TaxTMI 
TaxTMI 
2025 (3) TMI 2261
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....ke of convenience grounds relating to assessment year 2010-11 is reproduced as under: "GROUND NO. 1: LEVY OF PENALTY U/S 271(1)(c) OF RS. 49,219/- (a) The Id. CIT(A) erred in law and on facts in confirming the levy of penalty u/s. 271(1)(c), for concealment of income, by Id. AO of Rs. 49,219/- being 100% of the tax on notional income of Rs. 2,27,625/- representing the annual letting value determined by AO and further erred in levying penalty u/s 271(1)(c) in respect of a search assessment u/s 143(3) r.w.s. 153A ignoring that; i. AO had failed to recompute the Annual Letting Value as per the direction of ITAT and was yet to give effect to the Order of ITAT. ii. provisions of S. 271(1)(c) were inapplicable to the case of search assessments, iii. the addition was made vide an order u/s 153A, iv. the addition was in respect of such income for which no incriminating material was available, v. the addition was not sustainable in law, vi. the penalty was initiated without specifying any charge in the assessment order or penalty notices or penalty orders, vii. the appellant was prevented by a reasonable cause,....
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.... appellant prays that the penalty of Rs. 49,219/- levied u/s. 271(1)(c) of the Act be deleted. GROUND NO. 2: VIOLATION OF PROVISION OF S. 275 (a) The Id. CIT(A) erred in law and on in facts in confirming the order of penalty passed by AO in violation of limitation u/s 275 of the Act. (b) Your appellant submits that the provisions of s. 275 required an AO to pass the order within the time prescribed under the law on passing the order by CIT(A) on merit of the case. (c) Your appellant prays that an order passed in specific violation of s. 275 be quashed. GROUND NO. 3: SERIOUS VIOLATION OF NATURAL JUSTICE AND OF S. 274 AND S. 275 (a) The Id. CIT(A) erred in law in confirming the order of the AO in gross violation of the provisions of natural justice; i. by denying any opportunity to your appellant to present the case on merits, ii. by not giving effect to the order of ITAT on merits of the case, iii. in not giving any opportunity to show cause on merits as to why penalty shall not be levied. (b) Your appellant submits that the Id. AO has grossly violated the provisions of natural justice, ....
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....f income or furnishing of inaccurate particulars of income within the meaning of section 271(1)(c) of the Act. The assessee relied on the decision of Hon'ble Supreme Court in case of CIT vs. Reliance Petoproducts Pvt. Ltd reported in (2010) 322 ITR 158, in which it is held that, mere making of a claim which is unsustainable in law cannot be treated as furnishing of inaccurate particulars of income and as such will not attract the penalty proceedings which is u/s.271(1)(c) of the Act. 3.2 The Ld.CIT(A) after considering the submission of the assessee, confirmed the penalty levied for all year under consideration by passing separate orders. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. 4. The Ld.AR submitted a fact sheet wherein the assessee raised challenge against initiation and levy of penalty under wrong provisions of the act which is not applicable for the years under consideration. He submitted that post insertion of section 271AAA & 271AAB, penalty in case where search is initiated, depends on the date of search. He submitted that in the present facts of the case, as search was initiated in assessee's case, on 04/02/2016 then....
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....ursuance of search that took place under section 132 of the IT Act up to 15.12.2016. In support of these contention above the applicability of section 271AAB(1) to all the assessment years that are subjected to search the following may kindly be considered; a. The provisions of section 271AAB(1) are clearly made applicable to all the search actions that took place between 1st day of July 2012 to 15th December 2016. There is no reservation or limitation for applying the provisions to a year or two only that is the year of search or the year for which the time for filing return of income has not expired. b. The latter part of section 271AAB(1), starting with " the assessee shall pay by way of penalty in addition to tax, if any payable by him .... " is for conferring substantial relief in the quantum of penalty where the assessee otherwise complies with the conditions stipulated in clauses a to c of the said provisions, namely 271AAB(1). c. The above said latter part does not restrict the application of the main provisions to cases governed by clause a clause c, all of which are factual. d. In other words, a person searched is liable to immunity fro....
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.... to furnish returns, comply with notices, concealment of income, etc. (1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person- ............. (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,- (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Deputy Commissioner (Appeals) or the Commissioner (Appeals) to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that s....
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....ed in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the President, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,- (a) a sum computed at the rate of thirty per cent of the undisclosed income of the specified previous year, if the assessee- (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) on or before the specified date- (A) pays the tax, together with interest, if any, in respect of the undisclosed income; and (B) furnishes the return of income for the specified previous year declaring such undisclosed income therein; (b) a sum computed at the rate of sixty per cent of the undisclosed income of the specified previous year, if it is not covered under the provisions of clause (a). (2) No penalty under th....
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.... case, search was initiated in case of assessee on 04/02/2016, penalty has to be initiated under section 271AAB, since the search date falls between 1/06/2012 to 15/06/2016 ([i.e. date on which the Taxation Laws (Second Amendment) Bill, 2016 received the President's assent]. Now the question arises is, whether all assessment years under consideration stands covered under section 271AAB, as submitted by the Ld.AR. 5.3. From the plain reading of section 271AAB, it is clear that where a search u/s.132(1) was initiated on or after the 1st day of July, 2012, penalty is livable on the undisclosed income at the rate and conditions specified under section 271AAB(1) for the specified previous year. Further, the section also defines the term "specified previous year" as under:- "specified previous year" means the previous year- (i) 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; 5.....
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.... ; to withhold knowledge of. 7.1 The offence of concealment is, thus, a direct attempt to hide an item of income or a portion thereof from the knowledge of the income-tax authorities. In the present facts of the case, the assessee did not conceal any particulars of the income. Assessee had furnished all details and it was within the knowledge of the authorities that the assessee had not received rent from some properties either for the entire year or partly. In fact the assessee claimed vacancy allowance during the period where the properties remained vacant either for entire year of partly during the year. The vacancy allowance was not allowed by the Ld.AO against which ALV was computed based on the rent received by the assessee in past against such properties .The penalty is levied on the such notional rent computed in respect of the immovable property that remained vacant. It is noted that the assessee had offered the rental income that was received from properties that were rented out. We refer to the decision of Hon'ble Supreme Court in case of CIT vs. Reliance Petoproducts Pvt. Ltd(supra). Hon'ble Court held that: 9. We are not concerned in the present case with t....