The Income Tax Officer, Ward-7(2)(1), Bangalore V. Smt.Keeparti Ramaraju Yashoda , Bangalore

MA 377/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5674 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Question of law; Initiation of penalty proceedings
• Section: 271(1)(c); 80IA; 274; 13; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER [ M P NO. 377 /B ANG /20 18 (IN ITA NO. 488 /B ANG /20 1 8 )] (ASSESSMENT YEAR: 20 10 - 1 1 ) THE INCOME TAX OFFICER, WARD - 7(2)(1), BENGALURU. APPLICANT VS. SMT. KEEPARTI RAMARAJU YASHODA , #102/5, 7 TH A MAIN, 3 RD BLOCK, JAYANAGAR, BANGALORE 560011. PAN: AAA PY 9578 P RESPONDENT REVENUE BY : SHRI. PRIYADARSHI MISHRA , J CIT (DR)(ITAT), BENGALURU APPLICANT BY : SHRI. V. SRINIVASAN, ADVOCATE DATE OF HEARING : 11 /09/2020 DATE OF PRONOUNCEMENT : 30 /09/2020 O R D E R PER A. K. GARODIA, AM: THIS MISCELLANEOUS PETITION (MP) IS FILED BY THE REVENUE IN WHICH IT IS STATED THAT IN PARA 5 OF THE ASSESSMENT ORDER DATED 28.03.2013, THE AO HAS CLEARLY STATED THAT THE REASON FOR INITIATION OF PENALTY PROCEEDINGS WAS FOR CONCEALMENT OF PARTICULARS OF ASSESSEES INCOME AND THEREFORE, THE TRIBUNAL ORDER IS CONTAINING AN APPARENT MISTAKE BECAUSE AS PER THIS IMPUGNED TRIBUNAL ORDER, THE TRIBUNAL HAS HELD THAT IN VIEW OF THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY VS. CIT 359 ITR 0565, THE PENALTY ORDER IS BAD IN LAW BECAUSE IN THE NOTICE ISSUED BY THE AO UNDER SECTION 274 R.W.S. 271 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT), THE AO HAS NOT MADE IT CLEAR AS TO WHETHER THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR OF FURNISHING INACCURATE PARTICULARS OF INCOME. MP NO. 377/BANG/2018 (IN ITA NO.488/BANG/2018) PAGE 2 OF 13 2. IN THE COURSE OF HEARING OF THE MP, LEARNED DR OF THE REVENUE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- (A) CIT VS. SRI DURGA ENTERPRISES AS REPORTED IN 231 TAXMAN 886 (KARNATAKA), COPY AVAILABLE ON PAGES 35 TO 38 OF THE PAPER BOOK FILED BY THE REVENUE IN THE COURSE OF HEARING OF THE MP. (B) JAYSONS INFRASTRUCTURE (I) (P) LTD., VS. ITO AS REPORTD IN TS-5873-ITAT-2017 (BANG.), COPY AVAILABLE ON PAGES 39 TO 44 OF THE PAPER BOOK FILED BY THE REVENUE IN THE COURSE OF HEARING OF THE MP. (C) SUNDARAM FINANCE LTD., VS. ACIT 403 ITR 407 (MADRAS), COPY AVAILABLE ON PAGES 45 TO 50 OF THE PAPER BOOK FILED BY THE REVENUE IN THE COURSE OF HEARING OF THE MP. (D) ACIT VS. SOURASTRA KUTCH STOCK EXCHANGE 262 ITR 166 (GUJ), COPY AVAILABLE ON PAGES 51 TO 53 OF THE PAPER BOOK FILED BY THE REVENUE IN THE COURSE OF HEARING OF THE MP. 3. AS AGAINST THIS, LEARNED DR OF THE REVENUE SUBMITTED THAT THERE IS NO APPARENT MISTAKE IN THIS IMPUGNED TRIBUNAL ORDER BECAUSE AS THIS, THE TRIBUNAL HAS DECIDED THE ISSUE BY FOLLOWING THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF CIT VS.MANJUNATH COTTON AND GINNING FACTORY (SUPRA). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE PARA 4 OF THE IMPUGNED TRIBUNAL ORDER AS PER WHICH THE ISSUE WAS DECIDED BY THE TRIBUNAL: 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND SINCE IN THE PRESENT CASE, THE AO HAS NOT MADE IT CLEAR IN THE NOTICE ISSUED BY HIM U/S. 274 R.W.S. 271 OF IT ACT THAT WHETHER THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR OF FURNISHING INACCURATE PARTICULARS OF INCOME, THE TRIBUNAL ORDER CITED BY ID. AR OF ASSESSEE RENDERED IN THE CASE OF SRI A NAGARAJU VS. ITO(SUPRA) AND IN TURN THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) IS SQUARELY APPLICABLE AND RESPECTFULLY MP NO. 377/BANG/2018 (IN ITA NO.488/BANG/2018) PAGE 3 OF 13 FOLLOWING THESE JUDGEMENTS, WE HOLD THAT IN THE PRESENT CASE ALSO, ,PENALTY ORDER PASSED BY AO IS INVALID AND AS A CONSEQUENCE, THE PENALTY BY AO STANDS DELETED. 