TaxTMI 
TaxTMI 
2024 (10) TMI 171
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....ioner of Income-tax (Appeals) and also the learned AO is bad both in law and on facts. 3. For that the order of the learned Commissioner of Income Tax (Appeal) and also the learned Assessing Officer. Is based on presumption, surmises and conjectures." 03. Assessee has further raised additional grounds: - i. That the penalty u/s 271(1)(c) of the Act cannot be levied without recording satisfaction and mentioning specific direction of Income Tax Settlement Commissioner (ITSC). ii. That the quantum appeal is admitted is admitted by the higher authority, it means that the issue is debatable and therefore, penalty u/s 271(1)(c) of the Act cannot be levied. iii. Ld. CIT (A) erred in enhancing the penalty without issuing show cause. 04. So far as in ITA Nos.54 & 55/PAT/2021 are concerned, the assessee has raised common grounds for A.Y. 2011-12 and 2012-13 against levy of penalty u/s 271AAA of the Act and the same reads as under: - "1. For that the grounds of appeal hereto are without prejudice to each other. 2. For that the order of the learned Commissioner of Income Tax (Appeal) and also the learned assessing officer is bad both in law and on facts. 3. For that the order o....
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....an application before the ld. ITSC on 5th June, 2014, for A.Y. 2006-07 to A.Y. 2012-13 but the applications were not allowed to proceed on account of short payment of tax and interest. 06. Subsequently, assessee again filed fresh application on 26th June, 2014, before the ITSC (IT & WST) Additional Bench, Kolkata for A.Ys. 2006-07 to 2014-15 (nine Assessment Years) and the same was admitted and the ld. ITSC passed the order u/s 245D (4) of the Act on 31st December, 2015. After passing the order of ld. ITSC, the demand was raised but the assessee failed to make the payment of total demand. As a result of which, ld. ITSC withdrawn immunity granted to the assessee vide order dated 31st December, 2015. The outstanding amount which remained payable by the assessee in compliance to the order of the ld. ITSC order for A.Y. 2006-07 to 2014-15 amounted to Rs. 2,74,40,648/-. When the ld. ITSC withdraw the immunity granted to the assessee, the assessee filed a Writ Petition before the Hon'ble High Court and on the date of hearing i.e. 25th August, 2021, the ld. counsel for the assessee stated that there was bonafide reason which prevented the assessee from making the payment and that the....
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....ut no such exercise has been carried out. He also submitted that when the order of ITSC is invoked and demands have been recovered against tax liability calculated then how can the penalty to be imposed to the assessee. Alternative submission was also made and when the issue is debatable then the penalty cannot be levied. He also submitted that the action of ld. CIT (A) of enhancing the penalty to 300% is illegal, bad in law and violation of principle of natural justice as no show cause notice was issued to the assessee. 09. The brief synopsis filed by the ld. counsel for the assessee against the levy of penalty u/s 271(1)(c) of the Act is reproduced below: - Appeal against order u/s 271(1)(c) of Income tax Act, 1961 communicated vide DIN & Order No. ITA 56 /PAT/2021 in the case of M/S Patliputra Builders LTD. (2013-14). (ΡΑΝ: AACCP06293) Dates Particulars of events 29.07.2011 Search and seizure operation was conducted on the business and residential premises of the appellant and his family members. No statement was recorded during the search proceeding or after. 31.12.2015 The appellant moved before Hon'ble Settlement Commission and the Hon'ble ITS....
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....vaita Estate Development Pvt. Ltd. (Bombay High Court) Ajaybhai I Gogia Vs. ITO (ITAT Rajkot) Enhancement of amount @300% by the CIT(A) without issuing show cause notice is unjustified In this present case the Ld. CIT(A) has enhanced the penalty leviable @ 300% without issuing any show cause notice to the assessee which is unjustified and bad in law. The Ld. CIT(A) in the entire appeal order nowhere mentioned that the show notice was issued as mandated by the Section 251(2) of the Income tax Act, before enhancing the penalty leviable @ 300%. The assessee has relied upon following case laws: Meetu Bansal Vs. DCIT (Uttarakhand High Court) Syed Maqsoodulla Vs. ITO (ITAT Bangalore) Syed Maqsoodulla Vs ITO (ITAT Bangalore) of CIT vs. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 (SC) 010. As regards the penalty u/s 271AAA of the Act, he submitted that the preliminary requirement for invoking penalty u/s 271AAA of the Act is basis of the statement recorded during the course of search u/s 132(4) of the Act. However, in the case of the assessee no such statement was recorded and in support to that an affidavit has been filed by the Director of the assessee company and there....
