Shri Mohan Das Ghatiwala, Kota v. Deputy Commissioner Of Income Tax, Central Circle-3, Jaipur

ITA 844/JPR/2018 | 2015-2016
Pronouncement Date: 06-11-2019 | Result: Allowed

Appeal Details

RSA Number 84423114 RSA 2018
Assessee PAN ABBPG6893P
Bench Jaipur
Appeal Number ITA 844/JPR/2018
Duration Of Justice 1 year(s) 4 month(s) 9 day(s)
Appellant Shri Mohan Das Ghatiwala, Kota
Respondent Deputy Commissioner Of Income Tax, Central Circle-3, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 06-11-2019
Appeal Filed By Assessee
Tags mohan
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 06-11-2019
Last Hearing Date 17-09-2018
First Hearing Date 17-09-2018
Assessment Year 2015-2016
Appeal Filed On 27-06-2018
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH SMC JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; DS LE{K BEFORE: SHRI SHRI VIJAY PAL RAO JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 844/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16. SHRI MOHAN DAS GHATIWALA 7A BALLABH NAGAR KOTA. CUKE VS. THE DCIT CENTRAL CIRCLE-3 JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABBPG 6893 P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.R. SHARMA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI ABHISHEK SHARMA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04.10.2019. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 06/11/2019. VKNS'K@ ORDER PER VIJAY PAL RAO JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 02.04.2018 OF LD. CIT (APPEALS)-4 JAIPUR ARISING FROM PENALTY OR DER PASSED UNDER SECTION 271AAB OF THE IT ACT FOR THE ASSESSMENT YEAR 2015-16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LD. CIT (A) IS WRONG UNJUST AND HAS ERRED IN LAW IN CONFIRMING PENALTY OF RS. 3 93 068/- IMPOSED BY THE ASSESSING OFFICER U/S 271AAB OF THE ACT. 2 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. 2. THAT THE CIT (A) IS WRONG AND HAS ERRED IN LAW I N CONFIRMING THE SAID PENALTY OF RS. 3 93 068/- U/S 271AAB OF THE AC T HOLDING THAT IS MANDATORY IN NATURE AND NOT DISCRETIONARY A ND SO ASSESSING OFFICER IS CORRECT IN LAW WHILE IMPOSING PENALTY ON APPELLANT. 3. THAT THE CIT (A) IS WRONG AND HAS ERRED IN LAW I N CONFIRMING THE SAID PENALTY OF RS. 3 93 068/- U/S 271AAB IMPOSED B Y ASSESSING OFFICER ALTHOUGH THE NOTICE ISSUED BY ASSESSING OFF ICER FOR INITIATING THE PENALTY U/S 271AAB OF THE IT ACT 19 61 IS NOT IN ACCORDANCE WITH LAW NOT BEING SPECIFICALLY POINTING OUT THE DEFAULT FOR WHICH THE LD. A.O. SOUGHT TO IMPOSE PEN ALTY U/S 271AAB. 4. THAT THE LD. CIT (A) IS WRONG IN CONFIRMING PENA LTY OF RS. 3 93 068/- U/S 271AAB OF THE ACT IN AS MUCH THE PEN ALTY WAS LEVIED BY ASSESSING OFFICER SIMPLY ON THE BASIS THA T THE ASSESSEE ADMITTED THE INCOME OF RS. 39 30 680/- AND DISCLOSE D IN THE RETURN WITHOUT PROVING THAT THE SAID INCOME WAS UN DISCLOSED INCOME OF ASSESSEE WITHIN THE MEANING OF SECTION 2 71AAB OF I.T. ACT 1961. 