TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 801
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.... the Act") in relation to assessment year 2011-12. 2. Succinctly, the factual panorama of the case is that the assessee was subjected to search, pursuant to which the return was filed u/s 153A declaring the total income at Rs.1.57 crore. The assessment was completed at total income of Rs.9,65,49,046, making three additions viz., Expenditure incurred out of undisclosed sources amounting to Rs.1.38 crore; Investment out of undisclosed source at Rs.50 lacs; and Investment out of undisclosed source of Rs.6.20 crore. Thereafter, the AO imposed penalty u/s 271AAA of the Act to the tune of Rs.1.45 crore with reference to the above three additions. The assessee went in appeal before the ld. CIT(A), who sustained the penalty on two counts and delet....
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....of Department against this judgment has since been dismissed in PCIT vs. Golden Peace Hotels and Resorts (P.) Ltd. (2021) 437 ITR (9) (ST) (SC). It is manifest from the above enunciation of law that the issuance of a lawful notice u/s 274, clearly setting out the charge for which the penalty is proposed to be levied, is sine qua non, for passing a valid penalty order. Where notice u/s 274 is vague, penalty order gets vitiated. 5. Adverting to the facts of the extant case, we find that the assessee was subjected to search and undisclosed income was determined by the AO. Thereafter, the penalty proceedings were initiated by means of: `Notice under section 274 read with section 271" issued on 30.03.2014. The notice is reproduced as under: "N....
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....ax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorized representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271AAA Sd/- Assistant Commissioner of Income Tax Central Circle 1, Nashik" 6. On going through the above notice, it is vivid that the same was issued u/s 274 r.w.s. 271 of the Act. 7. At this juncture, it is relevant to mention that section 271AAA was inserted by the Finance Act, 2007 w.e.f. 01.04.2007 providing for the imposition of penalty where search has been initiated. This section provides for penalty @ 10% of "undisclosed income" of the specified previous year. The term "....
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.... issued for penalty u/s 271 and not section 271AAA. Sub-section (3) of section 271AAA categorically provides that no penalty under the provisions of section 271(1)(c) of the Act shall be imposed upon the assessee in respect of `undisclosed income" referred to in sub-section (1) of section 271AAA. This shows that albeit there is a bar on imposing penalty u/s 271(1)(c) of the Act anent to the search conducted within the period specified as above, the AO in the present case still went ahead by issuing notice of penalty u/s 274 r.w.s. 271 of the Act. The notice deciphers that not only did the AO invoke wrong section 271 for imposing the penalty u/s 271AAA but also took note of the relevant limbs of section 271(1)(c) of the Act in the context of....
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....ce under wrong section 271 as against 271AAA and also took note of the limbs of clause (c) of the former section, namely, concealing the particular of income or furnishing the inaccurate particulars of income, as against the only correct limb of "undisclosed income" u/s 271AAA. This manifests that the facts of extant case are rather worse vis-à-vis those of Mohd. Farhan A. Shaikh (supra). 11. The ld. DR took assistance from the last para of the notice for bolstering his submission that such notice refers to section 271AAA. In our considered opinion, the view canvassed by the ld. DR is devoid of merits. The last para of the notice has two sentences. The first asks assessee the reasons: "to show cause why an order imposing a penalty o....