TaxTMI 
TaxTMI 
2020 (12) TMI 211
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.... 10% each in the CIT(A)'s lower appellate discussion reading as under: "05. FINDINGS & DECISION: 1. I have carefully considered the submissions of the Ld. AR of the appellant and the observations and findings recorded by the Ld. AO and the factum of the case. In the facts involved in the present case, search action u/s. 132 was conducted on 11.04.2013. In the course of search, certain loose papers & documents were seized which inter alia contained the details of commodity dealings by the appellant. With reference to these loose documents, the appellant admitted before the Investigating authorities that they represented his income aggregating to Rs. 1,49,76,784/- for the relevant previous year and therefore offered the same to tax in the relevant AY 2013-14. In consonance with his statement so recorded u/s. 132(4), the appellant disclosed the income derived from these transactions under the head 'Income from Other Sources' in the return of income filed for the relevant AY 2013-14. The Ld. AO who framed the assessment u/s. 143(3) assessed the income of the appellant as returned by him. The Ld. AO however initiated penalty proceedings u/s. 271AAB of the A....
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....olly 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 transactions found in the course of a search under section 132, which has- (A) not been recorded on or before.... ...Commissioner before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the Principal Chief Commissioner or] Chief Commissioner or Principal Commissioner or Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted.] 4. From the above definition it shall be noted that the Legislature has assigned specific meaning to the term "undisclosed income". The said meaning is not borrowed from Section 68 to 69D of the Act but the term has been specifically defined ....
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.... the Intention to earn profit. The said company is statutorily required to maintain books of accounts under the provisions of Companies Act, 1956 as well as under provisions of Section 44AA of the Income-tax Act, 1961. Undeniably, the loose documents found & seized in the course of search contained entries regarding income which was not found recorded in the regular books of accounts. Further the loose documents contain mere nothings and it cannot be construed as other documents" maintained in regular course of business. In the circumstances such income falls within the scope of Explanation (c) to Sec. 271AAB of the Act. 10. The decisions referred to by the appellant are distinguishable in as much as in those cases the assessees were individuals who were neither maintaining nor were required to maintain books of accounts and the documents found contained entries which did not pertain to the assessee's business but other sources of income. On the peculiar set of the facts involved in that case the Tribunal had found that the loose documents were "other documents" which would enable the assessee as well as the AO to draw up the statement of income and hence did not Const....
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....manner in which such undisclosed income was derived (c) Pays Tax & Interest on such undisclosed income before the specified date (d) Files the ROI for specified previous year declaring such undisclosed income therein 13. In the facts of the present case search operations were conducted on 11.04.2013 and the Director of the appellant in his statement recorded u/s. 132(4) on 12.04.2013 had admitted the undisclosed income during course of search and survey operation. This fact also been admitted by the Ld. AO in the assessment as well as the impugned penalty order. Accordingly condition (a) is satisfied. It is also not in dispute that the appellant has discharged taxes along with interest before the specified date and that such income was disclosed in the return of income filed for the relevant year. In the circumstances even clause (c) & (d) stands satisfied. The only dispute between the appellant and the Ld. AO is regarding clause (b) as according to Ld. AO the appellant did not specify the manner in which such income was derived. I however find that allegation of the Ld. AO to be self-contradictory. By AO's own admission in the assessment order as wel....
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....s. 271AAB(1)(a) stood duly satisfied; has attained finality and therefore the assessee is entitled for relief against the entire penalty sum. And also that the Assessing Officer's penalty show-cause notices; both dated 31.03.2016, nowhere specified the relevant limb under which the same was sought to be imposed i.e. @ 10%, 20% & 30% of the alleged undisclosed income. He accordingly pressed for deleting the impugned penalties in entirety. 5. Mrs. Ranu Biswas, learned senior departmental representative, strongly supported both the lower authorities' action imposing the impugned penalties. She invited our attention to the Assessing Officer's identical satisfaction in both assessment orders dated 28.09.16 that the assessee had failed to substantiate the manner of having actually derived the above-stated undisclosed income and therefore, the impugned penal action has been rightly initiated. 6. We have given our thoughtful consideration to the foregoing rival pleadings. Suffice to say, we note during the course of hearing that the Assessing Officer had initiated the impugned penalty proceedings after alleging the assessee to have failed to substantiate the manner of hav....
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....th March, 2016 and 16th August, 2016 as under:- "No. ACIT/CC-l/JPR/2015-16 Dated : 30.03.2016. PENALTY NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB OF THE INCOME TAX ACT 1961. PAN - ABDPP 7196A To, Sh. Padam Chand 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 AM. on 28.04.2016 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/- (Sushil Kumar Kulhari) Asstt. Commissioner of Income-tax, ....
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.... of notice under section 274 for want of specifying the ground and default, we find that when the basic condition of the undisclosed income not recorded in the books of accounts does not exists, then the same has to be specified by the AO in the show cause notice and further the AO is required to give a finding while imposing the penalty under section 271AAB. Even if the AO is satisfied and come to the conclusion that the assessee has not recorded the undisclosed income in the books of accounts or in the other documents/record maintained in normal course relating to specified previous year, the show cause notice shall also specify the default committed by the assessee to attract the penalty @ 10% or 20% or 30% of the undisclosed income. There is no dispute that the AO has not specified the default and charge against the assessee which necessitated the levy of penalty under section 271AAB of the Act. Consequently, the assessee was not given an opportunity to explain his case for specific default attracting the levy of penalty in terms of clauses (a) to (c) of section 271AAB(1) of the Act. The Chennai Bench of the Tribunal in the case of DCIT vs. Shri R. Elangovan (supra) at pages 7 ....
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.... not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of CIT vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565. 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed''. In the earlier case of Manjunatha Cotton and Ginning Factory (supra) their lordship had observed as under:- ''Notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy the requirement of law; The assessee should know the grounds which he has to meet sp....