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2023 (7) TMI 241 - HC - Income TaxPenalty u/s 271AAB - Undisclosed income under the disclosure petition made during search and seizure proceedings as taken to books - undisclosed stock - HELD THAT:- Tribunal took note of the statement recorded from the Director before the Investigating Officer and all other documents forming part of the assessment file and held that no material has been brought on record by the AO to show that the during the course of search the authorized officer of the department had conducted physical inspection of the stock because of which excess quantities of raw leather was deducted and consequence to which additions were made towards undisclosed stock. Further the Tribunal found that the AO himself assessed the said sum of Rs. 6,04,95,912/- on the ground of “under-valuation” of stock and not as value of “undisclosed stock”. Tribunal held that the difference in stocks had been identified by internal team of the assessee itself much prior to the commencement of the search. Tribunal also noted the decision of its coordinate bench in the assessee’s group company M/s. New Horizon Private Limited [2019 (9) TMI 859 - ITAT KOLKATA] wherein the facts were identical had affirmed the order passed by the CIT(A) which attained finality and held that no penalty could be levied under Section 271 AAB of the Act. After taking note of the auditor’s report as well as stock inspection report, the tribunal found that such inspection report was prepared at the instance of the management as a matter of internal control and the same was drawn up much prior to the date of search. Tribunal has made elaborate examination of the factual position and granted relief to the assessee correctly. Defective notice u/s 274 - On a perusal of the notice, we find that none of the particulars which are required to be mentioned in the notice have been disclosed. In fact, the relevant columns have been left blank. The question would be whether penalty proceedings could have been initiated pursuant to such a notice and was the notice in accordance with law. As decided in Food Corporation of India Limited Versus State of Punjab and Others [2000 (12) TMI 911 - SUPREME COURT] vague and unreasoned notice will not provide reasonable opportunity to the noticee to file objection meeting the reasons/grounds on which action is proposed. Since the notice did not state the reasons of the grounds, the notice was held to be vague. Decided in favour of the assessee
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