5. THAT THE APPELLANT CRAVES THE PERMISSION TO ADD TO OR AMEND TO ANY OF THE ABOVE GROUNDS OF APPEAL OR TO WITHDRAW A NY OF THEM. GROUND NO. 3 IS REGARDING THE VALIDITY OF INITIATIO N OF PENALTY PROCEEDINGS UNDER SECTION 271AAB OF THE ACT. 2. SINCE THE ISSUE RAISED IN GROUND NO. 3 IS LEGAL IN NATURE AND GOES TO THE ROOT OF THE MATTER THEREFORE THE GROUND NO. 3 IS TAKEN UP FIRST FOR HEARING AND ADJUDICATION. 3. THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM PARTNERSHIP FIRM AND INCOME FROM OTHER SOURCES. THERE WAS A SEARCH AND S EIZURE ACTION UNDER SECTION 132 OF THE IT ACT ON 05.02.2015 IN CASE OF BUNDI SILICA GROUP KOTA IN WHICH THE 3 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. ASSESSEE IS ALSO COVERED. DURING THE COURSE OF SEA RCH AND SEIZURE PROCEEDINGS THE ASSESSEE DISCLOSED INCOME OF RS. 39 30 684/- ON ACC OUNT OF UNDISCLOSED CASH FOUND. THE ASSESSEE FILED HIS RETURN OF INCOME UNDER SECTI ON 139(1) ON 29.09.2015 DECLARING TOTAL INCOME OF RS. 40 64 920/- INCLUDING THE INCOME DISCLOSED DURING THE SEARCH AND SEIZURE ACTION OF RS. 39 30 684/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 153B(1)(B) OF THE IT ACT ON 15 TH DECEMBER 2016 ON THE RETURNED INCOME. THEREAFTER THE AO INITIAT ED THE PENALTY PROCEEDINGS BY ISSUING SHOW CAUSE NOTICES DATED 15.12.2016 AS WELL AS DATED 10.03.2017. THE AO LEVIED THE PENALTY OF RS. 3 93 068/- UNDER SECTION 271AAB OF THE ACT VIDE ORDER DATED 16.06.2017. THE ASSESSEE CHALLENGED THE LEVY OF PENALTY BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED. 4. BEFORE THE TRIBUNAL THE LD. A/R OF THE ASSESSEE SUBMITTED THAT THE AO HAS LEVIED IMPUGNED PENALTY U/S 271AAB(1)(A). IN THIS CONNECTION HE SUBMITTED THAT THE SECTION 271AAB OF ACT HAS THREE LIMBS AS SPECIFIED IN SECTION 271AAB(1)(A) (B) & (C). THE NOTICE DATED 20.112.2016 SENT TO ASSESSEE ALONG WITH ASSESSMENT ORDER DOES NOT SPECIFY IN WHICH LIMB THE PENALTY SOUGHT T O BE LEVIED AND ONLY MENTIONING OF SECTION 271AAB IN NOTICE DO NOT SATISFY THE REQU IREMENT OF LAW. THE LANGUAGE OF THE SAID NOTICE ISSUED ARE WHEREAS IN THE COURSE O F ASSESSMENT PROCEEDINGS BEFORE ME FOR THE A.Y. 2015-16 IT APPEARS TO ME THAT AS PE R PROVISIONS OF SECTION 274 AND 275 R.W. THE FOLLOWING SECTION (S) YOU ARE LIABLE F OR PENALTY ON ASSESSEE UNDISCLOSED INCOME. THEREAFTER ANOTHER SHOW CAUSE NOTICE DATED 10.03.2017 WAS ISSUED STATING THAT WHEREAS IN THE COURSE OF ASSE SSMENT PROCEEDINGS FOR THE A.Y. 2015-16 PENALTY PROCEEDINGS WERE INITIATED U/S 271 AAB OF THE INCOME-TAX ACT 1961 4 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. AND A PENALTY NOTICE WERE ISSUED. IN THIS CONNECTI ON IT IS SUBMITTED THAT ASSESSMENT WAS COMPLETED ON 15.12.2016 ITSELF AND EARLIER NO P ENALTY NOTICE U/S 271AAB WERE ISSUED AS MENTIONED IN PENALTY NOTICE DATED 15.12.2 016. A COPY OF SAID NOTICE IS PLACED IN PAPER BOOK PAGE NO. 1. IN VIEW OF THE ABO VE IT IS VERIFIABLE THAT NOTICE WAS ISSUED IN VERY CASUAL MANNER WITHOUT SPECIFYING THE SPECIFIC PROVISIONS/LIMB OF SECTION APPLICABLE ON ASSESSEE. THE ASSESSEE SHOUL D KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE THE PRINCIPLES OF NATURAL JUSTICE ARE VIOLATED. ON THE BASIS OF SUCH PROCEEDING NO PENALTY COULD BE I MPOSED ON THE ASSESSEE. THE LD. A/R FURTHER SUBMITTED THAT THE AO THEREAFTER ISSUED ANOTHER SHOW CAUSE NOTICE DATED 10.03.2017 BY CHANGING DATE OF NOTICE STATING THAT WHEREAS IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE A.Y. 2015-16 PENALTY PROCEEDINGS WERE INITIATED U/S 274 AND 275 READ WITH SECTION 271AAB OF THE ACT 19 61 AND A PENALTY NOTICE WAS ISSUED ACCORDINGLY. YOU ARE HEREBY ALLOWED FURTHER OPPORTUNITY OF BEING HEARD AND SHOW CAUSE WHY AN ORDER IMPOSING PENALTY ON YOU SHO ULD NOT BE MADE U/S 271AAB OF THE IT ACT 1961. IF YOU DO NOT WISH TO AVAIL YO URSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUGH AUTHORIZED REPRESENTATIV E YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE DATE FIXED FOR HEARING I.E . 20.03.2017 AT 11.00 AM WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER(S) IS/ARE MADE. THE ASSESSEE AFTER RECEIVING THIS NOTICE FILED HIS EXPLANATION DATED 11.04.2017. THE AO ON RECEIPT OF EXPLANATION OF ASSESSEE PASSED THE PENALTY ORDER ON 16.06.2017. 4.1. THE LD. A/R SUBMITTED THAT BOTH THE NOTICES WE RE ISSUED IN A ROUTINE MANNER WITHOUT MENTIONING UNDER WHICH CLAUSE OF SECTION 27 1AAB OF THE ACT THE ASSESSEE IS LIABLE FOR PENALTY. IT SUBMITTED THAT SECTION 271AA B(1) HAS THREE CLAUSES (A) TO (C) 5 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. AND EACH CLAUSE OF SUB-SECTION (1) TO SEC. 271AAB P ROVIDES THE CIRCUMSTANCES AND VIOLATION ATTRACTING THE PENALTY @ 10% OR 20% OR 30 % OF UNDISCLOSED INCOME OF SPECIFIED PREVIOUS YEAR. THE ASSESSEE SHOULD KNOW T HE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE THE PRINCIPLES OF NAT URAL JUSTICE ARE VIOLATED. ON THE BASIS OF SUCH PROCEEDING NO PENALTY COULD BE IMPOS ED ON THE ISSUE. THE AO EVEN IN THE ASSESSMENT ORDER HAS NOT SPECIFIED UNDER WHICH CLAUSE THE PENALTY IS LIABLE TO BE IMPOSED BUT THE AO HAS MENTIONED THE PENALTY PROCEE DINGS UNDER SECTION 271AAB OF THE IT ACT ARE BEING INITIATED. THUS THERE IS NO APPLICATION OF MIND AT THE TIME OF ISSUING THE SHOW CAUSE NOTICE AS THE SHOW CAUSE NOT ICE ISSUED BY THE AO DO NOT SPECIFY THE UNDISCLOSED INCOME ON WHICH THE ASSESSE E IS REQUIRED TO SHOW CAUSE. EVEN THE AO HAS NOT GIVEN ANY GROUND FOR LEVY OF PE NALTY FOR WHICH THE ASSESSEE COULD PUT HIS DEFENSE. THUS IN THE ABSENCE OF SPECI FIC CHARGE AGAINST THE ASSESSEE HE WAS NOT IN A POSITION TO COUNTER THE SHOW CAUSE NOTICE ISSUED BY THE AO AS WELL AS HIS COGENT REPLY TO THE SHOW CAUSE NOTICE. THOUG H THE AO WHILE PASSING THE IMPUGNED ORDER HAS IMPOSED THE PENALTY AS PER CLAUS E (A) OF SECTION 271AAB(1) OF THE ACT HOWEVER NO SUCH GROUND WAS SPECIFIED IN T HE SHOW CAUSE NOTICE ISSUED UNDER SECTION 271AAB READ WITH SECTION 274 OF THE A CT. THE LD. A/R OF THE ASSESSEE HAS RELIED UPON THE FOLLOWING DECISIONS :- CIT VS. M/S. SSAS EMERALD MEADOWS (2015) (11 TMI 1620 (KAR.) CIT VS. MANJUNATHA COTTON & GINNING FACTORY & OTH ERS 359 ITR 565 (KAR.) 6 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. ANUJ MATHUR VS. DCIT (ITA NO. 971/JP/2017) SHEVETA CONSTRUCTION CO. PVT. LTD. (IN DBIT APPEAL NO. 534/2008 DATED 06/12/2016) SHRI SHYAM SUNDAR KHANDELWAL VS. DCIT (IN ITA NO. 307/JP/2018) DATED 11.04.2019. 