BINOD KUMAR SINGH, MUMBAI v. DCIT CC 18 & 19, MUMBAI

ITA 1481/MUM/2014 | 2010-2011
Pronouncement Date: 21-10-2016 | Result: Allowed

Appeal Details

RSA Number 148119914 RSA 2014
Assessee PAN AJAPS5110J
Bench Mumbai
Appeal Number ITA 1481/MUM/2014
Duration Of Justice 2 year(s) 7 month(s) 19 day(s)
Appellant BINOD KUMAR SINGH, MUMBAI
Respondent DCIT CC 18 & 19, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 21-10-2016
Assessment Year 2010-2011
Appeal Filed On 03-03-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI G.S.PANNU ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH JUDICIAL MEMBER ITA NO.1476/MUM/2014 TO ITA NO.1481/MUM/2014 (ASSESSMENT YEARS 2005-06 TO 2010-11) SHRI BINOD KUMAR SINGH C/O. V.J. SHAH & CO. 401-406 KBUILDING 24 WALCHAND HIRACHAND MARG BALLARD ESTATE MUMBAI 400001 PAN:AJAPS5110J ...... APPELLANT VS. THE DCIT CC 18 &19 AAYKAR BHAVAN M.K.ROAD MUMBAI .... RESPONDENT APPELLANT BY : SHRI SHRI SANJAY PAR IKH RESPONDENT BY : SHRI MOHAMMED RIZW AN DATE OF HEARING : 18/10/2016 DATE OF PRONOUNCEMENT : 21/10/2016 ORDER PER G.S.PANNU A.M: THESE ARE SIX APPEALS BY THE ASSESSEE PERTAINING TO ASSESSMENT YEARS 2005-06 TO 2010-11 INVOLVING A COMMON ISSUE RELATI NG TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. SINCE THE FACTS AND CIRCUMSTANCES IN ALL THE APPEALS STAND ON SIMILAR FOOTING THE APPEAL FOR AS SESSMENT YEAR 2005-06 IS 2 ITA NO.1476 TO 1481/MUM/2014 TAKEN AS THE LEAD CASE. THIS APPEAL IS DIRECTED AG AINST AN ORDER PASSED BY CIT(A)-39 MUMBAI DATED 31/01/2014 WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 271(1 )(C) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) DATED 26/09/2013. 2. IN BRIEF THE RELEVANT FACTS ARE THAT THE ASSESS EE IS AN INDIVIDUAL WHO IS EXECUTIVE DIRECTOR OF M/S. ISPAT INDUSTRIES LTD. A FLAGSHIP COMPANY OF ISPAT GROUP OF CASES WHICH WAS COVERED UNDER A SEARCH ACTION CARRIED OUT BY THE DEPARTMENT UNDER SECTION 132(1) OF THE ACT. THE AS SESSEE WAS ALSO COVERED UNDER SUCH SEARCH ACTION AND AS A CONSEQUENCE FOR ASSESSMENT YEAR 2005-06 A NOTICE UNDER SECTION 153A OF THE ACT DATED 17/1/2 012 WAS ISSUED AND IN RESPONSE ASSESSEE FILED A RETURN OF INCOME ON 01/03 /2012 DECLARING A TOTAL INCOME OF RS.1 60 26 130/- WHEREAS IN THE ORIGINAL RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE ACT ON 29/7/2005 THE TOTAL INCOME DECLARED WAS RS.1 59 22 176/-. THE DIFFERENCE IN THE TOTAL INCOM E AS PER THE ORIGINAL RETURN OF INCOME AND THE RETURN OF INCOME FILED IN RESPONS E TO NOTICE UNDER SECTION153A OF THE ACT WAS ON ACCOUNT OF INTEREST I NCOME OF RS.1 15 951/- WHICH WAS NOT OFFERED TO TAX IN THE ORIGINAL RETURN OF INCOME. THE ENSUING ASSESSMENT UNDER SECTION 143(3) R.W.S 153A WAS FI NALIZED ON 28/3/2013 WHEREBY THE RETURNED INCOME WAS ACCEPTED AT RS.1 60 26 130/-. SUBSEQUENTLY THE ASSESSING OFFICER PASSED AN ORDER DATED 26/09/2013 HOLDING THE ASSESSEE GUILTY OF DEFAULT UNDER SECTION 271(1) (C) OF THE ACT AND IMPOSED A PENALTY OF RS.39 029/- BEING 100% OF TAX SOUGHT TO BE EVADED ON THE INCOME OF RS.1 15 951/-. THE SAID LEVY OF PENALTY HAS BEEN U PHELD BY THE CIT(A) ALSO AND AS A CONSEQUENCE ASSESSEE IS IN FURTHER APPEAL BEFO RE US. 3. BEFORE US THE LD. REPRESENTATIVE FOR THE ASSESS EE SUBMITTED THAT BEFORE JOINING M/S.ISPAT INDUSTRIES LTD. ASSESSEE WAS THE MANAGING DIRECTOR OF STEEL 3 ITA NO.1476 TO 1481/MUM/2014 AUTHORITY OF INDIA LTD.