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....gned. If the Ld. Has not mentioned about the statement recorded u/s 132(4) before imposing penalty u/s 271AAA the Ld. CIT(A) must mention about it in the appeal order. No statement was recorded during search and date of the statement recorded in not mentioned in the order. Enquiry was also no conducted in our case. In absence of statement enquiry is not possible. On that reason the Ld. AO has not conducted enquiry. Hence, in absence of both the mandatory ingredient penalty u/s 271AAA is not sustainable. The assessee has relied upon the following case law: Pr.CIT vs. M/s. Emirates Technologies Pvt. Ltd. (ITA No. 400/2017) order dated 18.07.2017 CIT vs. Mahendra C Shah reported as 299 ITR 305 (GJ) PCIT vs. Mukeshbhai Ramanlal Prajapati 398 ITR 0170(GJ) Page no.8 011. On the other hand, the ld. DR vehemently argued supporting the order of the ld. lower authorities and submitted that since the assessee did not follow the direction of ld. ITSC by way of making payment within the scheduled time the immunity granted by ld. ITSC stood withdrawn and the penal provisions became applicable and the impugned penalties have rightly been levied. 012. We have heard the rival contentions and per....
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....against the assessee that the order of ld. ITSC u/s 245D (4) of the Act has been obtained by the assessee by any fraud or misrepresentation of facts as provided u/s 245D (6) of the Act. We also notice that when the assessee is unable to make payments in accordance with the order of ld. ITSC Section 245D(6A) of the Act comes into action and the same reads as under: - "Section 245D(6A) in The Income Tax Act, 1961 (6A) Where any tax payable in pursuance of an order under sub-section (4) is not paid by the assessee within thirty-five days of the receipt of a copy of the order by him, then, whether or not the Settlement Commission has extended the time for payment of such tax or has allowed payment thereof by instalments, the assessee shall be liable to pay simple interest at one and one-fourth per cent for every month or part of a month on the amount remaining unpaid from the date of expiry of the period of thirty-five days aforesaid." 016. Now, going through the above provision by Sub-Section 245D(6A) of the Act, we find that there is no mention about levy of penalty on an assessee if the tax is not paid within time limit. Further, the assessee has gone before the Hon'ble Juri....
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....is family members including their business concerns, namely M/s Patliputra Builders Ltd., M/s Patliputra Shoppers Plaza Pvt. Ltd. and other group companies. M/s Patliputra Builders Ltd. and its sister concerns are mainly engaged in the business of real estate, retail chain, entertainment and hospitality. Notice u/s 153A of the Income- tax Act, 1961 was issued on 08/02/2013 for filing of return of Income. However, the assessee filed settlement application before Hon'ble Settlement Commission, (IT & WT), Additional Bench, Kolkata on 05/06/2014 for A.Y. 2006-07 to 2012-13 (7 assessment years). However, the applications were not allowed to be proceeded with on account of short payment of tax and interest. Subsequently, the assessee filed fresh settlement application on 26/06/2014 before the Settlement Commission, (IT & WT), Additional Bench, Kolkata for A.Ys. 2006-07 to 2014-15 (9 assessment years). Subsequently, the Hon'ble Settlement Commission, (IT & WT), Additional Bench, Kolkata had passed the order u/s 245D (4) on 31/12/2015. After receiving the Settlement order, the effect to the order was given and demand raised Rs 2,13,63,076/-. The demand notice u/s 156 was issued....
