TaxTMI 
TaxTMI 
2026 (9) TMI 867
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....ct"), dated 21-01-2022, for A.Y. 2016-17. The assessee has assailed the impugned order on the following grounds of appeal before us: "1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) is not justified in not quashing the order passed u/s 271AAB of the Act on 21.01.2022 as barred by limitation. 3. Without prejudice to the above, the learned Commissioner of Income Tax (Appeals) is not justified in not quashing the notice issued u/s 271AAB of the Act as invalid on the ground that the notice suffers from ambiguity in as much as the assessing officer did not specify the exact....
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....come. On being queried, the assessee submitted that M/s Navratna Estates, a firm in which he was a partner, had filed its return on 19-06-2017, declaring additional income of Rs. 1,17,45,000/- that it had disclosed in the course of the search proceedings, out of which his share worked out at Rs. 23,49,000/-. According to the assessee, the said amount represented unexplained income available in his hands, which was utilized for making investment in silver articles. The assessee thereafter filed a revised return of income on 19-11-2017, disclosing the balance amount of additional income of Rs. 23,35,044/- [Rs. 46,84,044/- (minus) Rs. 23,49,000/-] towards part disclosure of the undisclosed income admitted by him during the course of the search....
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.... against the assessee. It was submitted that the subsequent notices dated 21-01-2021 and 22-02-2021 also did not cure the defect and merely afforded an opportunity of hearing. The Ld. AR, to fortify his contention, relied upon the judgment of the Hon'ble High Court of Madras in PCIT Vs. Shri R. Elangovan, Tax Case Appeal Nos. 770 and 771 of 2018, dated 30-03-2021, and the orders of the ITAT, Hyderabad, in Shri Kishan Kumar Aggarwal, Hyderabad Vs. ACIT, ITA No. 2107/HYD/2025, dated 17-06-2026, and the ITAT, Visakhapatnam, in Baddham Venkateswarlu Vs. ACIT, Central Circle-1, Visakhapatnam, ITA No. 197/VIZ/2026, dated 24-07-2026. 8. Per contra, the Ld. Sr. DR relied upon the orders of the authorities below and submitted that Section 271AAB ....
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.... against the assessee. The subsequent notices dated 21-01- 2021 and 22-02-2021 also did not cure the said defect. For the sake of clarity, we deem it apposite to cull out the SCN, dated 28/12/2017, as under: 12. We find that Section 271AAB(3) makes the provisions of Sections 274 and 275 applicable, so far as may be, to penalty under the said Section. Accordingly, Section 274 requires that the assessee be afforded a reasonable opportunity of being heard, and such opportunity necessarily postulates that the assessee should be made aware of the precise statutory basis on which the penalty is proposed, so as to enable him to effectively defend himself. 13. We are unable to accept the Ld. Sr. DR's contention that specification of the parti....
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....he assessee was not informed of the particular statutory provision under which he was required to defend himself. 15. We, therefore, hold that the notice issued under Section 274 r.w Section 271AAB of the Act, dated 28-12-2017, was defective for failure on the part of the AO to specify in the SCN, dated 28/12/2017, the particular clause/default under Section 271AAB(1) of the Act. Also, the subsequent notices did not cure the foundational defect. Consequently, the initiation of penalty proceedings itself stands vitiated and the penalty order passed under Section 271AAB(1), dated 21-01-2022, cannot be sustained. 16. As we have, in terms of our aforesaid observations, quashed the penalty imposed by the AO under Section 271AAB(1) of the A....