5. ON THE OTHER HAND THE LD. D/R HAS SUBMITTED THAT THE LEVY OF PENALTY UNDER SECTION 271AAB IS MANDATORY IN NATURE AND THEREFOR E THE AO IS NOT REQUIRED TO SPECIFY THE CLAUSE AS PER SUB-SECTION (1) OF SECTIO N 271AAB OF THE ACT IN THE SHOW CAUSE. HE HAS REFERRED TO THE EXPLANATORY NOTE OF FINANCE BILL 2012 WHEREBY THE PROVISIONS OF SECTION 271AAB IS INSERTED IN THE STA TUTE AND SUBMITTED THAT THE LEGISLATURE HAS MADE IT CLEAR THAT THE PENALTY UNDE R SECTION 271AAB IS MANDATORY IN NATURE. THE LD. D/R HAS SUBMITTED THAT THE ASSESSE E WAS VERY WELL AWARE ABOUT THE DEFAULT AND THE NATURE OF INCOME HE HAS DISCLOSED A ND SURRENDERED DURING THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE IT A CT. THE SURRENDER IN QUESTION WAS MADE BECAUSE THE ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCE OF THE INVESTMENT IN QUESTION. IT IS A CLEAR CASE OF UNDISCLOSED INCO ME DETECTED DURING THE COURSE OF SEARCH AND SEIZURE ACTION AND THEREFORE THE SURRE NDER MADE BY THE ASSESSEE HIMSELF IS SELF-EXPLANATORY TO THE NATURE OF INCOME SURRENDERED BY THE ASSESSEE. THE LD. D/R HAS CONTENDED THAT THE ASSESSEE HAS PAR TICIPATED IN THE PENALTY PROCEEDINGS AND HAS NOT RAISED ANY OBJECTION OR HAS DEMANDED BEFORE THE AO ABOUT HIS UNAWARENESS OF THE NATURE OF DEFAULT ATTRACTING THE LEVY OF PENALTY UNDER SECTION 7 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. 271AAB. IT IS NOT THE CASE OF THE ASSESSEE THAT THE DISCLOSURE WAS TAKEN UNDER COERCION AND FURTHER THE ASSESSEE HAS OFFERED THE S AID AMOUNT TO TAX IN THE RETURN OF INCOME WHICH RULES OUT THE SCOPE OF ANY PRESSURE OR COERCION BY THE SEARCH TEAM FOR TAKING DISCLOSURE FROM THE ASSESSEE. THUS THE OBJE CTION RAISED BY THE ASSESSEE THAT THE AO HAS NOT SPECIFIED THE CLAUSE UNDER SECTION 2 71AAB(1) OF THE ACT HAS NO MERIT WHEN THE ASSESSEE HIMSELF HAS EXPLAINED THE NATURE OF INCOME DISCLOSED AND SURRENDERED AND ALSO PAID THE TAX ON THE SAME. THE LD. D/R HAS SUBMITTED THAT AS PER THE EXPLANATORY NOTE OF FINANCE BILL 2012 THE PROVISIONS OF SECTION 271AAB ARE MANDATORY IN NATURE AND THE AO HAS NO DISCRETION BU T THE ASSESSEE SHALL PAY THE PENALTY IN ADDITION TO THE TAX ON THE UNDISCLOSED I NCOME SURRENDERED UNDER SECTION 132(4) OF THE ACT. HE HAS RELIED UPON THE ORDERS O F THE AUTHORITIES BELOW. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS CHALLENGED THE VALIDITY O F INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271AAB OF THE ACT ON THE GROUND THAT IN THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271AAB THE AO H AS NOT SPECIFIED THE DEFAULT OF THE ASSESSEE AND THE LIMB UNDER WHICH THE PENALTY W AS PROPOSED TO BE LEVIED. FOR READY REFERENCE THE SHOW CAUSE NOTICES DATED 15.12 .2016 AND 10.03.2017 ISSUED BY THE AO ARE REPRODUCED AS UNDER :- 8 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. 9 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. NOTICE UNDER SECTION 274 READ WITH SECTION 271 READ WITH SECTION 271AAB OF THE INCOME TAX ACT 1961. NO. DCIT/CC-3/JPR/PENALTY/2016-17/ DATE : 10-03- 2017. TO WHEREAS IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE AY 2015-16 PENALTY PROCEEDINGS WERE INITIATED U/S 274 AND 275 READ WITH THE SECTION U/S 271AAB OF THE IT ACT AND A PENALTY NOTICE WAS ISSUED ACCORDINGLY. YOU ARE HEREBY ALLOWED FURTHER OPPORTUNITY OF BEING HEARD AND TO SHOW CAUSE WHY AN ORDER IMPOSING PENALTY ON YOU SHOULD NOT BE MADE U/S 271AAB OF THE INCOME TAX ACT 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD I N PERSON OR THROUGH AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WR ITING ON OR BEFORE THE DATE FIXED FOR HEARING ON 20.03.2017 AT 11.00 A M WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER (S) IS/ARE MADE. SD/- ( KAJAL SINGH ) DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-3 JAIPUR. THUS IT IS CLEAR THAT THE AO HAS EVEN NOT MENTIONED IN THE SHOW CAUSE NOTICE WHAT IS THE DEFAULT OF THE ASSESSEE AND WHAT WAS THE UNDISC LOSED INCOME AGAINST WHICH THE PENALTY WAS PROPOSED TO BE LEVIED. THE COORDINATE B ENCH OF THIS TRIBUNAL IN CASE OF SHRI SHYAM SUNDAR KHANDELWAL VS. DCIT (SUPRA) HAS C ONSIDERED AN IDENTICAL ISSUE IN PARA 5.1 AS UNDER :- 5.1. THE SECOND LIMB OF CHALLENGING THE VALIDITY O F INITIATION OF PENALTY PROCEEDINGS FOR NOT SPECIFYING THE GROUND A ND DEFAULT IN THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 274 HAS BEEN CONSIDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE O F RAVI MATHUR VS. DCIT (SUPRA) IN PARA IN PARA 7 AS UNDER :- 10 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. 7. AS REGARDS THE VALIDITY OF NOTICE UNDER SECTION 274 FOR WANT OF SPECIFYING THE GROUND AND DEFAULT WE FIND THAT WHEN THE BASIC CONDITION OF THE UNDISCLOSED INCOME NOT R ECORDED IN THE BOOKS OF ACCOUNTS DOES NOT EXISTS THEN THE SAM E HAS TO BE SPECIFIED BY THE AO IN THE SHOW CAUSE NOTICE AND FU RTHER THE AO IS REQUIRED TO GIVE A FINDING WHILE IMPOSING THE PE NALTY UNDER SECTION 271AAB. EVEN IF THE AO IS SATISFIED AND CO ME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT RECORDED THE UNDISCLOSED INCOME IN THE BOOKS OF ACCOUNTS OR IN THE OTHER DO CUMENTS / RECORD MAINTAINED IN NORMAL COURSE RELATING TO SPECIFIED PREVIOUS YEAR THE SHOW CAUSE NOTICE SHALL ALS O SPECIFY THE DEFAULT COMMITTED BY THE ASSESSEE TO ATTRACT THE PENALTY @ 10% OR 20% OR 30% OF THE UNDISCLOSED INCOME. THER E IS NO DISPUTE THAT THE AO HAS NOT SPECIFIED THE DEFAULT A ND CHARGE AGAINST THE ASSESSEE WHICH NECESSITATED THE LEVY OF PENALTY UNDER SECTION 271AAB OF THE ACT. CONSEQUENTLY THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO EXPLAIN HIS CASE FO R SPECIFIC DEFAULT ATTRACTING THE LEVY OF PENALTY IN TERMS OF CLAUSES (A) TO (C) OF SECTION 271AAB(1) OF THE ACT. THE CHANNAI B ENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. SHRI R. ELANGOVAN (SUPRA) AT PAGES 7 TO 10 HAS HELD AS UNDER :- IT IS CLEAR FROM THE SUB SECTION (3) OF SECTION 271 AAB THAT SECTIONS 274 AND SECTION 275 OF THE ACT SHALL SO FAR AS MAY BE APPLY. SUB SECTION (1) OF SECTION 274 OF THE ACT MANDATES THAT ORDER IMPOSING PENALTY HAS TO BE IMPOSED ONLY AFTER