TaxTMI 
TaxTMI 
2022 (12) TMI 1000
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....the ld. CIT(A) erred in sustaining penalty of Rs. 66,748/- u/s 271AAB of the Act. 3.That on the facts and in the circumstances of the case, the ld. CIT(A) erred in recording various observation in the appellate order are contrary to the provisions of the law and also against the law decided by the Hon'ble Courts. 4.That on the facts and in the circumstances of the case, the ld. CIT(A) erred in erred in not considering the explanation and judicial decisions referred by the appellant. 5. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing. 6. The petitioner prays for justice & relief." 3. The assessee has raised additional ground of appeal :- "That the show cause notice issued u/s 274 r/w 271AAB(i) of the Act, is quite vague and did not at all specify the specific clause of S. 271AAB of the Act under which the penalty was initiated i.e. whether it is for clause (a) or clause (b) or clause(c) of section 271AAB(1) because the conditions for imposing the penalty under each such clauses are separate. The impugned penalty based on such a notice being contrary to the prov....
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.... case because as discussed in the preceding Para in the instant case income of Rs.2,22,492/- in respect of which penalty u/s 271AAB has been levied, falls within the definition of 'undisclosed income' as given in clause (c) of Expl. to S. 271AAB penalty u/s BFA(2). 5.3 Further, levy of penalty by the A.O. under clause (c) of Section 271AAB(1) is also found to be correct as discussed in the following sub paras. 5.31 Section 271AAB, Sub section (1), provides for levy of penalty at three different rates on undisclosed income (as defined in the section) of "specified previous years" (as defined in the section) 10% in cases falling under clause (a) 20% in cases falling under clause (b) and 30% in cases not falling under clause9a) or (b). 5.3.2 For a case to fall under clause (a) or (b), one of the conditions is that taxes alongwith interest. On the undisclosed income admitted during search must be paid on or before the "specified date" and the return of income declaring the undisclosed income is furnished on or before the "specified date". The term "specified date" has been defined in explanation to section 271AAB, as "the due date of furnishing of return of i....
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....w to conclusively ascertain the earning of the undisclosed income beyond any doubt, however, in the assessment proceedings even if the evidence is not conclusive, the income may be assessed. For imposing penalty, the AO must conclusively prove the earning of the undisclosed income. However, in this case, the AO merely alleged but failed to bring any material whatsoever by making independent inquires to support the imposition of the impugned penalty. 1.2It is submitted that impugned penalty u/s 271AAB has been imposed by the AO mainly on account of the so called admission made by the assessee during the course of the search in the statement recorded u/s 132(4) on dated 02.07.2015 (CIT(A) order pg. 3) At the outset it is submitted that a bare reading of S.271AAB goes to show very clearly that it uses the word `may` which implies that the discretion has been conferred upon the AO to decide as to whether a penalty under that provision has to be levied or not and if yes then under which clause. For this purpose, the AO is required to examine the merits of each case and cannot blindly rely upon the fact of income surrendered by the assessee. No undisclosed income at all existed ....
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....etc. viz-a-viz the explanation given by the assessee during the course of the very statement recorded u/s 132(4) itself on 02.07.2015, will make it evidently clear that there was no occasion at all to make any admission of income. In fact, despite there being the source explained, thefigures were stressed to meet with the target of the surrender to be obtained by the search team. A perusal of the statement recorded u/s 132(4) would also give a clear picture that firstly, no incriminating material were found during the search and secondly, the assessee has on, on all occasions, has voluntarily surrendered the income, by simply accepting the figure as stated by the search team in their question. As a matter of fact the assessee herself in reply to question No. 7 (reproduced at Pg. 3 of CIT(A) Order) explained the source of income by stating that out of the cash surrendered during search Rs. 50,000 was withdrawn from the bank account of the assessee and Rs. 1,00,000 was withdrawn by the husband of the assessee. The remaining amount was past saving and amount received gift on various occasions. The authorities below have neither disputed or disapproved the fact by the....
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....e fact whether all the conditions provided under s. 271AAB are satisfied.-Ravi Mathur vs. Dy. CIT (ITA No. 969/Jp/2017, dt. 13th June, 2018) followed." 4.1 Ravi Mathur vs. Dy. CIT in ITA No. 969/JP/2017 dated 13.06.2018 4.2 Dinesh Kumar Agarwal vs. ACIT in ITA Nos. 855 & 856/JP/2017 dated 24.07.2018. 4.3 Raja Ram Maheshwari vs. DCIT in ITA No. 992/JP/2017 dated 10.01.2019. 4.4 M/s. Rambhajo's vs. ACIT in ITA No. 991/JP/2017 dated 11.01.2019. 4.5Rajendra Kumar Gupta vs. DCIT in ITA No. 359/JP/2017 dated 18.01.2019. Cases on other document 4.6 DCIT vs. Subhas Chandra Agarwala& Sons (HUF) [2018] 91 taxmann.com 442 (Kol) it was held as under: "Assessee submitted that it was for first time that he was doing unsystematic speculative activity which earned income and, it was brought under head 'Income from other sources', and so, accordingly, he was not required to maintain books of account as stipulated in section 44AA or section 44AA(2)(ii) - Further, assessee's speculative transactions had been found to be recorded in 'other documents' which were retrieved from assessee's accountant's drawer and b....
