Appeal allowed, penalty quashed under section 271AAB due to defective notice.

The Tribunal allowed the appeal, quashing penalty proceedings under section 271AAB due to a defective notice. The penalty of Rs. 64,22,348/- was deleted as the notice did not specify the charge against the assessee as required by law. The appeal for the Assessment Year 2014-15 was partly allowed, with the grounds on the merits of the penalty being dismissed.

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Issues Involved:
1. Validity of notice issued under section 274 read with section 271AAB of the Income Tax Act.
2. Confirmation of penalty under section 271AAB of the Income Tax Act.

Detailed Analysis:

1. Validity of Notice Issued Under Section 274 r.w.s. 271AAB of the Income Tax Act:

The primary issue raised by the assessee was the validity of the notice issued under section 274 read with section 271AAB of the Income Tax Act. The assessee contended that the notice was defective as it did not specify the charge against the assessee, making it illegal and unsustainable in law. The assessee relied on various judicial pronouncements, including the case of National Thermal Power Company Limited, to argue that the notice lacked the necessary details required under section 271AAB, such as the percentage of penalty and the specific clause under which the penalty was being levied.

The Tribunal observed that the notice issued by the Assessing Officer (AO) did not specify the conditions under section 271AAB, such as the percentage of penalty (10%, 20%, or 30%) and the specific clause (a, b, or c) under which the penalty was being levied. The Tribunal noted that the AO had used a general proforma for issuing the notice, which did not meet the requirements of law. The Tribunal emphasized that the notice should clearly convey the charge against the assessee to provide a reasonable opportunity to defend themselves.

The Tribunal referred to several judicial precedents, including the cases of Shri Vivek Chugh, DCIT vs. R. Elangovan, and Pr. CIT vs. Sandeep Chandak, to support its conclusion that a vague and non-specific notice is invalid. The Tribunal also noted that the Hon'ble Jurisdictional High Court in the case of PCIT vs. Kulwant Singh Bhatia had held that a defective notice under section 274 read with section 271(1)(c) is not sustainable in law.

Based on these observations, the Tribunal concluded that the notice issued to the assessee was defective and invalid, as it did not specify the charge against the assessee under section 271AAB. Consequently, the penalty proceedings initiated based on such a defective notice were quashed.

2. Confirmation of Penalty Under Section 271AAB of the Income Tax Act:

The second issue was the confirmation of the penalty of Rs. 64,22,348/- levied by the AO under section 271AAB of the Income Tax Act. The assessee argued that the penalty was not in accordance with the law and should be deleted. The AO had initiated penalty proceedings under section 271AAB based on the addition of Rs. 6,07,306/- to the assessee's income, which was not surrendered during the search and was subsequently added during the assessment.

The Tribunal noted that since the penalty proceedings were quashed on the preliminary legal ground of a defective notice, there was no need to address the merits of the penalty. The Tribunal emphasized that the defective notice rendered the penalty proceedings invalid, and therefore, the penalty of Rs. 64,22,348/- was deleted.

Conclusion:

The Tribunal allowed the appeal of the assessee on the preliminary legal ground, quashing the penalty proceedings initiated under section 271AAB due to a defective notice. Consequently, the penalty of Rs. 64,22,348/- was deleted. The grounds raised on the merits of the penalty were dismissed as infructuous. The appeal for the Assessment Year 2014-15 was partly allowed.

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