( IN SHORT SAIL) A GOVERNME NT OF INDIA UNDERTAKING AND THAT ASSESSEE WAS A TECHNICAL PERSON WHO WAS DEPEN DING ON THE STAFF OF SAIL AND/OR ISPAT INDUSTRIES LTD. FOR FILING OF HIS RE TURN OF INCOME FOR THE RESPECTIVE YEARS. THE LD. REPRESENTATIVE FOR THE ASSESSEE POI NTED OUT THAT THE ORIGINAL RETURN OF INCOME WAS FILED AS PER COMPILATION DONE BY THE STAFF OF M/S. ISPAT INDUSTRIES LTD. DECLARING SALARY INCOME ONLY AND AF TER THE SEARCH ACTION ASSESSEE APPOINTED A FIRM OF CHARTERED ACCOUNTANTS. WITH THE PROFESSIONAL HELP OF THE FIRM OF CHARTERED ACCOUNTANTS THE RETU RNS WERE FILED IN RESPONSE TO NOTICES ISSUED UNDER SECTION 153A OF THE ACT AND AT THAT STAGE IT WAS NOTICED THAT INTEREST INCOME ON ACCOUNT OF NATIONAL SAVING CERTIFICATE BANK INTEREST ETC. WERE HITHERTO NOT OFFERED FOR TAXATION IN THE ORIGINAL RETURN OF INCOME. IT HAS BEEN EXPLAINED THAT DURING THE COURSE OF SEARCH NO INCRIMINATING MATERIAL WAS FOUND AND THE DIFFERENCE BETWEEN THE INCOME DEC LARED IN THE ORIGINAL RETURN OF INCOME AND THE RETURN FILED IN RESPONSE T O NOTICE ISSUED UNDER SECTION153A WAS ON ACCOUNT OF THE AFORESAID INTERES T INCOME NOT OFFERED TO TAX EARLIER. THE LD. REPRESENTATIVE FOR THE ASSESS EE EXPLAINED THAT NON- DISCLOSURE OF INTEREST AND OTHER INCOME IN THE ORIG INAL RETURN OF INCOME FILED BY THE ASSESSEE WAS ON ACCOUNT OF THE STAFF OF SAIL/I SPAT INDUSTRIES LTD. WHO COMPILED THE RETURN OF INCOME FILED BY THE ASSESSEE ONLY ON THE BASIS OF THE SALARY CERTIFICATE. THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO JUSTIFICATION FOR LEVY OF PENALTY UNDER SECT ION 271(1)(C) OF THE ACT INASMUCH AS THE INCOME RETURNED IN THE RETURN FILE D IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT HAS BEEN ACCEP TED AS SUCH. IT WAS POINTED OUT THAT THERE WAS NO DETECTION EITHER DUR ING THE COURSE OF SEARCH OR DURING THE SUBSEQUENT ASSESSMENT PROCEEDINGS CARRIE D OUT WITH RESPECT TO THE RETURN FILED IN RESPONSE TO NOTICE ISSUED UNDER SEC TION 153A OF THE ACT WHICH 4 ITA NO.1476 TO 1481/MUM/2014 WOULD SHOW THAT ASSESSEE HAD EITHER CONCEALED OR FU RNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTI ON 271(1)(C) OF THE ACT. 3.1 NOTWITHSTANDING THE PLEA REGARDING THE ABSENCE OF MERIT FOR LEVY OF PENALTY THE LD. REPRESENTATIVE FOR THE ASSESSEE RA ISED A PRELIMINARY OBJECTION THAT THE PENALTY PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER FOR CONCEALMENT OF PARTICULARS OF INCOME WHEREAS THE P ENALTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER FOR FURNISHING INACCURATE PARTICULAR OF INCOME. THE POINT MADE OUT BY THE ASSESSEE IS THAT SINCE THE CH ARGE FOR WHICH THE PENALTY PROCEEDINGS HAVE BEEN INITIATED IS DIFFERENT FROM T HE BASIS ON WHICH IT HAS BEEN LEVIED THE PENALTY ORDER PASSED BY THE ASSESS ING OFFICER IS UNSUSTAINABLE AND IN THIS REGARD RELIED ON THE JUDGMENT OF THE HO NBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNIN G FACTORY 359 ITR 565(KAR). IT HAS ALSO POINTED OUT THAT THE SAID DE CISION HAS ALSO BEEN APPLIED BY THE MUMBAI TRIBUNAL IN THE CASE OF DHARNI DEV ELOPERS V. ACIT 40 ITR (TRIB) 720(MUMBAI) WHEREIN PENALTY WAS SET-ASIDE ON THE G ROUND THAT INITIATION WAS FOR ONE DEFAULT WHEREAS THE IMPOSITION OF PENALTY WAS FOR ANOTHER DEFAULT. 4. ON THE OTHER HAND LD. DEPARTMENTAL REPRESENTATI VE DEFENDED THE ACTION OF THE LOWER AUTHORITIES LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND POINTED OUT THAT IN THE ASSESSMENT ORD ER THE ASSESSING OFFICER HAS IN THE PENULTIMATE PARA DIRECTED FOR ISSUE OF N OTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT IMPLYING THAT THE PENAL TY HAS BEEN INITIATED IN THE CONTEXT OF SECTION 271(1)(C) OF THE ACT AS A WHOLE AND NOT MERELY ON ANY ONE OF THE LIMBS PRESCRIBED THEREIN. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS WITH RESPECT TO THE PRELIMINARY OBJECTION RAISED BY THE ASSESSEE. BEFO RE WE PROCEED FURTHER WE 5 ITA NO.1476 TO 1481/MUM/2014 MAY BRIEFLY RECAPITULATE THE FACTUAL MATRIX WHICH LIES IN A VERY NARROW COMPASS. IN THE INSTANT CASE CONSEQUENT TO A SEAR CH ACTION A NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED TO THE ASSESSEE AND IN RESPONSE ASSESSEE FILED RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.1 60 26 130/- AS AGAINST AN INCOME OF RS.1 59 22 180/- DECLARED IN THE ORIGI NAL RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE ACT THEREBY RESULTING IN A DIFFERENCE OF RS.1 15 951/-. THE SAID DIFFERENCE IS ON ACCOUNT O F INTEREST INCOME EARNED FROM VARIOUS SOURCES WHICH WAS HITHERTO NOT DECLAR ED IN THE ORIGINAL RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE ACT. THE ASSESSMENT WAS FINALIZED ON THE RETURNED INCOME OF RS.1 60 26 130/- AS SUCH. HOWEVE R THE GRIEVANCE OF THE ASSESSEE IS THAT THE ASSESSING OFFICER LEVIED P ENALTY UNDER SECTION 271(1)(C) OF THE ACT WITH RESPECT TO SUCH DIFFERENCE. 5.1 THE PRELIMINARY OBJECTION OF THE ASSESSEE IS TO THE EFFECT THAT THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UND ER ONE LIMB OF THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT BUT U LTIMATELY IT HAS BEEN LEVIED UNDER ANOTHER LIMB WHICH IS IMPERMISSIBLE. IN THI S CONTEXT IT WOULD BE PERTINENT TO NOTE THAT SECTION 271(1)(C) OF THE A CT EMPOWERS THE ASSESSING OFFICER TO LEVY PENALTY IF HE IS SATISFIED THAT AS SESSEE HAS EITHER CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. QUITE CLEARLY THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS IMPOSABLE IN TWO SITUATIONS NAMELY EITHER FOR CONCEALMENT OF THE P ARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. THE CASE MADE OUT BY THE ASSESSEE IS THAT IN THE ASSESSMENT ORDER THE ASSESS ING OFFICER INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT OF PARTICULARS OF INCOM E WHEREAS THE PENALTY HAS BEEN IMPOSED FOR FURNISHING OF INACCURATE PARTICULA RS OF INCOME QUA THE 6 ITA NO.1476 TO 1481/MUM/2014 INCOME IN QUESTION. IN THIS CONTEXT WE NOTICE THA T IN THE ASSESSMENT ORDER THE ASSESSING OFFICER NOTED AS UNDER:- THE DIFFERENCE IN THE TOTAL INCOME AS PER ORIGINAL RETURN OF INCOME AND RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT WAS EXPLAINED TO BE ON ACCOUNT OF INTEREST INCOME O F RS.1 15 951/- WHICH WAS NOT OFFERED TO TAX IN THE ORIGINAL RETURN OF IN COME. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT ARE INITIATED SEPARATELY FOR CONCEALMENT OF PARTICULARS OF INCOME IN THE RETURN OF INCOME FILED U/S.139(1) OF THE ACT. WHEREAS IN THE PENALTY ORDER THE ASSESSING OFFICER CONCLUDES THE IMPOSITION OF PENALTY IN THE FOLLOWING WORDS:- THEREFORE I AM OF THE OPINION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SEC.271 (1)(C) OF I.T. ACT FOR THE YEAR UNDER CONSIDERATION WITHIN THE MEANING OF EXPLANATION TO THE SAID SECTION AND HAS THEREBY RENDERED HIMSELF LIABL E FOR PENALTY U/S.271(1)(C) OF I.T. ACT THEREFORE I AM SATISFIED THAT THIS IS A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE I.T.ACT 1961. 5.2 THUS FACTUALLY SPEAKING IT IS QUITE CLEAR THAT THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER SHOW THAT THE PENALTY PROCEEDINGS HAVE BEEN INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME WHEREAS IN THE PENALTY ORDER THE LEVY HAS BEEN D ETERMINED ON THE GROUND THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME. 5.3 IN THIS CONTEXT IT WOULD BE GERMANE TO REFER T O THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNA THA COTTON AND GINNING FACTORY(SUPRA) WHEREIN GENERAL PRINCIPLES WITH RES PECT TO THE OPERATION OF SECTION 271(1)(C) OF THE ACT HAVE BEEN EXPLAINED. ONE OF THE LEGAL PROPOSITIONS LAID DOWN BY THE HONBLE HIGH COURT IS TO THE EFFE CT THAT TAKING UP OF PENALTY PROCEEDINGS UNDER ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS 7 ITA NO.1476 TO 1481/MUM/2014 BAD IN LAW. THE RELEVANT DISCUSSION BY THE HONBLE HIGH COURT IN THIS REGARD READS AS UNDER:- 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES T HAT 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 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 U PON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY AT THE TIME OF IMPOSING 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 WOULD O FFEND 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 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. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION FA CTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING THE 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 FURNISH ING 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 292 ITR 11(SC) AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCO ME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CO NNOTATIONS. THE GUJRAT HIGH COURT IN THE CASE OF MANU ENGINEERING WORKS R EPORTED IN [1980] 122 ITR 306 (GUJ) AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRGO 8 ITA NO.1476 TO 1481/MUM/2014 MARKETING PVT. LTD. REPORTED IN [2008]171 TAXMAN 1 56 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 APPROPRIATELY MARKED. SIM ILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ST ANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. 5.4 ON THE BASIS OF THE AFORESAID DISCUSSION A RE LEVANT PREMISE WHICH CAN BE DEDUCED FOR THE PRESENT PURPOSE IS THAT WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDING IS NOT IN ACCORDANCE WITH THE BA SIS ON WHICH THE PENALTY HAS BEEN ULTIMATELY IMPOSED THE IMPOSITION OF PENA LTY IN SUCH CIRCUMSTANCES WOULD BE INVALID. AT THIS STAGE WE MAY ALSO REFER TO THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF K.M.BHATIA (QUA RRY) VS. CIT 193 ITR 379(GUJ) WHEREIN ALSO SIMILAR PROPOSITION HAS BEEN EXPOUNDED NAMELY THAT PENALTY PROCEEDINGS HAVING BEEN INITIATED ON THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OF INCOME WOULD NOT VALIDATE THE IMPOSI TION OF PENALTY ON THE GROUND OF CONCEALMENT. OUR CO-ORDINATE BENCH IN TH E CASE OF DHARNI DEVELOPERS (SUPRA) HAS ALSO TAKEN A SIMILAR VIEW FO LLOWING THE RATIO OF THE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA). IN FACT SPE CIFYING THE PARTICULAR LIMB UNDER WHICH THE ASSESSEE IS TO BE PENALIZED UNDER SECTION 271(1)(C) OF THE ACT IS OF PARAMOUNT IMPORTANCE AS CAN BE UNDERSTOOD FRO M THE FACT THAT IN THE CASE OF SSAS EMERALD MEADOWS: S.L.P(C) NO.23272 OF 2016 THE HONBLE SUPREME COURT HAS ON 5/8/2016 DISMISSED THE SLP WHICH HAD ARISEN FROM THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN ITA NO.380 OF 2015 DATED 23/11/15 WHEREIN THE HONBLE KARNATAKA HIGH COURT FOLLOWING ITS EARLIER JUDGMENT IN THE CASE OF MANJUNATHA COTTON AND GINNI NG FACTORY(SUPRA) HELD 9 ITA NO.1476 TO 1481/MUM/2014 THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER UND ER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WAS BAD IN LAW AS IT DID NOT S PECIFY IN WHICH LIMB OF SECTION 271(1)(C) OF THE ACT PENALTY HAD BEEN INITI ATED I.E. WHETHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME. NO DOUBT THE CASE BEFORE US IS NOT ON THE FOOTING THAT THE LIMB OF SECTION 271(1)(C) OF THE ACT HAS NOT BEEN SPECIFIED AT THE TIME OF INITIATION OF PENALTY BUT WE ARE REFERRING TO THE AFORESAID ONLY TO EMPHA SIZE THE IMPORTANCE THAT IS PLACED ON THE REQUIREMENT TO SPECIFY THE CHARGE TO BE MADE AGAINST THE ASSESSEE OUT OF THE TWO LIMBS AVAILABLE IN SECTIO N 271(1)(C) OF THE ACT. IN THE BACKGROUND OF SUCH SCHEMATIC UNDERSTANDING OF THE O PERATING MECHANISM OF SECTION 271(1)(C) OF THE ACT IN OUR VIEW THE INIT IATION OF PENALTY ON ONE LIMB AND ITS IMPOSITION ULTIMATELY ON ANOTHER LIMB CA NNOT BE SUSTAINED. UNDER THESE CIRCUMSTANCES IN OUR VIEW THE PENALTY IMPOS ED BY THE ASSESSING OFFICER IN THE PRESENT CASE ON THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OF INCOME IS UNSUSTAINABLE FOR THE REASON THAT INITIAT ION WAS ON ANOTHER DEFAULT I.E. CONCEALMENT OF PARTICULARS OF INCOME. ACCORDI NGLY WE HOLD THAT THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT OF RS.39 029/- FOR ASSESSMENT YEAR 2005-06 IS NOT SUSTAINABLE AND IS H EREBY SET-ASIDE. SINCE WE HAVE SET-ASIDE THE ACTION OF THE ASSESSING OFFICER IN CONSONANCE WITH THE PRECEDENTS REFERRED ABOVE WE DO NOT FIND IT EXPEDI ENT TO ADDRESS THE ISSUE URGED ON MERIT OF THE PENALTY IMPOSED. IN CONCLUSI ON WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO D ELETE THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. 6. IN THE RESULT APPEAL OF THE ASSESSEE FOR ASSESS MENT YEAR 2005-06 IS ALLOWED AS ABOVE. 10 ITA NO.1476 TO 1481/MUM/2014 7. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT F ACTS AND CIRCUMSTANCES LEADING TO IMPOSITION OF PENALTY UNDER SECTION 271( 1)(C) OF THE ACT IN ALL OTHER CAPTIONED ASSESSMENT YEARS I.E. ASSESSMENT YEARS 20 06-07 TO 2010-11 ARE PARI- MATERIA TO THOSE CONSIDERED BY US IN ITA NO. 1476/MUM/2014 FOR ASSESSMENT YEAR 2005-06 THUS OUR DECISION THEREIN SHALL APPL Y MUTATIS MUTANDIS IN THE APPEALS FOR ASSESSMENT YEARS 2006-07 TO 2010-11 AL SO. 8. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 21/10/2016 SD/- SD/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI DATED 21/10/2016 VM SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT MUMBAI