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....a perusal of the show cause notice issued u/s 274 r/w S. 271AAB dated 27.12.2017, it is not at all clear as to for what precise charge, the appellant was asked to show cause viz. whether the charge is with regards to clause (a), clause (b) or clause (c). Rather the AO has simply mentioned "deliberately concealed the correct and true income". Thus, he has not specified the default of the assessee in terms of clause (a) to (c) of section 271AAB of the Act. The said impugned SCN is issued in a routine manner without mentioning under which precise clause of S. 271AAB(1) of the Act, the assessee is found liable for penalty. This has left the assessee hanging in confusion, as to on which limb the AO proposes to impose the said penalty and hence, seeking reply. 2. Covered issue: It is submitted that the AO did not appreciate that the different charges specified in the S. 271AAB carry different connotations. Notably, this Hon'ble Bench, when found deficiency in the Show Cause Notice u/s 274 r/w 271AAB to the effect that the AO did not specify the precise default and charge (viz 10% or 20% or 30% of the undisclosed income), repeatedly held that such SCN was deficient and did not me....
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....lty under section 271AAB was proposed to be levied renders the initiation of penalty proceedings invalid and consequently the order passed under section 271AAB of the Act is liable to be quashed...." 2.2 Ashish Kumar Kanodia vs. ACIT (2019) 33 NYPTTJ 445 (JP) holding that "Penalty under s. 271AAB-Undisclosed income for purposes of s. 271AAB- Cash advances recorded in diary found in search-Cash advances given to various persons found noted in a diary recovered in the course of such which were declared as income in the return could not be treated as undisclosed income attracting penalty under s.271AAB" 2.3Arun Kala vs. DCIT (2019) 33 NYPTTJ 756 (JP), held as under: "Penalty under s. 271AAB-Validity-Notice issued without application of mind- Caption of notice not mentioning correct section for levy of penalty, default for which show-cause notice was issued not specified but the pre-typed notice mentioning defaults relating to various provisions initiation of proceedings for penalty under s. 271AAB suffered from various defects not curable in law" 2.4 B. D. Mundra& Sons vs. DCIT in ITA No. 826/JP/2019 dated 25/10/2019 held as under: ....
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....ity and consequently the impugned penalty based thereon, has also been held to be without jurisdiction. On the other hand, however, the time of the completion of the assessment, it is only the initiation by the AO in the assessment order, when the assessee is not called upon to show cause against the very initiation hence, whether the penalty was initiated on one limb or the other or both the limbs, is irrelevant. Otherwise also, no appeal lay against the very initiation. Therefore, the law which is now well settled, is only and only w.r.t the vagueness in the SCN and there is no reference at all to the findings recorded or the initiation of the penalty proceeding in the assessment order. Therefore, to refer the initiation in the assessment order by the authorities to justify the imposition of penalty is complete misreading and misinterpretation of law of the land. Therefore, the impugned penalty deserves to be deleted." 8. We have considered the Written Submission filed by the AR for the assessee and perused the orders of the authorities and the material available on record. The ld. AR for the assessee raised additional ground of appeal before us. The addit....
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.... found during search. Therefore the income of Rs. 2,22,492/- falls within the definition of undisclosed income as given in clause (c) of Explanation to Section-271AAB. 5.2 The argument of the assessee that penalty u/s 271AAB is not mandatory is found to be supported by the judicial authorities cited, and is therefore acceptable in principle, but the said principle does not apply in the facts of the instant case, because, as discussed in the preceding Para, in the instant case, income of Rs. 2,22,492/-, in respect of which penalty u/s 2/1AAB has been levied, falls within the definition of "undisclosed income" as given in clause (c) of Explanation to Section 271AAB penalty u/s BFA(2). 5.3 Further, levy of penalty by the A.O under clause (c) of Section 271AAB(1) is also found to be correct as discussed in the following sub paras. 5.3.1 Section 271AAB, sub section (1), provides for levy of penalty at three different rates on "undisclosed income (as defined in the section) of "specified previous years ("as defined in the section): 10% in cases falling under clause (a), 20% in cases falling under clause (b) and, 30% in cases not falling under clause (a) or (b).....