TaxTMI 
TaxTMI 
2020 (10) TMI 353
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....e Road, Kolkata - 700 027. Notice u/s 142(1) of the Act was issued to the assessee. In response, the assessee filed a return of income declaring income of Rs. 3,17,25,160/-. Income was declared under the heads 'salary', 'house property' and 'other sources'. The Assessing Officer records at para 4 & 5 of his order as follows:- "4. ............They produced relevant evidences in support of the return of income which were seen and placed on record. 5. It is seen from the computation of total income filed along with the return of income that the assessee during the year under consideration had disclosed an amount of Rs. 3,10,00,000/- as commodity profit which was duly included in the Profit & Loss Account and computation of total income. Penalty proceeding u/s 271AAB of the IT Act, 1961 is initiated separately." 2.1. The assessment was completed u/s 143(3) of the Act, accepting the returned income. Later a notice was issued u/s. 274 r.w.s. 271 of the Act on 31/03/2015 proposing to levy penalty. The notice reads as follows:- "NOTICE SECTION 274 REAP SECTION OF THE J.T. ACT. 1961. P.A.No. AACHM0965N Office of the DCIT, CC. 1(1), Kolkata. AayakarBhav....
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....ctions in the month. c) All these transactions in commodity trading were made in cash. The contentions of the assessee that he would have anyhow disclosed these profits in the return of income for the year, was not accepted, as all the settlements were in cash and the assessee has taken care to remove all audit trails of these transactions and that suppression of profits in commodity training was only detected due to search. He rejected the contention of the assessee that commodity profits were recorded in other documents which would have been disclosed to the Department. 3.2. The ld. CIT(A) relied on the decision of the Hon'ble Allahabad High Court in the case of Pr. CIT, Kanpur vs. Sandeep Chandak (2018) 405 ITR 648, for the proposition that penalty u/s 271AAB of the Act is mandatory where the three conditions as mentioned above are satisfied. He also relied on the decision of the Kolkata Bench of the Tribunal in the case of DCIT, CC-1(1) vs. Gopal Krishna in ITA No. 2224/Kol/2018, order dt. 05/02/2020, and confirmed the penalty. 4. Aggrieved the assessee is in appeal before us. 5. The ld. Counsel for the assessee Shri S.M. Surana, submitted that ....
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.... taken against the assessee. He distinguished the decision of the Hon'ble Allahabad High Court in the case of Sandeep Chandak (supra) and the decision of the ITAT in the case of Gopal Krishna (supra) relied upon by the ld. CIT(A). 6. The ld. D/R, on the other hand, submitted that:- a) Incriminating documents were found during the course of search in the office of Ramkrishna Forgings Ltd., based on which a disclosure was made by Shri Naresh Jalan on 08/02/2017 of commodity profits, which was never intended to be disclosed as income, but for the search. He pointed out that the ld. CIT(A) has recorded that these transactions were done in cash and were not mentioned in any of the regular books of accounts of the assessee. b) That the three conditions mentioned in Section 271AAB of the Act were satisfied, as the assessee made a voluntary disclosure based on incriminating material found during the course of search and had filed his return of income and paid taxes together with interest. On the argument that the notice is vague, he submitted that the assessee has not raised this point before the Assessing Officer and that he understood the notice and to take such argu....
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....hari) Asstt. Commissioner of Income-tax, Central Circle-1, Jaipur. "No. ACIT/CC-1/JPR/2016-17/928 Dated : 16.08.2016. PENALTY NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB OF THE INCOME TAX ACT, 1961. PAN - ABDPP 7196A To, Chand Sh. Padam Pungalia, 2372, MSB Ka Rasta, Johari Bazar, Jaipur. Whereas in the course of assessment proceedings before me for the A.Y. 2014-15, it appears to me that as per sections 274 and 275 read with section 271AAB of the Income-tax Act you are liable for penalty on assessed undisclosed income. You are hereby requested to appear before me at my office Room No. 103 (NA), N.C.R.B., Jaipur at 11.00 A.M. on 25.08.2016 and show cause why an order imposing penalty on you should not be made u/s 271AAB r.w.s. 274 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 reply to show cause in writing on or before the said date which will be considered before any such order is made. Yours faithfully, Sd/- (Devangi Swarnkar) Asstt. Commissioner of Incom....
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....7 to 10 has held as under :- " It is clear from the Sub Section (3) of Section 271 AAB that Sections 274 and Section 275 of the Act shall, so far as may be, apply. Sub Section (1) of Section 274 of the Act mandates that order imposing penalty has to be imposed only after hearing the assessee or giving a assessee opportunity of hearing. Opportunity that is to be given to the assessee should be a meaningful one and not a farce. Notice issued to the assessee reproduced (supra), does not show whether penalty proceedings were initiated for concealment of income or for furnishing inaccurate particulars of income or for having undisclosed income within the meaning of Section 271AAB of the Act. Notice in our opinion was vague. Hon'ble Karnataka High Court in the case of SSA's Emerald Meadows (supra) relying in its own judgment in the case of Manjunatha Cotton and Ginning Factory (supra) had held as under:- ''2. This appeal has been filed raising the following substantial questions of law: (1) Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that fo....
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....ch he has to meet specifically. Otherwise, the principles of natural justice are offended. On the basis of such proceedings, no penalty could be imposed on the assessee ; ) taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law ; penalty proceedings are distinct from the assessment proceedings : though proceedings for imposition of penalty emanate from proceedings of assessment, they are independent and a separate aspect of the proceedings ; The findings recorded in the assessment proceedings in so far as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the proceedings on the merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared invalid in the penalty proceedings''. View taken by the Hon'ble Karnataka High Court in the above judgment was indirectly affirmed by the Hon'ble Apex Court, when it dismissed an SLP filed by the Revenue ag....