TaxTMI 
TaxTMI 
2022 (12) TMI 1008
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....he seized cash during search. iv. The appellant craves leave to add further grounds of appeal or alter the grounds at the time of haring." 2. Brief facts of the case are that a search and seizure operation was conducted on the premises of assessee on 28.03.2016 and consequence to that the assessee had disclosed a sum of Rs. 79,00,000/-. Subsequently, the assessee was filed his return of income by showing income of Rs. 83,02,410/- including the said undisclosed income of Rs. 79,00,000/- on 31.01.2017. The ld. AO had accepted the return of income filed by the assessee without making any further addition. During the intervening period, the assessee had requested the ld. AO to adjust his tax liability of Rs. 28,34,610/- as per his return with the seized cash of Rs. 36,00,000/- vide his letter dated 26.09.2017. The ld. AO although accepted the return filed by the assessee and assessed the total income at Rs. 83,02,410/- initiated a penalty proceeding u/s 271AAB of the Act and subsequently passed an order dated 27.06.2018 u/s 271AAB of the Act. 3. Aggrieved by the above order dated 27.06.2018, the assessee preferred an appeal before the ld. CIT(A) and appeal of the assessee was dis....
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.... finding made and admission of the appellant was not a voluntary act. Hence, there was conscious concealment or act of concealment of income on the part of the appellant. The appellant has not fulfilled the condition for concessional rate of imposition of penalty u/s 271AAB(1)(a) or 271AA(1)(b) of the Act as he has not paid the tax, together with interest in respect of undisclosed income declared. Thus, it is a fit case for imposition of penalty u/s 271AAB(1)(c). Hence, penalty u/s 271AAB(1)(c) of the Income Tax Act, 1961 of Rs. 23,70,000/- is imposed upon the appellant which is about 30% of the undisclosed income of Rs. 79,00,000/-. The appellant did not give any documentary evidences with regard to payments of tax on undisclosed admitted income. In view of the above, penalty levied by the A.O. amounting to Rs. 23,70,000/- is hereby confirmed and the appeal is dismissed." 4. During the course of hearing, ld. Counsel for the assessee raised the legal ground relying on the judgement of the Hon'ble Apex Court in the case of National Thermal Power Company Limited 229 ITR 383 (SC) challenging the validity of notice issued u/s 274 r.w.s. 271AAB of the Act claiming it to be illegal and....
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....wn the proposition that show cause notice issued u/s 271AAB of the Act is a defective notice and liable to be quashed. 6. Per contra, the ld. departmental representative vehemently argued supporting the orders of the lower authorities and also submitted that the legal issue raised by the assessee is liable to be dismissed since the notice issued u/s 274 of the Act, the ld. AO has specifically mentioned that section 271AAB of the Act and it may have been a clerical error on the part of ld. AO to use the same proforma as used for issuing notice u/s 274 r.w.s. 271(1)(c) of the Act. On merits, the assessee has no case since the alleged addition was surrendered during the course of search, not included in the income tax return and taxes not paid and such undisclosed income has rightly been penalized @ 30% as per the provisions of section 271AAB(c) of the Act. The ld. departmental representative strongly relied on the decision rendered by the authorities below. 7. We have heard the rival contentions and perused the records placed before us. The legal issue before us is that whether the notice issued u/s 274 r.w.s. 271AAB of the Act suffers from fatal error and technical defect thereby ....
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....271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1). (3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in this section. Explanation.-For the purposes of this section,- "specified date" means the due date of furnishing of return of income under subsection (1) of section 139 or the date on which the period specified in the notice issued under section 153A for furnishing of return of income expires, as the case may be; "specified previous year" means the previous year- which has ended before the date of search, but the date of furnishing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the date of search; or (ii) in which search was conducted; (c) "undisclosed income" means- (i) any income of the specified previous year represented, either wholly 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 ....
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....lls under Clause-c of section 271AAB of the Act, why he should not be visited by the penalty @ 30% of the undisclosed income. Against this charge, the assessee should have been given reasonable opportunity of being heard. 9. Now let us revert back to the fact instant case of the assessee and look into what has been mentioned in the alleged notices issued u/s 274 r.w.s. 271AAB of the Act which is reproduced below: NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB OF THE INCOME TAX ACT, 1961 PAN- AKFPP 4837 K OFFICE OF THE DCIT, Cirlce-2, Siliguri Date: 28.12.2017 To Shri Sushil Kumar Paul Milan Mandir Road, Subhash Pally Siliguri-734001. Whereas in the course of proceedings before me for the assessment year 2016-17, it appears to me that you:- Have without reasonable cause failed to furnish me return of income which you were required to furnish by a notice given under section 22(1)/22(2)/34 of the Indian Income Tax Act, 1922 or which you were required to furnish under section 139(1) or by a notice given under section 139(2)/ 148 of the Income-tax Act, 1961, No.............. dated.......... Or have without reasonable cause failed to furnish it within t....
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....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. Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the penalty notice under Section 274 r.w.S. 271(1)(c) is bad in law and invalid despite the amendment of Section 271 (1 B) with retrospective effect and by virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the....
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....he 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 against the judgment in the case of SSA's Emerald Meadows (supra), specifically observing that there was no merits in the petition filed by the Revenue. Considering the above cited judgments, we hold that the notice issued ujs.274 r.w.s. 271AAB of the Act, reproduced by us at para 5 above was not valid. Exconsequenti, the penalty order is set aside. 12. The view taken by the Co-ordinate Bench of Chennai in the case of DCIT vs Rs. Elangovan 1199/CHNY/2017 order dated 05.04.2018 has been subsequently followed by the Co-ordinate Bench of Jaipur in the case of Ravi Mathur vs DCIT, ITA 969/JP/2017 holding that such show cause notice issued u/s 274 r.w.s 271AAB of the Act are not sust....