TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 100
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....e as return of income was filed on 06.08.2016, therefore, proceedings initiated u/s.263 is illegal, invalid and bad in law. 3. The Pr. Commissioner of Income Tax, Nagpur-2 ought to have considered that the opinion of assessing officer accepting the income shown by verifying the documents submitted by the assessee, therefore, order passed u/s.263 is unjustified, unwarranted and excessive. 4. The Pr. Commissioner of Income Tax, Nagpur-2 ought to have considered that the quantum of penalty u/s.271(1)(c) in the order passed u/s.153A r.w.s.143(3) by the assessing officer which is not erroneous in so far as not prejudicial to the interest of the revenue as income shown by the assessee were not undisclosed income of the assessee and set a site assessment order. Therefore, order passed u/s.263 is unjustified, unwarranted and excessive. 5. The Pr. Commissioner of Income Tax, Nagpur-2 ought to have considered order passed u/s.153A r.w.s 143(3) since all the issues were discussed and considered at the time of original assessment and the assessing officer has made addition of Rs. 20,00,000/- and which was deleted by the CIT(A) vide order CIT(A)-2/10306/2018- 19, again on same issue order....
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....s. On being confronted with the aforesaid statement it was claimed by the assessee that he was deriving income from two streams of business, viz. (i). business of trading in cosmetics under the name and style of M/s Yash Traders; and (ii). business of a real estate agent. Qua the source of the aforesaid amount of cash of Rs. 1.70 crore (supra), it was submitted by the assessee that an amount of Rs. 20 lacs was sourced out of the cash-in-hand that was available with him on 31.03.2016, while for the balance amount of Rs. 1.50 crore was offered by him for tax as his undisclosed income for A.Y 2016-17. 3. In compliance to the Notice u/s 153A of the Act the assessee filed his return of income for assessment year 2016-17 on 06.08.2016, declaring a total income of Rs. 1,49,24,000/- (after claiming deduction under Chapter-VIA of the Act). Assessment was thereafter framed vide order passed u/s. 153A r.w.s 143(3), dated 27.12.2018, wherein the Assessing Officer holding a conviction that the assesseee had failed to substantiate his claim that the amount of Rs. 20 lac (supra) was sourced out of the cash-in-hand available with him on 31.03.2016, thus, added the same as his undisclosed income u....
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....it of the Act, the Pr. CIT held the order passed by him u/s 153A r.w.s 143(3), dated 27.12.2018 as erroneous in so far it was prejudicial to the interest of the revenue under section 263 of the Act and, set-aside the same to his file with a direction to re-assess the income of the assessee on the basis of a speaking order and initiate penalty proceedings as per the mandate of law. 5. The assessee being aggrieved with the order passed by the Pr. CIT u/s. 263 of the Act, dated 27.12.2018 has carried the matter in appeal before us. 6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Admittedly, a perusal of the assessment order passed by the Assessing Officer u/s 153A r.w.s 143(3) of the Act, dated 27.12.2018 for the year under consideration i.e, A.Y 2016-17, reveals, that he had while culminating the assessment initiated penalty proceedings u/s 271(1)(c) of the Act, alleging concealment of income as regards the aforesaid amount of Rs. 1.70 crore....
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....the undisclosed income was derived; and (iii) on or before the specified date- (A) pays the tax, together with interest, if any, in respect of the undisclosed income; and (B) furnishes the return of income for the specified previous year declaring such undisclosed income therein; (b) a sum computed at the rate of twenty per cent of the undisclosed income of the specified previous year, if such assessee- (i) in the course of the search, in a statement under sub-section (4) of section 132, does not admit the undisclosed income; and (ii) on or before the specified date- (A) declares such income in the return of income furnished for the specified previous year; and (B) pays the tax, together with interest, if any, in respect of the undisclosed income; (c) a sum computed at the rate of sixty per cent of the undisclosed income of the specified previous year, if it is not covered by the provisions of clauses (a) and (b). (1A) 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 date on which the Taxation Laws (Second Amendment) Bill, 20....
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.... 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." 9. As is discernible from the aforesaid mandate of law, we find that the penalty proceedings contemplated u/s 271AAB of the Act gets triggered only in a case where search had been initiated u/s.132 of the Act. At this stage, we may herein observe, that in the case of the assessee before us the aforesaid cash of Rs. 1.70 crore (supra) was requisitioned u/s. 132A and thereafter seized by the Department vide Panchanama dated 06.04.2016. However, the Pr. CIT loosing sight of the fact that no search proceedings were initiated u/s 132 of the Act in the case of the assessee, had directed the Assessing Off....
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.... penalty proceedings is supported by the following judicial pronouncements: (i). CIT (Central) Ludhiana Vs. Shri Rakesh Nain Trivedi, ITA No.290 of 2014 dated 29.10.2015 (ii). CIT v. J.K. Da'Costa [1984] 147 ITR (St.) 1 SC) . (iii). Commissioner of Income Tax Vs. Subhash Kumar Jain[2011] 335 ITR 364 (P&H) (iv). CIT Vs. Jagriti Agarwal (2011) 339 ITR 610 (P& H) (v). CIT Vs. Jagtar Singh Chawla, (2013) 215 Taxmann 154 (P& H) In the case of Shri Rakesh Nain Trivedi (supra) the Hon'ble Punjab & Haryana High Court had after exhaustively deliberating on the aforesaid issue under consideration, observed as under: "5. After hearing learned counsel for the parties, we find the issue that arises for consideration of this Court in this appeal is could the CIT in exercise of power under Section 263 of the Act hold the order of the Assessing Officer to be erroneous and prejudicial to the interest of the revenue where the Assessing Officer had failed to initiate penalty proceedings while completing assessment under Section 153A of the Act. 6. It may be noticed that the said issue is no longer res integra. This Court in Commissioner of Income Tax v. Subhash Kumar Jain (2011) 33....
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....essment proceedings and the penalty proceedings; the latter are separate proceedings, that may, in some cases, follow as a consequence of the assessment proceedings. As the Tribunal has pointed out, though it is usual for the ITO to record in the assessment order that penalty proceedings are being initiated, this is more a matter of convenience than of legal requirement. All that the law requires, so far as the penalty proceedings are concerned, is that they should be initiated in the court of the proceedings for assessment. It is sufficient if there is some record somewhere, even apart from the assessment order itself, that the ITO has recorded his satisfaction that the assessed is guilty of concealment or other default for which penalty action is called for. Indeed, in certain cases it is possible for the ITO to issue a penalty notice or initiate penalty proceedings even long before the assessment is completed though the actual penalty order cannot be passed until the assessment finalised. We, therefore, agree with the view taken by the Tribunal that the penalty proceedings do not form part of the assessment proceedings and that the failure of the ITO to record in the assessm....