TaxTMI 
TaxTMI 
2019 (1) TMI 1392
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....sessee raised sole ground in all the cross objections above basing on similar identical facts, therefore, with the consent of both the parties, we proceed to hear cross-objections together taking into consideration the facts and circumstances of the case in C.O. 32/Kol/2017 as base case and pass a common order for the sake of convenience. C.O.No.-32/KOL/2017 [In ITA No.216/KOL/2017] (ASSESSMENT YEAR-2013-14) 3. Heard both parties and perused the material available on record. Brief fats of the facts emanating from the record are that the assessee is in the status of HUF, engaged in the business of mining and trading of iron and other ores. A search and seizure operation was conducted in the residential, office, business premises of the Ghanshyam Misra Group of cases on 16.10.2012 & on subsequent dates at Kolkata, Burdwan & Odisha. Lockers belonging to the various persons of this group were covered u/s 132 of the Act. In the course of search and seizure operation, cash, jewellery, books of accounts, documents & other assets were found and seized. The assessee filed return of income for the year under consideration on 29.09.2013 by declaring a total income of Rs. 2,25,98,700/....
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....osed by him vide disclosure dated 12.11.2012. Considering the submissions of the assessee, the AO proceeded to impose penalty @ 10 % u/s 271AAB(1)(a) of the Act vide his order dated 29.09.2015. The relevant portion of which is reproduced herein below:- "Again, without prejudice to what has been elaborated above, on the issue of whether the amount of Rs. 1.5 crores + Rs. 0.75 crore =Rs.2.25 crores can be treated as undisclosed income u/s. 271AAB, reference is made to explanation (c) of section 271AAB, which states that undisclosed income means, interalia- "i) any income of specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transaction found in the course of a search under section 132, which has .........." In the assessee's case income of Rs. 2.25 cr. of the specified previous year is represented partly, by an amount of cash of Rs. 75,00,000/- found in the course of search under section 132, which has not been recorded on or before the date of search in the books of accounts or other documents maintained in the norma....
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....nsidered the findings given by the AO in the penalty order and submissions made by the AR during the appellate proceeding. I find that the AO has taken the undisclosed income of the assessee found during the search operation u/s 132 (for which evidences, documents/papers, stock, cash etc were found) along with the amount declared suo moto by the assessee (for which no evidence, papers/documents, stock, cash etc were found during the search operation) in order to buy peace of mind and avoid any further litigation. The assessee has brought on record the case law of Dilip N Shroff vs CIT (2007) 291 ITR 519 (SC). In this case law the Hon'ble Supreme Court has held that imposition of penalty is not automatic. Levy of penalty is not only discretionary in nature, but such discretion is required to be exercised on the part of the Assessing Officer keeping the relevant factors in mind. The AR has also brought on record the case of Pubjab Tyres (Pubjab Tyres [1986] 162 ITR 517 (Madhya Pradesh), the Hon'ble High Court of Madbya Pradesh) in which it was held that when surrender is made to purchase peace or for other similar reason, surrender cannot amount to admission, constituting evi....
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....rtains to which specified previous year. In this situation, where nothing is clear from assessee's statement recorded at the time of search, the action of the AO to levy penalty is] s 271AAB( 1)(a) on the amount offered by the assessee suo moto to buy peace of mind, cannot be justified. The Hon'ble Supreme Court has also categorically decided the ratio that penalty cannot be levied on the amount offered by the assessee in order to buy peace of mind [in the case of Sudarshan Silk & Saries (supra)]. Thus, respectfully following the ratio decided by the Hon'ble Supreme Court, the AO is directed to calculate and levy penalty is] s 271AAB(1)(a) on Rs. 75 lakhs only. Accordingly, assessee's appeal on grounds no 1, 2 and 3 are partly allowed." 9. The Ld.AR made two sets of arguments. First is that no charge has been specified in the notice issued u/s 274 r.w.s. 271 of the Act and he argued that the notice is defective for not specifying the charge of penalty and on such defective notice imposition of penalty is not maintainable. 10. Second is, regarding the decision of Hon'ble High Court of Allahabad in the case of Sandip Chandak in ITA No.122/2017, it was argued tha....
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.... opinion of the three-Judge Bench which should prevail. The argument does not appeal. For a start, a judgment may be said to be per incuriam if it is passed in ignorance of any provision of statute or in ignorance of an authority which is binding on the forum but is not noticed. However, when a precedent is noticed and it is interpreted, even if the rule as enunciated in the precedent is read down, it is the rule as interpreted and read down in the later judgment that becomes binding on fora which are inferior to the forum which passes. such judgment. In other words, if a Supreme Court Bench of equal or inferior strength fails to notice a previous judgment of the Supreme Court of similar or greater strength, it may be open to a High Court to regard the later judgment as per incuriam. But when a Supreme Court Bench of equal or lesser strength notices the previous judgment of the Supreme Court of greater or equal strength and interprets the same, it is the interpretation of such judgment in the later decision which becomes binding on High Courts under Article 141 of the Constitution." 12. Ld. AR pointed out an order of Jodhpur Bench in the case of Shankarlal Agarwal & Co., argued ....