5. FROM THE ABOVE PARA REPRODUCED FROM THE IMPUGNED TRIBUNAL ORDER, IT IS SEEN THAT THE TRIBUNAL HAS DECIDED THE ISSUE BY FOLLOWING THE BINDING JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA). IN PARA 3 OF THE TRIBUNAL ORDER, THIS FACT IS ALSO NOTED BY THE TRIBUNAL THAT THE NOTICE ISSUED BY THE AO UNDER SECTION 274 R.W.S. 271 OF THE ACT IS AVAILABLE ON PAGE 8A OF THE PAPER BOOK AND FROM THE SAME, IT CAN BE SEEN THAT THE AO HAS NOT MADE IT CLEAR AS TO WHETHER THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR OF FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE PRESENT MP, THIS IS NOT THE CLAIM OF THE REVENUE THAT THERE IS ANY FACTUAL MISTAKE COMMITTED BY THE TRIBUNAL IN GIVING THIS FINDING IN PARA 3 OF THE IMPUGNED TRIBUNAL ORDER THAT THE AO HAS NOT MADE IT CLEAR IN THE NOTICE ISSUED BY HIM UNDER SECTION 274 R.W.S. 271 OF THE ACT AS TO WHETHER THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR OF FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE PRESENT MP, THIS IS THE ONLY CLAIM OF THE REVENUE THAT IN SPITE OF THIS FACT THAT NOTICE ISSUED BY THE AO UNDER SECTION 274 R.W.S. 271 OF THE ACT DID NOT MAKE IT CLEAR AS TO WHAT IS THE OBJECTION OF THE AO AND WHETHER IT IS REGARDING CONCEALMENT OF INCOME OR OF FURNISHING INACCURATE PARTICULARS OF INCOME, THERE IS NO DEFICIENCY MP NO. 377/BANG/2018 (IN ITA NO.488/BANG/2018) PAGE 4 OF 13 IN THE PENALTY ORDER PASSED BY THE AO IN THE PRESENT CASE. IN THIS REGARD, LEARNED DR OF THE REVENUE HAS PLACED RELIANCE ON THE ABOVE NOTED FOUR JUDGMENTS AND NOW WE EXAMINE THE APPLICABILITY OF THESE JUDGMENTS IN THE PRESENT CASE. THE FIRST JUDGMENT ON WHICH RELIANCE HAS BEEN PLACED BY LEARNED DR OF THE REVENUE IS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. SRI DURGA ENTERPRISES (SUPRA). WE FIND THAT IN THIS CASE, THE ISSUE INVOLVED WAS REGARDING VALIDITY OF THE NOTICE ISSUED BY THE AO UNDER SECTION 148 OF THE ACT AND NOT ABOUT VALIDITY OF THE NOTICE ISSUED BY THE AO UNDER SECTION 274 R.W.S. 271 OF THE ACT AND THEREFORE, IN OUR CONSIDERED OPINION, THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE. 6. THE SECOND JUDGMENT ON WHICH RELIANCE IS PLACED BY THE LEARNED DR OF THE REVENUE IS THE TRIBUNAL ORDER RENDERED IN THE CASE OF JAYSONS INFRASTRUCTURE INDIA PVT. LTD., VS. ITO (SUPRA). PARA 7 OF THIS TRIBUNAL ORDER IS RELEVANT AND HENCE, THE SAME IS REPRODUCED HEREINBELOW FOR READY REFERENCE: 7. WE HAVE HEARD THE CONTENTIONS OF THE LD. DR AND PERUSED THE; ORDERS OF THE LOWER AUTHORITIES. IN OUR VIEW, U/S.271(1)(C) OF THE ACT, THE AO IS REQUIRED TO SATISFY THAT AN ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND AFTER REACHING A SATISFACTION THE AO MAY DIRECT THE SAID PERSON I ASSESSEE TO PAY BY WAY OF PENALTY, A ,SUM EQUIVALENT TO THE TAX SOUGHT TO BE EVADED OR THREE TIMES THE TAX SOUGHT TO BE EVADED. AS MENTIONED HEREIN ABOVE, THE AO WHILE PASSING THE ASSESSMENT ORDER HAS TO SATISFY THAT INACCURATE PARTICULARS OF INCOME. HAS BEEN FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME. FROM