TaxTMI 
TaxTMI 
2019 (1) TMI 1208
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....confirming the above penalty and not appreciating the fact that the penalty of Rs. 20,000/- could not have been imposed by the assessing officer being the DC IT without seeking prior approval of the Additional / Joint Commissioner of the Income-tax as has been provided u/s 272(2) of the Act which is as under: Section 274 (1) No order... (2) No order imposing a penalty under this Chapter shall be made- (a) by the Income-tax Officer, where the penalty exceeds ten thousand rupees: (b) by the Assistant Commissioner or Deputy Commissioner, where the penalty exceeds twenty thousand rupees. except with the prior approval of the Joint Commissioner Since the assessment order does not show any such approval therefore penalty imposed is illegal and must be deleted. 3. The CIT(A) erred in law and on facts in confirming the penalty ignoring that the offer of this additional income AO accepted was conditional that no penalty would be imposed under the Act on the said amount. 2. The appellant craves the leave to add, substitute, modify, delete or amend all or any ground of appeal either before or at the time of hearing. 3.....
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....ous income of Rs. 51,64,100/-. The Ld. AR submitted that certain documents of the two Pvt. Ltd companies belonging to the assessee's family were found during the search. The documents as detailed in Question nos. 17 to 18 of the statement u/s 132(4) of the Act dated 01/08/2008 were: 1. Application for shares by named corporate-applicants 2. Blank transfer forms by those applicants 3. POA by applicants which were not completely filled 4. Blank receipt for the sale of shares 5. Blank but signed sale bill which is undated 6. Signed but undated delivery note for shares It is important to appreciate that no share certificates against the said blank papers. When questioned, the assessee vide reply 17 informed that "I have no full knowledge of these documents. However, I would like to add that these papers were taken from the seller in good faith with the intentions to buy the same from the sellers. Since the rate of the share and its premium could not be settled therefore, the documents were not filled and remained unfilled." The Ld. AR submitted that unquestionably, nothing can be inferred from these documents. It cannot ....
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....other sum of Rs. 14,00,000/- as unexplained cash found at the time of search which in the second round after the Hon'ble ITAT's order was deleted by the AO himself accepting that this cash belonged to the other entities. Further, penalties were initiated after mentioning as "Initiate penalty u/s 271 (l)(c). Penalty proceeding u/s 271 AAA are also being initiated as the assessee has failed to substantiate the manner in which the surrender income of Rs. 51,64,100/- was earned. Issue necessary forms'. It is submitted that the impugned penalty has been initiated without application of mind and in a mechanical manner. The provisions of 271 AAA are as under: 271 AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007 but before the 1st day of July, 2012, the assessee shall pay by way ofpenalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) Nothing contained in sub-section (1) shall apply if the assessee,- ....
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....as found not entered in the appropriate books of account. The Assessing officer is bound to furnish at least some basis for initiating the penalty. Even the impugned penalty notice is silent as in this notice, section has been reproduced but nothing has been scored off or tick marked. It is well established law that the SCN must indicate precise charge as penalty has civil consequences. It has been held in CIT Vs MANJUNATHA COTTON AND GINNING FACTORY 2013-TIOL-536-HC-KAR-IT that A reading of Section clearly indicates that the assessment order should contain a direction for initiation of penalty proceedings. The meaning of the word direction is of importance. Merely saying that penalty proceedings are being initiated will not satisfy the requirement. The direction to initiate proceedings should be clear and not be ambiguous. It is well settled law that fiscal statutes are to be construed strictly and more so the deeming provisions by way of legal fiction are to be construed more strictly. They have to be interpreted only for the said issue for which it has deemed and the manner in which the deeming has been contemplated to be restricted in the manner sought to be deemed. As the word....
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....a satisfaction. Though the assessment order need not reflect every item, viz., addition or disallowance, yet we have to find out that the order is couched in such a manner and the discussion herein leads towards the opinion of the AO that the assessee had concealed particulars of income or furnishing inaccurate particulars. This has to be discerned from the reading of the assessment order." The Ld. AR further submitted that though this order is in respect of concealment penalty u/s 271(l)(C) of the Act, but legal ratio would equally apply to the section 271 AAA of the Act which is leviable in respect of i) assets ii) entries in books / documents relating to income not entered in regular books and iii) unrecorded expenses. The assessment order and the SCN must indicate prima facie reason for initiating penalty and failure of the AO would lead to cancellation of penalty. The Ld. AR submitted that in the present case, even the penalty order is silent on subject of undisclosed income. The Ld. AR submitted that the Assessing Officer has also not mentioned in the impugned notice that it is a notice u/s 274 r.w.s. 271 AAA of the Act. The assessment order does not show that any approval....
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....tself, to the DDIT (Inv.) and offered to surrender Rs. 51.641 lakhs as his income and asserted that this offer was for buying peace of mind and to avoid the litigation and to cooperate 'on the specific condition that no penalty proceedings and prosecution proceedings' would be initiated. The assessee indicated that Rs. 45 lakhs was paid for purchasing the shares and further, lump sum Rs. 6.641 Lakhs on account of cash in hand, jewellery and any other items without any specific break up / details. The Ld. AR further submitted that the blank share transfer forms were not valuable article or thing. Transfer of shares is complete only when the share certificates along with the transfer form are delivered. Therefore, the blank forms are not covered by 'undisclosed income' as defined in section 271 AAA of the Act. 11. Further, the Ld. AR submitted that though the assessee mentioned 'sum of Rs. 6.641 lakhs on account of cash in hand, jewellery and any other items, but in fact nothing pertains to cash or jewellery. The total jewellery found was valued at Rs. 26,74,710/- and nothing was seized. The notice u/s 142(1) of the Act dated 28/09/2010 was issued by the AO and the query number no....
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....sessee and his associates which shows that the shares issued were acquired for a very low amount. Thus, the disclosure of Rs. 45,00,000/- for purchases of 87,045 equity shares of the face value of Rs. 88,87,450/- is without any basis. It is neither for the full amount of Rs. 95 lakhs nor at the rate of Rs. 2.50 or Rs. 5/- per equity share as per some information found as mentioned above which in that case could only be at the most Rs. 4,35,225/- for 87,045 equity shares. The Revenue accepted the said offer just because the Revenue pressurized the assessee for a surrender of Rs. 55,00,000/- which is clear from the offer letter dated 12/09/2008 where besides 45,00,000/- for the shares, a sum of Rs. 3,35,837.39 (rounded off to Rs. 3,35,900/-) for stocks of his company and Rs. 6,64,100/- miscellaneous income covering cash, jewellery, etc. was mentioned whereas no such undisclosed asset was found. Thus, no specific undisclosed income in terms of the definition u/s 271 AAA of the Act was found during the course of search. The Ld. AR relied upon the decisions of SPS Steel & Power Ltd vs ACIT ITA nos. 1391/KOL/2011 (DoD 30/06/2015) and Abu Mansur Ali vs DCIT 2017-TIOL-587-ITAT- KOL. The Ld....