNISHED INACCU RATE PARTICULARS OF INCOME IS NOT SUFFICIENT TO COMPLY WITH THE P ROVISIONS OF SECTION 271(1)(C). THE ASSESSING OFFICER HAS TO SUBJECTIVELY EXPLAIN AS TO WHAT INFORMATION ASSESSEE HAS CONCEALED AND/OR WHAT INACCURATE PARTICULARS ARE FILED IN THE RETURN OF INCOME. THE ASSESSING OFFICER IN PRESENT CASE SEEMS WAS NOT CLEAR AT THE TIME OF ISSUING NOTICE AS TO WHETHER PENALTY IS TO BE LEVIED FOR CONCEALMENT OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OR BOTH. THUS, IN OUR CONSIDERED VIEW THE NOTICE ISSUE U/S. 274 R.W.S 271(1)(C) IN THE INSTANT CASE IS DEFECTIVE AND THE PROCEEDINGS ARISING THEREFROM ARE VITIATED, UNSUSTAINA BLE AND ARE LIABLE TO BE ANNULLED. 11. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SANJOG TARACHAND LODHA VS. INCOME TAX OFFICER IN ITA NOS. 688 & 689/PN/2014 FOR THE ASSESSMENT YEAR 2007-08 AND 2008 -09 DECIDED ON 31-08-2015 DELETED THE PENALTY ON THE SIMILAR GROUND BY PLACING RELIANCE ON THE DECISION RENDERED IN THE CASE OF COMMISSIO NER OF INCOME TAX VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA). 12. THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF SUV APRASANNA BHATACHARYA VS. ACIT IN ITA NO. 1303/KOL/2010 FOR THE AS SESSMENT YEAR 2006-07 DECIDED ON 06-11-2015 HAS HELD THAT THE SHOW CAUSE NOTICE ISSUED U/S. 274 OF THE ACT IS DEFECTIVE IF IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS TO BE IMPOSED. 11 ITA NOS. 994 & 995/PN/2013, A.Y. 2008-09 13. IN VIEW OF THE FACT THAT THE NOTICE ISSUED U/S. 274 R .W.S. 271(1)(C) IS HELD TO BE DEFECTIVE AND BAD IN LAW, THE SUBMISSION MADE BY THE LD. AR ON MERITS HAVE BECOME ACADEMIC. IN THE FACTS OF THE CASE AND THE DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJ UNATHA COTTON & GINNING FACTORY (SUPRA), THE IMPUGNED ORDER IS SE T ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 9 94/PN/2013 IS ALLOWED AND APPEAL OF THE ASSESSEE IN ITA NO. 995/PN/2 013 IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 11 TH DAY OF MARCH, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 11 TH MARCH, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-V, PUNE 4. ' / THE CIT-V, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE