Penalties deleted by ITAT due to defective notices and lack of proper charges.

The ITAT upheld the deletion of penalties for the assessee in the cases concerning AY 2011-12 and AY 2016-17. The penalties under Section 271AAA for AY 2011-12 and under Section 271AAB(1)(a) for AY 2016-17 were deleted due to defective notices and lack of proper charges, rendering the penalty proceedings void ab initio. The Revenue's appeals were dismissed.

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Issues Involved:
1. Deletion of penalty under Section 271AAA for Assessment Year 2011-12.
2. Deletion of penalty under Section 271AAB(1)(a) for Assessment Year 2016-17.

Detailed Analysis:

Issue 1: Deletion of Penalty under Section 271AAA for Assessment Year 2011-12

Facts:
- The assessee, Kalyan Toll Infrastructure Ltd, was subjected to search operations from 05.05.2011 to 07.05.2011.
- The original return of income for AY 2011-12 was filed electronically on 30.09.2011, including an additional income of Rs. 6,85,96,426/- offered during the search under Section 132(4).
- The Assessing Officer (AO) levied a penalty of Rs. 70,78,640/- under Section 271AAA, alleging that the assessee did not specify and substantiate the manner of deriving such income during the search.

Contentions:
- The assessee argued that the penalty was not applicable as the manner of additional income offered was duly explained.
- The notice issued under Section 274 r.w.s. 271AAA was defective, lacking specific charges.
- No proper opportunity of being heard was provided to the assessee.

Findings:
- The penalty proceedings were initiated without specifying any charge in the assessment order.
- The notice issued was defective, mentioning charges relevant for Section 271(1)(c) instead of Section 271AAA.
- The assessee had disclosed the manner of earning the income, and the additional income was offered as business income, which was accepted by the Department.

Judgment:
- The ITAT upheld the deletion of the penalty, confirming that the notice was defective and not in accordance with law.
- The penalty proceedings were held void ab initio, and the penalty of Rs. 70,78,640/- was deleted.

Issue 2: Deletion of Penalty under Section 271AAB(1)(a) for Assessment Year 2016-17

Facts:
- The assessee, Kalyan Keti Toll Pvt. Ltd, was subjected to search operations on 04.09.2015.
- The return of income for AY 2016-17 was filed on 17.10.2016, declaring total income of Rs. 20,990/- after including income offered under Section 41(1) of Rs. 13,37,84,149/-.
- The AO levied a penalty of Rs. 1,33,78,415/- under Section 271AAB(1)(a), alleging undisclosed income.

Contentions:
- The assessee argued that the penalty notice was defective and did not specify the charge under Section 271AAB.
- The income offered under Section 41(1) was not undisclosed income as it was recorded in the regular books of accounts and disclosed in the return filed under Section 139(1).

Findings:
- The notice issued under Section 274 r.w.s. 271AAB was cryptic and not in accordance with law, referring to charges under Section 271(1)(c).
- The liability was duly recorded in the books of accounts, and the income offered under Section 41(1) was not undisclosed income.
- The penalty proceedings were initiated without mentioning any specific charge under Section 271AAB.

Judgment:
- The ITAT upheld the deletion of the penalty, confirming that the notice was defective and the penalty proceedings were void ab initio.
- On merits, it was held that the income offered under Section 41(1) was not undisclosed income, and the penalty of Rs. 1,33,78,415/- was deleted.

Conclusion:
Both appeals by the Revenue were dismissed. The penalties under Section 271AAA for AY 2011-12 and under Section 271AAB(1)(a) for AY 2016-17 were deleted due to defective notices and lack of proper charges, rendering the penalty proceedings void ab initio.

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