Ramesh Prasad Sao, Kolkata V. DCIT, CC-XVII, Kolkata, Kolkata

ITA 997/KOL/2011

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3175 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 11-07-2011
• Court: TRIBUNAL
• Assessee Lawyers: A K TULSIYAN
• Keywords: Search and seizure; Document seized; Principle of natural justice; Initiation of penalty proceedings; Documents seized
• Section: 143(3); 153A; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, KO LKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM] ITA NO.997/KOL/2011 ASSESSMENT YEAR : 2007-08 RAMESH PRASAD SAO . -VERSUS- D.C.I.T., CENTRAL CIRCLE-XVII, KOLKATA KOLKATA (PAN:ALAPS 8363 F) (APPELLANT ) (RESPONDENT) ITA NO.1188/KOL/2011 ASSESSMENT YEAR : 2007-08 D.C.I.T., CENTRAL CIRCLE-XVII, -VERSUS- RAMESH PRASAD SAO KOLKATA KOLKATA (APPELLANT ) (RESPONDENT) FOR THE ASSESSEE SHRI A.K.TULSIYAN, FCA FOR THE DEPARTMENT : NONE DATE OF HEARING : 29.01.2016. DATE OF PRONOUNCEMENT : 03.2.2016. ORDER PER SHRI N.V.VASUDEVAN, JM ITA NO.997/KOL/2011 IS AN APPEAL BY THE ASSESSEE WHILE ITA NO.1188/KOL/2011 IS AN APPEAL BY THE REVENUE. BOTH THESE APPEALS ARE DIRECTED AGAINST THE ORDER DATED 03.06.2011 OF CIT(A), CENTRAL-I, KO LKATA RELATING TO A.Y.2007-08. BOTH THESE APPEALS ARISE OUT OF THE PROCEEDINGS IN ITIATED U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (ACT). 2. THE ASSESSEE IS AN INDIVIDUAL. FOR A.Y.2007-08 T HE ASSESSEE FILED RETURN OF INCOME ON 31.07.2007 DECLARING TOTAL INCOME OF RS.4 ,07,87,035/-. THE ORDERS OF THE AUTHORITIES ARE SILENT AS TO WHETHER ANY ORDER U/S 143(3) OF THE ACT OR ANY INTIMATION U/S 143(1) OF THE ACT WAS ISSUED ON THE RETURN OF I NCOME FILED BY THE ASSESSEE. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT U/S 13 2 OF THE ACT ON 23.11.2007 IN THE CASE OF THE ASSESSEE. THE ASSESSEE IS ENGAGED IN MI NING OF IRON ORE, MANUFACTURING OF ITA NOS.997&1188/KOL/2011 RAMESH PRASAD SAO A.YR.2007-08 2 SPONGE IRON AND TRADING IN LIQUOR. PURSUANT TO THE SEARCH, AN ORDER OF ASSESSMENT U/S 153A R.W.S. 143(3) OF THE ACT WAS PASSED ON 31.12.2 009. IN THE SAID ORDER AO MADE AN ADDITION OF RS.4,30,00,000/-. THE ADDITION WAS M ADE ON THE BASIS OF THE SEIZED DOCUMENTS MARKED AS TPS-9 AT PAGES 3,4,15 AND 16 FO UND IN THE COURSE OF SEARCH. THE DOCUMENTS SEIZED EVIDENCED THE ASSESSEE HAVING RECE IVED A SUM OF RS.4,20,97,077/.- FROM SREE METALIK LTD. IT WAS STATED THAT THE SAID SUM WAS RECEIVED FOR SUPPLY OF MATERIALS TO THE PARTY AND WAS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE OFFERED TO TAX INCOME OF RS. 4,30,00,000/- ON THE BASIS OF THE SEIZED DOCUMENTS. THE SAID SUM WAS DECLARED IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE U/S 153A OF THE ACT. THE SAME WAS BRO UGHT TO TAX BY THE AO. THE DISCLOSURE IN THE RETURN OF INCOME WAS MADE PURSUAN T TO DISCLOSURE MADE IN THE STATEMENT U/S 132(4) OF THE ACT. IN THE ORDER OF AS SESSMENT AO HAS NOT RECORDED ANY OTHER FACT EXCEPT THE SEIZURE OF DOCUMENTS IN THE C OURSE OF SEARCH BASED ON WHICH DISCLOSURE OF RS.4.3 CRORES WAS MADE BY THE ASSESSE E. THERE IS NO OTHER ADVERSE OBSERVATION IN THE ORDER OF AO. HOWEVER, IN THE PEN ALTY MADE PART OF THE ASSESSMENT AO HAS OBSERVED AS FOLLOWS :- PENALTY PROCEEDINGS U/S 271(1)(C) R.EAD WITH EXPLA NATION 5A HAS BEEN INITIATED AND SHOW CAUSE NOTICE U/S 274 OF THE ACT HAS BEEN ISSUE D SEPARATELY. 3. SHOW CAUSE NOTICE U/S.274 OF THE ACT, BEFORE IM POSING PENALTY U/S.271(1)( C) OF THE ACT WAS ISSUED TO THE ASSESSEE BY THE AO. IN THE P ENALTY PROCEEDINGS THE STAND TAKEN BY THE ASSESSEE WAS THAT THE ASSESSEE WAS ENTITLED TO IMMUNITY PROVIDED UNDER EXPLANATION 5A TO SECTION 271(1) (C) OF THE ACT. TH E STAND OF THE ASSESEE WAS THAT THE DISCLOSURE MADE IN THE RETURN OF INCOME FILED U/S 1 53A OF THE ACT WAS TRUE AND FULL AND DISCLOSURE MADE IN GOOD FAITH AND IN PURSUANCE OF DISCLOSURE MADE U/S 132(4) OF THE ACT. THE CONTENTION OF THE ASSESSEE DID NOT FAV OUR EITHER TO THE AO OR CIT(A). PENALTY WAS ACCORDINGLY IMPOSED ON THE ASSESSEE FOR THE AFORESAID ASSESSMENT YEARS U/S 271(1)(C) OF THE ACT. 4. AGGRIEVED BY THE ORDERS OF CIT(A) THE ASSESSEE HAS PREFERRED THE PRESENT APPEALS BEFORE THE TRIBUNAL. ITA NOS.997&1188/KOL/2011 RAMESH PRASAD SAO A.YR.2007-08 3 5. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED COU NSEL FOR THE ASSESSEE WHO SUBMITTED THAT THE AO HAS NOT RECORDED SATISFACTION IN THE ORDER OF ASSESSMENT THAT THE ASSESSEE IS LIABLE TO BE PROCEEDED AGAINST U/S.271( 1)( C) OF THE ACT EXCEPT RECORDING AS FOLLOWS IN THE ORDER OF ASSESSMENT VIZ., PENALTY P ROCEEDING U/S.271(1)( C) INITIATED. ACCORDING TO HIM THE ABOVE MANNER OF INITIATION OF PENALTY PROCEEDINGS IN THE ORDER OF ASSESSMENT IS NOT IN ACCORDANCE WITH LAW. 5.1. THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE SHOW CAUSE NOTICE ISSUED U/S.274 OF THE ACT BEFORE IMPOSING PE NALTY AND SUBMITTED THAT THE SAID NOTICE DOES NOT SPECIFY AS TO WHETHER THE ASSESSEE IS GUILTY OF HAVING FURNISHED INACCURATE PARTICULARS OF INCOME OR OF HAVING CON CEALED PARTICULARS OF SUCH INCOME. HE POINTED OUT THAT THE PRINTED SHOW CAUSE NOTICE D OES NOT STRIKE OUT THE IRRELEVANT PORTION VIZ., FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF SUCH INCOME. HE DREW OUR ATTENTION TO A DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GI NNING FACTORY (2013) 218 TAXMAN 423 (KAR.) WHEREIN IT WAS HELD THAT IF THE S HOW CAUSE NOTICE U/S.274 OF THE ACT DOES NOT SPECIFY AS TO THE EXACT CHARGE VIZ., W HETHER THE CHARGE IS THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF I NCOME OR CONCEALED PARTICULARS OF INCOME BY STRIKING OUT THE IRRELEVANT PORTION OF PRINTED SHOW CAUSE NOTICE, THAN THE IMPOSITION OF PENALTY ON THE BASIS OF SUCH INVA LID SHOW CAUSE NOTICE CANNOT BE SUSTAINED. 6. NONE APPEARED ON BEHALF OF THE REVENUE. WE PR OCEEDED TO DECIDE THE APPEAL AFTER HEARING THE SUBMISSIONS OF THE LEARNED AR. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D AR. THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS THAT THE SHOW CAUSE NOTICE U/S.274 OF THE ACT WHICH IS IN A PRINTED FORM AND THE AO HAS INDICATED IN THE SAID NOTICE AS TO WHETHER THE PENALTY IS SOUGHT TO BE LEVIED ON THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOM E BY STRIKING OFF THE IRRELEVANT PORTION OF THE PRINTED SHOW CAUSE NOTICE. ON THIS ASPECT WE FIND THAT IN THE SHOW ITA NOS.997&1188/KOL/2011 RAMESH PRASAD SAO A.YR.2007-08 4 CAUSE NOTICE U/S.274 OF THE ACT THE AO HAS NOT STRU CK OUT THE IRRELEVANT PART. IT IS THEREFORE NOT SPELT OUT AS TO WHETHER THE PENALTY P ROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME O R CONCEALING PARTICULARS OF SUCH INCOME. 7.1. THE HONBLE KARNATAKA HIGH COURT IN THE CASE O F CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KARN), HA S 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 FURNISH ING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT HAS FURTHER LAID DO WN THAT CERTAIN PRINTED FORM WHERE ALL THE GROUNDS GIVEN IN SECTION 271 ARE GIVE N WOULD NOT SATISFY THE REQUIREMENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PE NALTY PROCEEDINGS ON ONE LIMB AND FIND THE ASSESSEE GUILTY IN ANOTHER LIMB IS BAD IN LAW. IT WAS SUBMITTED THAT 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 QUASHED. 7.2. THE HONBLE KARNATAKA HIGH COURT IN THE CASE O F CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS LAID DOWN T HE FOLLOWING PRINCIPLES TO BE FOLLOWED 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 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 CO NTAINS THE SATISFACTION OF THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF T HE EXISTENCE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDER AND IF I T IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 OR IN EXPLANAT ION-1(B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, I N 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 I MPOSING PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGH T TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF TH E 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 DEPARTMENT SENDING A P RINTED FARM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SA TISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS THE SAID ITA NOS.997&1188/KOL/2011 RAMESH PRASAD SAO A.YR.2007-08 5 PROVISIONS HAVE TO BE HELD TO BE STRICTLY CONSTRUED , NOTICE ISSUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPE CIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTIC E IS VAGUE. ON THE 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 PARTICULARS OF I NCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CAS ES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF TH E PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCE EDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING H IM GUILTY FOR EITHER THE 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 271(1 )(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALL Y 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 SHOULD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO ANSWER. I T IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON T HE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAIN ED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEE DINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSI TION OF PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY I MPOSING THE PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUB SEQUENT 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 ANY PROCEEDIN GS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF T OTAL 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 FURNISHING INACCURAT E PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN T HE 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 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 SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROP RIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOM E. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN IN FERENCE AS TO NON-APPLICATION OF MIND. THE FINAL CONCLUSION OF THE HONBLE COURT WAS AS FO LLOWS:- 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. ITA NOS.997&1188/KOL/2011 RAMESH PRASAD SAO A.YR.2007-08 6 B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSI NG 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 AUTHORITY OR REVISI ONAL AUTHORITY. F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOU LD BY A LEGAL 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 PROCEEDINGS UNDER SECTION 271 (L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDINGS BECA USE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). 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 TAX 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 ASSESSMENT ORDER THAT, IT IS O N ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITTED AND IF NOT IT WOULD H AVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT O RDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPL ANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS 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 FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION 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 PROCEEDINGS, IN A PPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, 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., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTI ONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE H AS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDE D. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASS ESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AN D FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. ITA NOS.997&1188/KOL/2011 RAMESH PRASAD SAO A.YR.2007-08 7 T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE A SSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EMANAT E FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SEPARATE ASPECT O F THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEED INGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORRECT PARTICULARS ' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSES SEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATT ER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS. (EMPHASIS SUPPLIED) 7.3. IT IS CLEAR FROM THE AFORESAID DECISION THAT O N THE FACTS OF THE PRESENT CASE THAT THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT IS DEFECT IVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS SOUGHT TO BE IMPOSE D. FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT, WE HOLD THAT THE ORDE RS IMPOSING PENALTY IN ALL THE ASSESSMENT YEARS HAVE TO BE HELD AS INVALID AND CON SEQUENTLY PENALTY IMPOSED IS CANCELLED. 7.4. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT LEVY OF PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED. WE THEREFORE CANCEL THE ORDER S IMPOSING PENALTY ON THE ASSESSEE AND ALLOW THE APPEAL BY THE ASSESSEE. IN VIEW OF O UR ABOVE CONCLUSIONS ON THE ISSUE OF DEFECT IN SHOW CAUSE NOTICE U/S.274 OF THE ACT, WE ARE NOT DEALING WITH THE OTHER ARGUMENTS MADE ON MERITS OF THE ORDERS IMPOSING PEN ALTY ON THE ASSESSSEE. AS FAR AS THE APPEAL OF THE REVENUE IS CONCERNED, THE REVENUE IS AGGRIEVED BY THE ORDER OF CIT(A) WHEREBY CIT(A) REDUCED THE QUANTUM OF PENALT Y FROM 300% OF THE TAX SOUGHT TO BE EVADED IMPOSED BY THE AO TO 100% OF THE TAX S OUGHT TO BE EVADED. SINCE THE LEVY OF PENALTY ITSELF HAS BEEN CANCELLED WE ARE OF THE VIEW THAT THERE IS NO MERIT IN THE APPEAL BY THE REVENUE. CONSEQUENTLY THE SAME IS DISMISSED. ITA NOS.997&1188/KOL/2011 RAMESH PRASAD SAO A.YR.2007-08 8 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 03.02.2016. SD/- SD/- [M.BALAGANESH] [N.V.VASUDEVAN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 03.02.2016. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. RAMESH PRASAD SAO, C/O THAKRU PRASAD SAO & SONS P. LTD., AVANI SIGNATURE,, 2 ND FLOOR, 91A/1, PARK STREET, KOLKATA-700016. 2 THE D.C.I.T., CENTRAL CIRCLE-XVII, KOLKATA. 3. THE CIT-CENTRAL-I, KOLKATA, 4. T HE CIT(A)-CENTRAL-I, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES