TaxTMI 
TaxTMI 
TaxTMI 
2025 (5) TMI 1772
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....nce, the impugned order is bad in law and is liable to be quashed. 3. That, on the facts and circumstances of the case and in law, the ld CIT(A) has grossly erred in laws in confirming penalty of Rs. 56,55,000/- imposed by the ld AO u/s. 271AAB of the I.T.Act, 1961 without considering the submission of the appellant. Hence, the impugned order is bad in law and is liable to be quashed" 3. Brief facts of the case are that the assessee is a company engaged in the Real Estate business. A search was carried out in the case of the assessee on 2.12.2014 and consequently, this being the year under search, assessment was originally completed u/s 143(3) of the Act on 28.12.2016, wherein, addition of Rs. 1.00 crore was made to the total income of Rs. 1,04,20,240/- declared by the assessee and proceedings u/s. 271AAB of the Act were initiated separately. Thereafter, the case of the assessee was reopened by issuance of notice u/s. 148 of the Act on 8.8.2017 after taking necessary approval from the competent authority and the reassessment order was passed u/s. 147/143(3) of the Act on 31.10.2017, wherein, addition of Rs. 88,50,000/- was further made to the income of the assessee. This has res....
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.... barred by limitation as on date. He thus submit that therefore, no penalty can be leviable u/s. 271AAB of the Act on the addition of Rs. 1 crore in the hands of the assessee initiated vide order u/s. 143(3) of the Act dt.28.12.2016 through penalty order passed u/s. 271AAB against the proceedings initiated in the reassessment order passed u/s. 147 r.w.s 143(3) of the Act. He further submits that assessee has not challenged the order passed u/s. 143(3) dated 28.12.23016 thus as provided in section 275(1)(a) of the Act, the penalty proceedings initiated u/s. 271AAB in the said order must be concluded upto 30.9.2017 i.e. within six months from the end of relevant assessment in which the order initiating such proceedings was completed. Since no order is passed upto 30.9.2017 on such pending proceedings, the said proceedings are now barred by limitation. 5. With regard to penalty of remaining amount of addition of Rs. 88,55,000/- made in the order passed u/s. 147/143(30 of the Act, ld AR submits that at the time of initiation of penalty proceedings, a notice dated 31.10.2017 was issued wherein, the assessee was show caused as to why penalty u/s. 271AAB should not be levied for concealm....
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....ved as under: "The penalty proceedings u/s. 271AAB which were initiated are also retained at the time of this reassessment u/s. 147 of the I.T.Act, 1961" 9. As is evident from the observation of the Assessing Officer, the Assessing officer had tried to merge the penalty proceedings initiated vided order u/s. 143(3) with the penalty proceedings initiated in the re-assessment order passed u/s. 147/143(3) of the Act. Since these two orders are separate calumniated by two separate proceedings i.e. assessment proceedings u/s. 143(3) and second re-assessment proceedings u/s. 147/143(3), wherein, two separate proceedings were initiated for imposition of penalty u/s. 271AAB, therefore, in no circumstances, one single order imposing penalty u/s. 271AAB on the addition made vide two separate orders could be passed. Moreover, the penalty proceedings initiated u/s. 271AAB in the order passed u/s. 143(3) cannot be left undecided without there being any speaking order passed for imposing or dropping the proceedings so initiated. Thus, in the present case as the penalty proceedings were initiated u/s. 271AAB vide order passed u/s. 143(3) of the Act and as such when no order was passed against ....
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....h notice has a fatal error and technically is not a correct notice in the eyes of law because it intends to penalize an assessee without spelling about the charge against the assessee. 11. In the case of DCIT vs R. Elangovan Ltd. (supra), Co-ordinate Bench, Chennai while dealing with the legal ground challenging the validity of notice issued u/s 274 r.w.s. 271AAB of the Act had observed that: "It is clear from the Sub Section (3) of Section 271 AAB that Sections 274 and Section 275 of the Act shall, so far as may be, apply. Sub Section (1) of Section 274 of the Act mandates that order imposing penalty has to be imposed only after hearing the assessee or giving a assessee opportunity of hearing. Opportunity that is to be given to the assessee should be a meaningful one and not a farce. Notice issued to the assessee reproduced (supra), does not show whether penalty proceedings were initiated for concealment of income 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 ....
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....r it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy the requirement of law; The assessee should know the grounds which he has to meet specifically. Otherwise, the principles of natural justice are offended. On the basis of such proceedings, no penalty could be imposed on the assessee) taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law; penalty proceedings are distinct from the assessment proceedings : though proceedings for imposition of penalty emanate from proceedings of assessment, they are independent and a separate aspect of the proceedings; The findings recorded in the assessment proceedings in so far as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the 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 ....
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....d on the Revenue to specifically mention in the show cause notice itself as to what offence the assessee has committed and also to mention the rate of penalty that is sought to be levied by the Assessing Officer on the assessee i.e., 10% or 20% or 30% or 60% of undisclosed income, as the case may be. If none of these preliminary informations are mentioned in the show cause notice, then the show cause notice issued by the Ld. AO becomes completely defective and consequentially fatal and would vitiate the entire penalty proceedings. This issue, in any case, is no longer res integra in view of the decision of Kolkata Tribunal in the case of Sushil Kumar Paul vs. ACIT in ITA No.2274/Kol/2019 for A.Y. 2016-17 dated 15/12/2022 wherein it was held as under:- "10. From going through the above notice issued to the assessee on 28/12/2017, we find that there is no mention about various conditions provided u/s 271AAB of the Act. The Id. AO has very casually used the proforma used for issuing notice before levying penalty u/s 271(1)(c) of the Act for the concealment of income or furnishing of inaccurate particulars of income. Except mentioning the section 271AAB of the Act in the notice, it d....