TaxTMI 
TaxTMI 
2026 (9) TMI 1972
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....l Grounds may be admitted and adjudicate accordingly, as it goes to the root of the matter and would not require any fresh evidence. A. That, on the facts and in the circumstances of the case and in law, the penalty order passed under section 271AAB of the Income Tax Act, 1961 dated 24.9.2024 and the appellate order passed by the CIT(A) are bad in law, void ab initio and liable to be quashed as the notice issued for initiation of penalty proceedings u/s. 271AAB is vague, defective and invalid. B. That, on the facts and in the circumstances of the case and in law, the notice issued under section 271AAB fails to specify the exact charge against the appellant, namely whether the penalty was proposed under clause (a), clause (b) or clause (c) of section 271AAB(1), or under clause (a) or clause (b) of section 271AAB(1A), thereby rendering the initiation as well as the consequent penalty proceedings illegal, invalid and liable to be quashed. 3. We have heard rival contentions and perused the records placed before us. The legal issue by way of Additional Ground before us is that whether the notice issued u/s 274 r.w.s. 271AAB of the Act suffers from fatal error and te....
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....ty per cent of the undisclosed income of the specified previous year, if it is not covered by the provisions of clauses (a) and (b). (2) No penalty under the provisions of clause (c) of subsection (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub- section (1). (3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in this section. Explanation.--For the purposes of this section,-- (a) "specified date" means the due date of furnishing of return of income under subsection (1) of section 139 or the date on which the period specified in the notice issued under section 153A for furnishing of return of income expires, as the case may be; "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; (b) "....
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....d provisions of the Act which in the instant case relates to not surrendering of undisclosed amount during the course of search which is subsequently admitted during the course of assessment and not challenged before the Ld. CIT(A). So it was incumbent for Ld. A.O that in the notice issued u/s 274 of the Act he should have mentioned that penalty u/s 271AAB of the Act may be levied @10/20/ 30% since the assessee falls in Clauses (a)/(b)/(c) of section 271AAB of the Act. He should have further mentioned that as the assessee's case falls under clause-c of section 271AAB of the Act, why he should not be visited by penalty @30% of the undisclosed income. Against this charge the assessee should have been given a reasonable opportunity of being heard. 6. Now let us revert back to the fact of the instant case of the assessee and look into what has been mentioned in the alleged notices dated 30.02.2024 and 02.09.2024 issued u/s 274 r.w.s. 271AAB of the Act, which are reproduced below; "GOVERNMENT OF INDIA, MINISTRYOF FINANCE INCOME TAX DEPARTMENT TO BRINDAVAN AGRO INDUSTRIES PRIVATE LIMITED, 3/16, WEST PATEL NAGAR, WEST PATEL NAGAR, PATEL NAGA....
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.... before any such order is made under section 271AAB of the Income Tax Act. Akshay Anand Central Circle 6, Delhi" 7. From going through the above two notices issued to the assessee on 30.03.2024 & 02.09.2024, we find that there is no mention about various conditions provided u/s 271 AAB of the Act. 8. We find that Hon'ble Jurisdictional High Court in the case of PCIT V/s Kulwant Singh Bhatia dealt the issue of defective notice issued u/s 274 r.w.s. 271(1)(c) of the Act and Hon'ble Court after relying judgment of Hon'ble Supreme Court in the case of CIT V/s Manjunatha Cotton Ginning Factory and CIT v/s SSA'S Emerald Meadows held that such show cause notices would not satisfy the requirement of law as notice was not specific. Merely issuing notice in general proforma will negate the very purpose of natural justice. Hon'ble Apex Court in the case of Dilip N Shraf 161 Taxmann 218 held that "the quasi criminal proceedings u/s 271(1)(c) of the Act ought to comply with the principles of natural justice". 9. Further in the case of DCIT V/s R. Elangovan Ltd, Co- ordinate Bench, Chennai while dealing with the legal ground challenging thevalidity of notice is....
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.... in law as it did not specify which limb of Section 271 (1)(c) of the Act, the penalty proceedings had been initiated i.e., Whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, While allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of CIT vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565. 11. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed". 12. In the earlier case of Manjunatha Cotton and Ginning Factory (supra) their lordship had observed as under:- "Notice under section 274 of the Act should specifically state the grounds mentioned in section 271(l)(c), i.e., whether 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 ....