TaxTMI 
TaxTMI 
2020 (8) TMI 177
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....u/s. 132 of the IT Act was conducted at various business and residential premises of the assessee group on 23.08.2011. In response of notice u/s. 143 (2), the assessee appeared before the AO from time to time. The AO completed the assessment u/s. 143(3) on 27.02.2015 determining the total income of the assessee at Rs. 2,37,79,490/- wherein he made various additions. Subsequently the AO initiated penalty proceedings u/s. 271 AAA of the Act. Rejecting the various explanation given by the assessee the AO levied penalty of Rs. 15,84,210/- u/s. 271 AAA on the difference in the assessed income and returned on account of the following additions :- SI. No. Particulars Amount (RS.) 3.1 Alleged notional interest on bank balance with HSBC 5,27,098/- 3,2 Notional interest on Promissory Note 93,357/- 3.3 Undisclosed investment in jewellery 55,69,850/- 3.4 Undisclosed expenditure on purchase of watches 7,76,800/- 3.5 Undisclosed Cash 31,00,000/- 3.6 Undisclosed expenditure on purchase of jewellery 35,42,000/- 3.7 Undisclosed investment in Silver 22,33,000/- 4. In appeal the Ld. CIT(A) reduced the penalty of Rs. 15,84,210/- to Rs. 1,05,230/-. 5. Aggrieved with such part ....
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....ye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in levying penalty under section 271 AAA of the Act 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in levying penalty on the addition made by him on account of accrual/interest on deposit in alleged foreign bank account, HSBC Geneva 4. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in levying penalty on the addition of undisclosed investment of Rs. 5,24,600/-on account of purchase of watches. (ii) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the penalty on the investment already taxed in the hands of assessee in AY 2009-10 & AY 2010-11 5. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in confirming the penalty despite the fact that the additions made in the assessment order itself being not sustainable, no penalty under se....
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....ch penalty is initiated there is violation of principle of natural justice. Accordingly, such penalty proceedings are bad in law and have to be quashed. 8. Referring to the decision of Hon'ble Karnataka High Court in the case of CIT Vs. Manjunath Cotton and Ginning Factory reported in 359 ITR 565, he submitted that in absence of non striking of the inappropriate words in the penalty notice, the penalty proceedings were quashed. He submitted that the SLP filed by the revenue against the above decision of Hon'ble Karnataka High Court was dismissed by the Hon'ble Supreme Court in appeal (c) No.-1398/2014 dated 11.07.2016. Similarly the Hon'ble Karnataka High in the case of CIT Vs. SSA's Emerald Meadows vide ITA No.380/15 order dated 23.11.2016 reported in 73 taxman.com 241 has also taken similar view and the SLP filed by the revenue has been dismissed by the Hon'ble Supreme Court vide CC No.11485/2016 dated 05.08.2016. He submitted that even though the above decisions of Hon'ble Karnataka High Court are in respect of penalty u/s. 271 (1) (c) of the Act but the ratio laid down there is equally applicable to penalty u/s. 271 AAA or 271 AAB of the Act which are pari-materia. The Ld. Cou....
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....ders of the AO and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case levied penalty of Rs. 15,84,210/- u/s. 271 AAA of the Act on the various additions which has been reproduced in para No. 3 of this order. We find the Ld. CIT(A) restricted the penalty to Rs. 1,05,230/- being the addition finally sustained by him on account of valuation of the three ladies watches. A perusal of the order of the Tribunal vide ITA No.3367/Del/2016 and C.O. No.124/Del/2018 order dated 13.01.2020 shows that in the appeal filed by the revenue, the Tribunal in the quantum appeal has upheld the order of the CIT(A) in deleting various additions and gave further relief where in the issue of notional interest on HSBC Bank account was set aside to the file of the AO and has given further relief on undisclosed expenditure on purchase of ladies watches. 13. From the above we find that the order of the CIT(A) giving relief to the assessee on various addition except the addition on account of watches has attained finality in view of the dismissal of the appeal filed by the revenue in the quantum app....
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....u should not be made under section 271 of the Income Tax Act, 1961. if you do not wish to avail yourself of this opportunity of being heard in person or through authorized representative you may showcause in writing on or before the said date which considered before any such order Is made under section 271. (Ram Niwas) Asstt. Commissioner of Income Tax Central Circle-30, New Delhi" 16. The provisions of section 271 (1) (c) reads as under :- 271 (1) .... If the [Assessing] Officer or the [***] [Commissioner (Appeals)] [or the [Principal Commissioner or] Commissioner] in the course of any proceedings under this Act, is satisfied that any person- 271 (1) (c) "has concealed the particulars of his income or [***] furnished inaccurate particulars of [such income, or]" 17. Similarly the provisions of section 271 AAA reads 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 July, 2007[but before the 1st day of July 2012], the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a ....