A PERUSAL OF THE ORDER, IT IS CLEAR THAT THE ASSESSEE HAS SOUGHT MP NO. 377/BANG/2018 (IN ITA NO.488/BANG/2018) PAGE 5 OF 13 THE EXEMPTION OF INCOME U/S. 80IA OF THE ACT, ON THE PRETEXT THAT THE ASSESSEE IS AN ELIGIBLE UNDERTAKING WITHIN THE MEANING OF SECTION 80IA. HOWEVER, IT IS ONLY DURING THE COURSE OF A SURVEY WHEN A STATEMENT OF THE DIRECTOR OF THE COMPANY WAS RECORDED, IT CAME TO LIGHT THAT THE ASSESSEE WAS NOT ENTITLED FOR THE BENEFIT OF SECTION 80IA OF THE ACT. EVEN OTHERWISE, THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF ANY INFRASTRUCTURE PROJECT CONSTRUCTED OR MAINTAINED BY IT DURING THE YEAR .UNDER CONSIDERATION. THUS IT IS CLEAR THAT THE ASSESSEE HAS DELIBERATELY FURNISHED THE INACCURATE PARTICULARS OF INCOME AND THEREBY SOUGHT TO AVAIL THE BENEFICIAL PROVISIONS OF SECTION 80IA. THE ASSESSEE WAS AWARE THAT IT WAS NOT ENTITLED AND THEREFORE THIS FACT WAS ACCEPTED BY THE ASSESSEE DURING THE COURSE OF SURVEY. IN VIEW THEREOF, WHEN THE ASSESSEE' HAS FURNISHED' INACCURATE PARTICULARS OF INCOME IN THE RETURN OF INCOME AND CLAIMED THE BENEFIT U/S. 801A AND HAS FILED NIL RETURN OF INCOME, THE CASE OF THE ASSESSEE CLEARLY FALLS WITHIN THE PURVIEW OF SECTION 271(1)(C) OF THE ACT. EVEN OTHERWISE, IN OUR VIEW, ONCE THE ASSESSMENT ORDER CLEARLY MENTIONED THAT THE 'ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME', MERE MENTIONING IN THE NOTICE 'FOR CONCEALING THE PARTICULARS OF INCOME' OR LURNISHED INACCURATE PARTICULARS OF INCOME' WOULD NOT CAUSE ANY PREJUDICE TO THE ASSESSEE. THE ASSESSEE WAS ALREADY HAVING THE BENEFIT OF GOING THROUGH THE ASSESSMENT ORDER WHEREIN IT IS CLEARLY MENTIONED THAT 'THE PENALTY PROCEEDINGS ARE INITIATED FOR FILING INACCURATE PARTICULARS OF INCOME'. THERE IS NO AMBIGUITY IN THE IMPUGNED ORDER OF THE AQ FOR INIIATING THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE. MOREOVER, IF THE ASSESSEE IS OF THE I VIEW THAT THERE IS SOME AMBIGUITY, THE SAID AMBIGUITY CAN BE SORTED OUT BY PARTICIPATING IN THE PENALTY PROCEEDINGS AND TAKING OBJECTION TO THE FACT BEFORE AO. THE ASSESSEE HAS NOT TAKEN ANY OBJECTION BEFORE THE AO IN THE 'PENALTY PROCEEDINGS AND FOR THE FIRST TIME,'THE SAID OBJECTION HAS BEEN TAKEN BEFORE CIT(A). IN OUR VIEW, THE PURPOSE OF ISSUING THE : NOTICE IS TO INFORM THE ASSESSEE ABOUT THE CHARGES UNDER WHICH THE ASSESSEE IS LIABLE FOR IMPOSITION OF PENALTY. ONCE THE CHARGES ARE CLEARLY KNOWN TO THE ASSESSEE WHICH ARE DULY !MENTIONED IN THE ASSESSMENT ORDER AS WELL AS IN THE NOTICE, THERE IS NO ERROR IN THE NOTICE ISSUED BY THE AO FOR IMPOSITION OF PENALTY. IN VIEW THEREOF ALSO, WE DO NOT FIND ANY MERIT IN THE APPEAL. AS A RESULT, PENALTY PROCEEDINGS ARE CONFIRMED. 8. FROM THE ABOVE PARA REPRODUCED FROM THE TRIBUNAL ORDER, IT IS SEEN THAT IN THAT CASE, THE TRIBUNAL HAS NOT CONSIDERED THE APPLICABILITY OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT MP NO. 377/BANG/2018 (IN ITA NO.488/BANG/2018) PAGE 6 OF 13 RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) WHILE DECIDING THE ISSUE IN THAT CASE AS PER PARA 7 REPRODUCED ABOVE. ALTHOUGH, IN PARA 4 OF THE SAME TRIBUNAL ORDER, IT WAS NOTED BY THE TRIBUNAL THAT THE ASSESSEE PLACED RELIANCE ON THE JUDGMENT ON HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) BUT IN SPITE OF THIS, WHILE DECIDING THE ISSUE AS PER PARA 7 REPRODUCED ABOVE, THAT JUDGMENT WAS NOT LOST