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....)(c). Therefore, keeping in view facts of the case, I have left with no other option but to impose penalty u/s 271(1)(c) of the Income-tax Act, 1961 for concealment. Hence, penalty, as calculated below is being levied on this issue. Calculation of Penalty: (i) Income determined by Hon'ble Settlement Commission Rs. 6,56,65,495/- (ii) Returned income Rs. 96,03,759/- (iii) Tax on (i) above including surcharge Rs. 2,23,19,702/- (iv) Tax on (ii) above including surcharge Rs. 29,67,562/- (v) Undisclosed income declared by the assessee and further amount determined by the Hon'ble ITSC for A.Y. 2009-10 =Rs. 5,60,61,736/- (vi) Tax sought to be evaded on above (iii - iv) = Rs. 1,93,52,140/- (vii) Minimum penalty leviable @ 100% tax sought to be evaded u/s 271(1)(c) of the Income tax Act. Rs. 1,93,52,140/- (viii) Maximum penalty leviable @300% tax sought to be evaded u/s 271(1)(c) of the Income tax Act. Rs. 5,80,56,420/- In the light of the facts and circumstances discussed in foregoing paras, penalty of Rs. 1,93,52,140/- is hereby imposed u/s 271(1)(c) of the Income-tax Act, 1961. This order is passed with the prior approval of Joint CIT....
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.... and otiose." 020. Madhushree Gupta vs. Union of India [2009] 183 TAXMAN 100 (DELHI)] held as under: - "in this case it was held that "an assessment order should contain at least a direction for initiation of penalty proceedings to constitute satisfaction of the AO for initiation of penalty proceedings under Section 271(1)(c). Even post Section 271(18), still a prima facie satisfaction of Assessing Officer that the case may deserve imposition of penalty should be discernible from order passed during the course of assessment proceedings." 021. In light of the above judgement on the legal ground itself, the assessee deserves to succeed as the penalty proceedings have not been initiated in accordance with law and they are void ab initio. We therefore are of the considered view that assessee deserves to succeed on the legal ground as the penalty proceedings have not been initiated in accordance with provision of Section 271(1)(c) r.w.s. 274 of the Act as neither there is any reference to any assessment order having been passed for the impugned assessments nor there is any reference to any notice issued u/s 274 of the Act which is a mandatory requirement prior to initiation of penal....
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....s found in the course of a search under section 132, which has- (A) not been recorded on or 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 Chief 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; (b)"specified previous year" means the previous year- (i)which has ended before the date of search, but the date of filing 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 said date; or (ii)in which search was conducted.]" 023. Before examining the facts of the case in light of the above provisions, we would first like to note the observation of the l....
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....onvey that our Patliputra Group is one of the reputed names in business community in the State of Bihar. For the past many years we are regular taxpayer and contributed significantly to State exchequer. However in the past few years, the business scenario of Bihar has been gloomy one. especially for real estate sector. Some policy changes of State Govt. have hit us hard and our revenue has been badly affected. As such we are facing lot of hardship in running day to day business affairs due to crunch of funds. Sir, I would like to categorically assure you that we are honest taxpayer of the nation and we always strive for payment of all statutory dues against us. We just want some support from the department in form of some relaxation in time period for payment of demands. Therefore, we request you to kindly grant us time period of at least 60 days, so that we will be able to us." clear all tax dues against us. The reply of the in view of the fact that the assessee is not tenable in view of the fact that the assessee failed to make payment of the demand determined by the Hon'ble ITSC and Hon'ble ITSC has withdrawn immunity granted to the assessee earlier. The assessee is ....
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....71AAA of the Act can be levied. However, in the instant case, the fact placed before us by the ld. Counsel for the Assessee is that no statement of the director of the company was recorded and in support an affidavit has been filed by Mr. Anil Kumar, director of assessee company, stating that during the search proceedings no statement u/s 132(4) of the Act was recorded by the department at any stage. Once it is established that no statement of the Director of the assessee company was recorded u/s 132(4) of the Act, there cannot be any mechanism to proceed with levy of penalty u/s 271AAA of the Act because assessee had no occasion to admit any undisclosed income and specify the manner in which such income has been derived. When the basic condition which are required to be fulfilled prior to visiting the assessee with the penalty u/s 271AAA of the Act are not present, then without being satisfied, the ld. AO cannot proceed to levy penalty u/s 271AAA of the Act. We are thus of the view that the penalty u/s 271AAA of the Act has been wrongly levied by the ld. AO on account of not fulfilling the condition mentioned in Section 271AAA of the. We further find support from the judgement of ....