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....er section 44AB within specified date was not in issue before the Hon'ble High Court. In the circumstances the above referred observations of the Hon'ble High Court as made on page 165 of the reported judgment may not be the ratio decidendi of the case but only obiter dicta, as has been argued by the Ld. A.R. of the assessee. The contention of the Ld. A.R. of the assessce has further been that the Obiter dicta of the Hon'ble Apex Court of the land may have the binding nature and be operative as precedent but not the Obiter dicta of an Hon'ble High Court and this contention cannot be said to be without force. It has been held by the Hon'ble Calcutta High Court in the case of Mahaliram Ramjeedas. In re, [1938] 6 ITR 265 that the Obiter dicta of High Court did not operate as res-judicata nor was it binding on I.T. authorities. In Goodyear India Ltd. v. State of Haryana [ 1991] 188 ITR 402 (SC), the Hon'ble Supreme Court has held that a judgment is an authority only for what it decides and not for what may remotely or even logically follow. It has also been held therein that a decision even on question not argued cannot be treated as president. In CITv. Sun Engg....
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.... the circumstances the revenue does not get any benefit from the decision of Hon'ble jurisdictional High Court in the case of Abhey Kumar. 14. In view of the discussions made above, we are of the view that prior to amendment of sections 271B & 44AB vide Finance Act, 1995 w.e.f. 1-7-1995, penalty for non-furnishing of audit report required under section 44AB within specified date was not leviable. As such the assessment year under appeal being 1993-94 the penalty under section 271B for non-furnishing of audit report under section 44AB on or before 31-10-1993, the specified date, was not leviable on assessee. 13. Before us, the Ld.DR placed reliance on the decision of Hon'ble High Court of Allahabad in the case of Sandip Chandak supra in ITA No.122/2017. The Ld.DR argued the facts and circumstances of the said case are similar to the present case and the Hon'ble High Court held that the imposition of penalty u/s 271AAB is automatic. He supported the order of AO. 14. Before adverting to the facts and circumstances of the decision above and finding thereon enunciated by the Hon'ble High Courts and Jodhpur Bench, we shall read the provision under section 271AAB of the....
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....271AAB, explains that in a search case the AO may direct the assessee to pay penalty as computed at the rates specified in the clauses (a), (b) & (c) of sub section (1) of 271AAB of the Act and the assessee shall pay penalty in addition to the tax on undisclosed income disclosed by the assessee made at the stage of making statement u/s 132(4) of the Act or during the assessment proceedings. In the present case as discussed above that the assessee in his reply to the AO in assessment proceedings accepted disclosure of Rs. 2,25,00,000/- as its income from undisclosed source, as not recorded in the books u/s 132(4) of the Act. It is also noted that the same has been computed as disclosure u/s 134(2) in the computation of total income in the assessment order. There is no dispute regarding the payment of tax together with interest in respect of such undisclosed income and the specified date of filing return of income. So, therefore, it is clear from the record that the assessee admitted undisclosed income and the statement was recorded u/s 132(4) of the Act to that effect. The assessee also explained the manner of such earning i.e. out of business activities of potato trading, contracti....
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....ut/completed. We have noticed that the penalty notice has been issued under Section 274 read with section 271. Section 274 provides that no order imposing a penalty shall be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. In the instant case the penalty notice issued clearly indicates that the opportunity of being heard is provided to the assessee and therefore, the penalty notices has been issued under Section 274 read with section 271 calling upon the assessee to show cause in writing or in person which fulfill the requirement of Section 274 of the Act. In the present case, the provisions of Section 271AAB are fully applicable as of the conditions so stipulated or attracts as a search has been initiated under Section 132 and during the course of search the statement of the assessee has been recorded under sub section (4) of Section 132, in which the assessees admit undisclosed income and specifies the manner in which such income has been derived. We have gone through the contents of the penalty notice and we find that in the penalty notice, which has been issued under Section 274 read with Section 271, ....
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....the Income Tax Act, 1961 because firstly, the assessee has raised no objection before the AO in this regard. Secondly, last line of the notice clearly mentions section 271AAB. Thirdly, the assessee has given reply to said notice which shows that the assessee fully comprehended the implication of the notice that it is for section 271AAB. The assessee has also challenged that the principles of natural justice has not followed by the AO. The detailed submissions of A.R. in this regard has already been reproduced above. The A.R. did not produce any evidence to show that he was not given proper opportunity of hearing. It is clear from the penalty order that the AO has given penalty notice and which was also replied by the assessee. Therefore, in my opinion, principle of natural justice has not been violated. Thus in view of above discussion penalty imposed by AO u/s 271AAB of the Act is confirmed." Since admittedly, no proceeding under Section 271(1)(c) are initiated by the assessing authority during the course of the assessment proceeding under Section 143(3), the impugned penalty proceedings under Section 271AAB are fully justified and are initiated in accordance wit....
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...., the said appeal was dismissed as withdrawn vide order dated 02.08.2018 being low tax effect because in terms of CBDT Circular No.3/2018, F.No.0279/Misc.142/2007- ITJ(Pt), dated 11July, 2018. Therefore, it is undisputed that there is no appeal challenging the action of the CIT(A) in cancelling the penalty in respect of Rs. 1,50,00,000/-. 19. Before us challenge in respect of confirmation of undisclosed amount by the CIT(A) to the extent of Rs. 75,00,000/- by the assessee. As discussed above and provisions containing u/s 271AAB of the Act, it is justified to hold that Rs. 75,00,000/- is undisclosed amount, that the assessee shall pay penalty u/s 271AAB of the Act @ 10% under clause (a) of sub-section (1) of section 271AAB of the Act for the reasons set out hereunder under:- [1]. Search action u/s 132 of the Income Tax Act, 1961 initiated u/s 132 on or after 01.06.2012; [2]. The assessee has made disclosure of undisclosed income during the course of search action, has paid the tax together with interest and filed return of income; and [3]. The assessee substantiated the manner in which the undisclosed income and in view of the above, the order of CIT(A) is justified, sole Ground ....