SIGHT OF AND THEREFORE, WE FEEL THAT WE HAVE TO FOLLOW THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) AND WE CANNOT CONSIDER THIS TRIBUNAL ORDER RENDERED IN THE CASE OF JAYSONS INFRASTRUCTURE INDIA PVT. LTD. VS. ITO (SUPRA) IN WHICH THAT JUDGMENT WAS NOT TAKEN INTO CONSIDERATION ALTHOUGH THE SAME WAS CITED BEFORE THE TRIBUNAL IN THAT CASE. AT THIS JUNCTURE, WE FEEL IT PROPER TO REPRODUCE THE CONCLUSION OF HONBLE KARNATAKA HIGH COURT IN THE JUDGMENT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) AND THE SAME IS REPRODUCED HEREINBELOW FROM PAGES 31 TO 33 OF THE SAID JUDGMENT AVAILABLE ON PAGES 37 TO 39 OF THE PAPER BOOK FILED BY THE REVENUE:- CONCLUSION IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EMERGES IS AS UNDER : (A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIABILITY. MP NO. 377/BANG/2018 (IN ITA NO.488/BANG/2018) PAGE 7 OF 13 (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 INGREDIENT FOR ATTRACTING CIVIL LIABILITY. (D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 271(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271. (E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCERNIBLE FROM THE ASSESSMENT ORDER OR THE ORDER OF THE APPELLATE AUTHORITY OR THE REVISIONAL 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) AND 1(B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BECAUSE OF DEEMING PROVISION. (G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE ASSESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 271(1)(C) IS A SINE QUA NON FOR THE ASSESSING OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAINED IN SUB-SECTION (1B). (H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE COMMISSIONER. (I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. (J) THE IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. (K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORDER 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 ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY THE AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE MP NO. 377/BANG/2018 (IN ITA NO.488/BANG/2018) PAGE 8 OF 13 ADMITTED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. (L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPLANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THAT THE EXPLANATION OFFERED IS NOT BONA FIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. (M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUBSTANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONA FIDE 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 1(B) TO SECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. (O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS, IN APPEAL, 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 SPECIFICALLY 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 GROUNDS MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQUIREMENT OF LAW. (R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. (S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. (T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH MP NO. 377/BANG/2018 (IN ITA NO.488/BANG/2018) PAGE 9 OF 13 EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. (U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS 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 ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON THE MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED AS INVALID IN THE PENALTY PROCEEDINGS. IN THE LIGHT OF WHAT WE HAVE STATED ABOVE, IT IS CLEAR THAT MERELY BECAUSE THE ASSESSEE AGREED FOR ADDITION AND ACCORDINGLY ASSESSMENT ORDER WAS PASSED ON THE BASIS OF THIS ADDITION AND WHEN THE ASSESSEE HAS PAID THE TAX AND THE INTEREST THEREON IN THE ABSENCE OF ANY MATERIAL ON RECORD TO SHOW THE CONCEALMENT OF INCOME, IT CANNOT BE INFERRED THAT THE SAID ADDITION IS ON ACCOUNT OF CONCEALMENT. MOREOVER, THE ASSESSEE HAS OFFERED THE EXPLANATION. THE SAID EXPLANATION IS NOT FOUND TO BE FALSE. ON THE CONTRARY, IT IS HELD TO BE BONA FIDE. IN FACT IN THE ASSESSMENT PROCEEDINGS THERE IS NO WHISPER ABOUT THESE CONCEALMENT. UNDER THESE CIRCUMSTANCES, THE ENTRY FOUND IN THE ROUGH CASH BOOK COULD HAVE BEEN REFLECTED IN THE ACCOUNTS FOR THE SAID FINANCIAL YEAR IN WHICH THE SURVEY TOOK PLACE AS THE LAST DATE FOR CLOSING THE ACCOUNT WAS STILL NOT OVER. THE VERY FACT THAT THE ASSESSEE AGREED TO PAY TAX AND DID NOT CHALLENGE THE ASSESSMENT ORDER, IT IS CLEAR THE CON-DUCT OF THE ASSESSEE CANNOT BE CONSTRUED AS MALA FIDE. THEREFORE, THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDERS PASSED BY THE APPELLATE AUTHORITY AS WELL AS THE ASSESSING AUTHORITY. IN SO FAR AS THE IMPOSITION OF PENALTY IS CONCERNED, IT IS NOT IN ACCORDANCE WITH LAW. NO FAULT COULD BE FOUND WITH THE TRIBUNAL FOR DELETING THE PENALTY. THUS, WE ANSWER THE SUBSTANTIAL QUESTION OF LAW IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 9. FROM THE ABOVE PARA REPRODUCED FROM THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT, IT IS SEEN THAT IN CLAUSE NO.P OF THE MP NO. 377/BANG/2018 (IN ITA NO.488/BANG/2018) PAGE 10 OF 13 CONCLUSION OF HONBLE KARNATAKA HIGH COURT AS REPRODUCED ABOVE, THIS IS THE FINDING OF HONBLE KARNATAKA HIGH COURT THAT NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY 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. IN CLAUSE NO.R, THIS IS ALSO OBSERVED BY HONBLE KARNATAKA HIGH COURT THAT THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY AND OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE IS OFFENDED AND ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. IN CLAUSE NO.T OF THE SAID CONCLUSION AS REPRODUCED ABOVE, THIS IS THE FINDING OF HONBLE KARNATAKA HIGH COURT THAT T HE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS AND ALTHOUGH THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. WE HAVE SEEN THAT THIS IS NOT THE FINDING OF HONBLE KARNATAKA HIGH COURT THAT IF THE AO HAS NOT MADE A SPECIFIC ALLEGATION IN THE ASSESSMENT ORDER, THEN ONLY, MAKING OF SPECIFIC ALLEGATION IN THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271 OF THE ACT IS NECESSARY OR RELEVANT. HENCE, IN OUR CONSIDERED OPINION, ONCE THE NOTICE ISSUED BY THE AO UNDER SECTION 274 R.W.S. 271 OF THE ACT IS FOUND TO BE DEFECTIVE BECAUSE THERE IS NO SPECIFIC ALLEGATION MADE BY THE AO REGARDING THIS ASPECT AS TO WHETHER THE MP NO. 377/BANG/2018 (IN ITA NO.488/BANG/2018) PAGE 11 OF 13 ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME, THE SAID NOTICE CANNOT BE ACCEPTED AS VALID EVEN IF SUCH SPECIFIC ALLEGATION IS MADE BY THE AO IN THE ASSESSMENT ORDER. IN OUR CONSIDERED OPINION, THE AO HAS TO MAKE A SPECIFIC ALLEGATION IN THE ASSESSMENT ORDER ALSO AND THAT WILL SATISFY THIS REQUIREMENT THAT THE AO WAS SATISFIED ABOUT