TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tax Appeals Allowed, Penalties Quashed under Section 271(1)(c). Invalid Notices. Immunity under Section 271AAA.</h1> <h3>Shri Ramesh Chand Bansal Versus The DCIT, Central Circle, Ajmer</h3> Shri Ramesh Chand Bansal Versus The DCIT, Central Circle, Ajmer - TMI Issues Involved:1. Legality of penalty proceedings under Section 271(1)(c) read with Explanation 5A.2. Applicability of Section 271AAA versus Section 271(1)(c).3. Validity of the show cause notice issued under Section 274.4. Satisfaction of conditions for immunity under Section 271AAA(2).Detailed Analysis:Issue 1: Legality of Penalty Proceedings under Section 271(1)(c) read with Explanation 5AThe assessee was penalized under Section 271(1)(c) for the Assessment Years 2007-08 to 2010-11 following a search operation on 13.10.2010. The AO imposed penalties based on the additional income disclosed in returns filed under Section 153A. The assessee argued that the penalties were not justified as the additional income was disclosed voluntarily. The CIT(A) upheld the penalties, citing Explanation 5A to Section 271(1)(c), which deems the undisclosed income as concealed if the due date for filing the return under Section 139 has expired and no return was filed.Issue 2: Applicability of Section 271AAA versus Section 271(1)(c)The assessee contended that since the search was conducted after 01.06.2007 but before 01.07.2012, only Section 271AAA could be invoked for imposing penalties. Section 271AAA, introduced to provide amnesty in search cases, overrides other penalty provisions, including Section 271(1)(c). The CIT(A) rejected this argument, but the Tribunal found merit in it, noting that Section 271AAA applies exclusively to searches conducted during the specified period and provides conditions for immunity if fulfilled.Issue 3: Validity of the Show Cause Notice Issued under Section 274The Tribunal found that the show cause notices issued under Section 274 were vague and did not specify whether the penalty was for 'concealment of income' or 'furnishing inaccurate particulars of income.' The notices used the conjunction 'and/or,' which does not meet the legal requirement of clarity. The Karnataka High Court in CIT vs. Manjunatha Cotton & Ginning Factory and subsequent cases emphasized that such vagueness violates principles of natural justice. The Tribunal quashed the notices and the consequential penalties.Issue 4: Satisfaction of Conditions for Immunity under Section 271AAA(2)The assessee argued that all conditions for immunity under Section 271AAA(2) were satisfied: the undisclosed income was admitted in the statement under Section 132(4), the manner of deriving the income was specified, and the tax along with interest was paid. The Tribunal agreed, noting that the AO did not provide any specific question regarding the manner of earning the undisclosed income, and thus, the assessee could not be denied immunity.ConclusionThe Tribunal allowed the appeals, quashing the penalties levied under Section 271(1)(c) for all the assessment years in question. The decision was based on the invalidity of the show cause notices under Section 274 and the applicability of Section 271AAA, which provides immunity if certain conditions are met. The Tribunal emphasized the necessity for clear and specific grounds in penalty notices to satisfy the principles of natural justice.
TaxTMI 