HEARING THE ASSESSEE OR GIVING A ASSESSEE OPPORTUNITY OF HEARING. OPPORTUNITY THAT IS TO BE GIVEN TO THE ASS ESSEE SHOULD BE A MEANINGFUL ONE AND NOT A FARCE. NOTICE ISSUED TO TH E ASSESSEE REPRODUCED (SUPRA) DOES NOT SHOW WHETHER PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR HAVING UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAB OF THE ACT. NOTICE IN OUR OPINION WAS VAGUE. HONBLE KARNA TAKA HIGH COURT IN THE 11 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. CASE OF SSAS EMERALD MEADOWS (SUPRA) RELYING IN IT S OWN JUDGMENT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPR A) HAD HELD AS UNDER:- 2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWI NG SUBSTANTIAL QUESTIONS OF LAW: (1) WHETHER OMISSION IF ASSESSING OFFICER TO EXPLICITL Y MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISH ING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF I NCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HA D CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE P ENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) IS BAD IN LAW AN D INVALID DESPITE THE AMENDMENT OF SECTION 271(1B) WITH RETRO SPECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT THE ASSESSIN G OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECORDING THE SAT ISFACTION FOR THE SAME? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAI NST THE REVENUE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WIT HOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSI NG OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 (FOR SHORT T HE ACT) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E. WHETHER FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME. THE TRIBUNAL WHILE ALLOWING THE APPEAL OF THE ASSESSEE HAS RELI ED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE O F CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT WE ARE OF THE OPINION NO SUBSTANTIA L QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE AP PEAL IS ACCORDINGLY DISMISSED. IN THE EARLIER CASE OF MANJUNATHA COTTON AND GINNIN G FACTORY (SUPRA) THEIR LORDSHIP HAD OBSERVED AS UNDER:- NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIF ICALLY 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 INCOM E. SENDING PRINTED FORM 12 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. WHERE ALL THE GROUNDS MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQUIREMENT OF LAW ; THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS T O MEET SPECIFICALLY. OTHERWISE THE PRINCIPLES OF NATURAL JUSTICE ARE OF FENDED. ON THE BASIS OF SUCH PROCEEDINGS NO PENALTY COULD BE IMPOSED ON TH E ASSESSEE ; ) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW ; PENALTY PROCEEDINGS AR E DISTINCT FROM THE ASSESSMENT PROCEEDINGS : THOUGH PROCEEDINGS FOR IMP OSITION OF PENALTY EMANATE FROM PROCEEDINGS OF ASSESSMENT THEY ARE IN DEPENDENT AND A SEPARATE ASPECT OF THE PROCEEDINGS ; THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS IN SO FAR AS CONCEALMENT OF INCOME AND FURNISHING OF INCORREC T PARTICULARS WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE PROCEEDINGS ON THE MERITS. HOWEVER THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PE NALTY IS LEVIED CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE A SSESSMENT OR REASSESSMENT CANNOT BE DECLARED INVALID IN THE PENA LTY PROCEEDINGS. VIEW TAKEN BY THE HONBLE KARNATAKA HIGH COURT IN T HE ABOVE JUDGMENT WAS INDIRECTLY AFFIRMED BY THE HONBLE APEX COURT WHEN IT DISMISSED AN SLP FILED BY THE REVENUE AGAINST THE JUDGMENT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) SPECIFICALLY OBSERVING THAT THERE WAS NO M ERITS IN THE PETITION FILED BY THE REVENUE. CONSIDERING THE ABOVE CITED JUDGMEN TS WE HOLD THAT THE NOTICE ISSUED U/S.274 R.W.S. 271AAB OF THE ACT REP RODUCED BY US AT PARA 5 ABOVE WAS NOT VALID. EX-CONSEQUENTI THE PENALTY OR DER IS SET ASIDE. 6. SINCE WE HAVE SET ASIDE THE PENALTY ORDER FOR TH E IMPUGNED ASSESSMENT YEAR THE APPEAL FILED BY THE REVENUE HAS BECOME IN FRUCTUOUS. IN VIEW OF THE DECISION OF THE CHENNAI BENCH (SUPRA ) THE SHOW CAUSE NOTICE ISSUED BY THE AO IN THE CASE OF THE ASSESSEE IS NOT SUSTAINABLE. WE FURTHER NOTE THAT IN THE CASE IN HAND THE AO IN THE SHOW CAUSE NOTICE HAS NEITHER SPECIFIED THE GROUNDS AND DEFAULT ON TH E PART OF THE ASSESSEE NOR EVEN SPECIFIED THE UNDISCLOSED INCOME ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED. FOR READY REFERENCE WE REPRODUCE THE SH OW CAUSE NOTICES ISSUED BY THE AO UNDER SECTION 274 READ WITH SECTION 271AA B ON 23 RD DECEMBER 2016 AND 15 TH MAY 2017 AS UNDER :- 13 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. NOTICE UNDER SECTION 274 READ WITH SECTION 271 READ WITH SECTION 271AAB OF THE INCOME TAX ACT 1961. DATED : 23.12.2016. TO M/S. SHRI SHYAM SUNDER KHANDELWAL 1839 BARAH GANGORE KA RASTA JOHRI BAZAR JAIPUR. PAN-ADRPK 5862 C WHEREAS IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE AY 2015-16 PENALTY PROCEEDINGS WERE INITIATED U/S 274 AND 275 READ WITH THE SECTION U/S 271AAB OF THE IT ACT AND A PENALTY NOTICE WAS ISSUE D ACCORDINGLY. YOU ARE HEREBY ALLOWED FURTHER OPPORTUNITY OF BEING HEARD AND TO SHOW CAUSE WHY AN ORDER IMPOSING PENALTY ON YOU SHO ULD NOT BE MADE U/S 271AAB OF THE INCOME TAX ACT 1961. IF YOU DO NOT W ISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUG H AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE DATE FIXED FOR HEARING ON 19.01.2017 AT 11.00 AM WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER (S) IS/ARE MADE. SD/- ( KAMLESH KUMAR MEENA ) DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-2 JAIPUR. NOTICE UNDER SECTION 274 READ WITH SECTION 271 READ WITH SECTION 271AAB OF THE INCOME TAX ACT 1961. DATE : 15-05-2017. TO NAME M/S/SHRI/SMT. SHYAM SUNDER KHANDELWAL ADDRESS 1839 RASTA BARAH GANGORE JOHARI BAZAR JAIPUR. PAN ADRPK 5862 C WHEREAS IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE AY 2015-16 PENALTY PROCEEDINGS WERE INITIATED U/S 274 AND 275 READ WITH THE SECTION U/S 271AAB OF THE IT ACT AND A PENALTY NOTICE WAS ISSUE D ACCORDINGLY. YOU ARE HEREBY ALLOWED FURTHER OPPORTUNITY OF BEING HEARD AND TO SHOW