REASON OF INITIATING PENALTY PROCEEDINGS BUT EVEN AFTER THAT, THE ALLEGATION SHOULD BE SPECIFIC AND CLEAR IN THE PENALTY NOTICE ALSO BECAUSE THE ASSESSEE HAS TO SUBMIT REPLY IN THE COURSE OF PENALTY PROCEEDINGS ON THE BASIS OF ALLEGATION IN THE PENALTY NOTICE ONLY AND NOT ON THE BASIS OF ALLEGATION IN THE ASSESSMENT ORDER AND THEREFORE, EVEN IF SPECIFIC ALLEGATION IS MADE BY THE AO IN THE ASSESSMENT ORDER, THE DEFECT IN THE PENALTY NOTICE DOES NOT GET RECTIFIED EVEN UNDER SECTION 292B OF THE ACT. 10. THE NEXT JUDGMENT ON WHICH RELIANCE IS PLACED BY LEARNED DR OF THE REVENUE IS THE JUDGMENT HONBLE MADRAS HIGH COURT RENDERED IN THE CASE OF SUNDARAM FINANCE LTD., VS. ACIT (SUPRA). IN PARA 16 OF THIS JUDGMENT, THIS IS NOTED BY HONBLE MADRAS HIGH COURT THAT THE NOTICE ISSUED BY THE AO UNDER SECTION 274 R.W.S 271 OF THE ACT WERE PERUSED AND IT WAS FOUND THAT THE RELEVANT COLUMN HAS BEEN MARKED, MORE PARTICULARLY, WHEN THE CASE AGAINST THE ASSESSEE IS THAT THEY HAVE CONCEALED PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. HENCE, IT IS SEEN THAT MP NO. 377/BANG/2018 (IN ITA NO.488/BANG/2018) PAGE 12 OF 13 IN THAT CASE, THE FACTS ARE DIFFERENT BECAUSE IN THAT CASE, THIS IS THE FINDING OF FACT RECORDED BY HONBLE MADRAS HIGH COURT THAT RELEVANT COLUMNS OF THE NOTICE HAVE BEEN MARKED BY THE AO WHEREAS IN THE PRESENT CASE, THE FACTS ARE DIFFERENT AND THEREFORE, THIS JUDGMENT OF HONBLE MADRAS HIGH COURT IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. MOREOVER, EVEN IF THIS JUDGMENT OF HONBLE MADRAS HIGH COURT IS CONSIDERED TO BE APPLICABLE THEN ALSO, WE ARE DUTY BOUND TO FOLLOW THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN PREFERENCE TO THE JUDGMENT OF ANY OTHER HIGH COURT AND THEREFORE, FOR THIS REASON ALSO, IT CANNOT BE SAID THAT THERE IS ANY APPARENT MISTAKE IN THE IMPUGNED TRIBUNAL ORDER BECAUSE IN THE IMPUGNED TRIBUNAL ORDER, THE TRIBUNAL HAS DECIDED THE ISSUE BY FOLLOWING THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT. 11. NEXT JUDGMENT ON WHICH RELIANCE HAS BEEN PLACED BY LEARNED DR OF THE REVENUE IS THE JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF ACIT VS.SOURASTRA KUTCH STOCK EXCHANGE (SUPRA). AS PER CLAUSE F OF PARA 33 OF THIS JUDGMENT, THIS IS NOTED BY HONBLE GUJARAT HIGH COURT THAT NON-CONSIDERATION OF A JUDGMENT OF THE JURISDICTIONAL HIGH COURT WOULD ALWAYS CONSTITUTE A MISTAKE APPARENT FROM THE RECORD, REGARDLESS OF THE JUDGMENT BEING RENDERED PRIOR TO OR SUBSEQUENT TO THE ORDER PROPOSED TO BE RECTIFIED. IN THE PRESENT CASE, THIS IS NOT THE CASE OF THE REVENUE THAT ANY JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT WAS NOT MP NO. 377/BANG/2018 (IN ITA NO.488/BANG/2018) PAGE 13 OF 13 CONSIDERED BY THE TRIBUNAL IN THE PRESENT CASE. IN FACT, THIS IS ADMITTED POSITION THAT THE TRIBUNAL ORDER IS FOLLOWING THE BINDING JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) AND THEREFORE, IN THE FACTS OF THE PRESENT CASE, THIS JUDGMENT OF HONBLE GUJARAT HIGH COURT IS ALSO NOT RENDERING ANY HELP TO THE REVENUE. 23. AS PER ABOVE DISCUSSION, WE FIND THAT THERE IS NO APPARENT MISTAKE IN THE IMPUGNED TRIBUNAL ORDER. 24. IN THE RESULT, MP FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- ( N. V. VASUDEVAN ) VICE PRESIDENT (A. K. GARODIA) ACCOUNTANT MEMBER PLACE : BANGALORE DATED : 30/09/2020 /NS/* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE