TaxTMI 
TaxTMI 
2026 (6) TMI 1519
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....facts and submitted that assessee is an individual and regularly files his return of income. During the year, he had earned income in the nature of capital gains, dividend income and interest from FDs saving account and accordingly, he filed return of income declaring total income of Rs.17,07,170/-. 3. He further submitted that a search and seizure action was carried on Manoj Kumar Singh and his various transacting parties including M/s Era Infra Engineering on 14.10.2020 and the assessee was associated with M/s. Era Infra Engineering in the past years and thus, premises of the assessee was also searched. He submitted that during the course of search operation at assessee's premises, cash of Rs.5,89,170 was found out of which Rs.5 La....
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....t of Rs.Rs.5,89,170/- partial relief of Rs.2,50,000 was granted by the ITAT, the AO levied penalty u/s 271AAB of the Income-tax Act, 1961 (for short 'the Act') @ 60 % on the balance amount of Rs.3,39,170, holding it as undisclosed income Accordingly, penalty @ 60% on Rs.3,39,170 i.e. Rs.2,03,502 was levied which was sustained by the ld. CIT(A) and against that order, assessee is in appeal before the ITAT by raising following grounds of appeal :- "1. The penalty order is bad in law and void-ab-initio and accordingly, ought to be quashed. 2. On the facts and circumstances of the case and in law, the Learned AO erred in levying penalty u/s 271AAB Without specifying the relevant clause of the Section 271AAB under which....
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.... Accordingly, he pleaded that the penalty order passed under section 271AAB is legally unsustainable as it fails to specify the precise clause i.e. either clause (a) or (b) under which the penalty has been initiated and imposed. He further submitted that this omission is not a mere procedural lapse but a substantive defect that violates the principles of natural justice. The assessee was not informed of the precise charge he was required to meet, thereby making the present penalty order void-ab-intio. In this regard, he relied on the following decisions :- ● Jaina Marketing & Associates, Delhi vs. DCIT ITA No. 224 & Ors. Dated 20.03.2024 ITAT Delhi ● Landcraft Developers (Pvt.) Ltd. (ITAT Delhi) in ITA No.1062/....
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....ddition. Further we observed the sustained addition does not meet the statutory definition of "undisclosed income" under section 271AAB. We observed that the addition is based on judicial estimation and not on any seized material or admission and the penalty imposed is without legal foundation. Further we observed that there is no undisclosed income of the Assessee and whatever cash has been found is agricultural income of the father and the savings of the ladies. We observed that there is no undisclosed income or malafide intention which is mandatory for invoking section 271AAB. 11. Further we observed that assessee has taken a legal ground and the impugned penalty order does not survive on technical grounds since the charge levied agai....
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....so issued on 09/09/2021 for imposing penalty u/s 271AAB for A.Y 2018-19 and identical show cause notice was also issued for A.Y 2019-20. The show cause notice dated 09/09/2021 reads as under :- "During the course of proceedings before me for the assessment year 2019-20, it was found that consequent upon search proceeding you were found to have undisclosed income. You were show caused vide letter ITBA/PNL/S/271AAB/2021-22/1033245356(1) dated 02.06.2021 as to why an order imposing a penalty on you should not be made u/s 271AAB of Income Tax Act, 1961. You were requested to submit your reply by 02.07.2021 but no reply has been submitted by you till date. You are, hereby, given further opportunity to explain as to why an order....