CAUSE WHY AN ORDER IMPOSING PENALTY ON YOU SHO ULD NOT BE MADE U/S 271AAB OF THE INCOME TAX ACT 1961. IF YOU DO NOT W ISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUG H AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE DATE FIXED 14 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. FOR HEARING ON 25.05.2017 AT 11.00 AM WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER (S) IS/ARE MADE. SD/- ( KAMLESH KUMAR MEENA ) DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-2 JAIPUR. THUS IT IS CLEAR THAT BOTH THE SHOW CAUSE NOTICES I SSUED BY THE AO FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271 AAB ARE VERY VAGUE AND SILENT ABOUT THE DEFAULT OF THE ASSESSEE AND FURTHE R THE AMOUNT OF UNDISCLOSED INCOME ON WHICH THE PENALTY WAS PROPOSE D TO BE LEVIED. EVEN THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF SH EVATA CONSTRUCTION CO. PVT. LTD IN DBIT APPEAL NO. 534/2008 DATED 06.12.2016 HA S CONCURRED WITH THE VIEW TAKEN BY HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KARNATAKA) W HICH WAS SUBSEQUENTLY UPHELD BY THE HONBLE SUPREME COURT BY DISMISSING T HE SLP FILED BY THE REVENUE IN THE CASE OF CIT VS. SSAS EMERALD MEADOW S 242 TAXMAN 180 (SC). ACCORDINGLY FOLLOWING THE DECISION OF THE C OORDINATE BENCH AS WELL AS HONBLE JURISDICTIONAL HIGH COURT THIS ISSUE IS DE CIDED IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE INITIATION OF PENALTY IS NOT VALID AND CONSEQUENTLY THE ORDER PASSED UNDER SECTION 271AAB IS NOT SUSTAINABLE AND LIABLE TO BE QUASHED. THUS IN VIEW OF THE DECISION OF THE COORDINATE BENC H AS WELL AS VARIOUS OTHER JUDGMENTS INCLUDING THE JUDGMENT OF HONBLE JURISDI CTIONAL HIGH COURT IN CASE OF SEVETA CONSTRUCTIONS CO. PVT. LTD. (SUPRA) AND THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & G INNING FACTORY LTD. (SUPRA) I HOLD THAT THE INITIATION OF PENALTY PROCEEDINGS UND ER SECTION 271AAB WITHOUT SPECIFYING THE DEFAULT AS WELL AS THE PARTICULAR CL AUSE OF SECTION 271AB(1) UNDER WHICH THE PENALTY WAS PROPOSED TO BE LEVIED THE SA ME IS VERY VAGUE AND SILENT NOT MAKING THE ASSESSEE KNOWN ABOUT THE CHARGE ATTRACTI NG THE PENALTY UNDER SECTION 15 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA. 271AB OF THE ACT. HENCE THE INITIATION OF PENALTY P ROCEEDINGS IS NOT VALID AND CONSEQUENTLY THE PENALTY ORDER PASSED UNDER SECTION 271AAB IS LIABLE TO BE QUASHED. 7. SINCE THE PENALTY ORDER IS QUASHED BEING NOT VAL ID THEREFORE THE OTHER GROUNDS RAISED BY THE ASSESSEE BECOME INFRUCTUOUS A ND I DO NOT PROPOSE TO TAKE UP FOR ADJUDICATION. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 06/11/20 19. SD/- ( FOT; IKY JKWO (VIJAY PAL RAO) U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 06/11/2019. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI MOHAN DAS GHATIWALA KOTA. 2. THE RESPONDENT THE DCIT CENTRAL CIRCLE-3 JAI PUR. 3. THE CIT(A). 4. THE CIT 5. THE DR ITAT JAIPUR 6. GUARD FILE (ITA NO. 844/JP/2018) VKNS'KKUQLKJ@ BY ORDER LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 16 ITA NO. 844/JP/2018 SHRI MOHAN DAS GHATIWALA KOTA.