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2019 (8) TMI 179 - ITAT CHANDIGARHPenalty u/s 271AAB - surrender being made allegedly voluntarily on the condition that no penal consequences would be visited upon the assessee - HELD THAT:- Statutory mandate of sub-section (1) of Section 274 is triggered. The requirement set out therein is that no order imposing penalty under this Chapter shall be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. In the facts of the present case, no doubt the assessee has been heard but there can also be no two opinions on the fact that the assessee instead of arguing on permissible facts has mistakenly relied upon his surrender letter believing that the tax authorities were also bound by the unilateral terms of the surrender made i.e. that on account of the surrender being made allegedly voluntarily on the condition that no penal consequences would be visited upon the assessee, the surrender having been made consequently bound the tax authorities also to honour the unilateral belief. As noted, this belief has no legal sanction and has to be discarded. However, the fact remains that the opportunity so provided has been misutilized by the assessee by making irrelevant arguments. Accordingly, in all fairness, it cannot be said that an effective and reasonable opportunity of being heard has not been availed of by the assessee. We set aside the impugned orders. The parties were, accordingly, required to address as to which authority the remand be made as necessarily the statement recorded at the time of the search and the documents confronted and any other relevant fact would be required to be addressed which led to the surrender being made so as to address “undisclosed income”. DRs made a request that the matter may be remanded to the AO as he shall be in a better position to confront the material to the assessee. AR agreed that he shall address his arguments within the parameters of the powers vested with the tax authorities. Accordingly, the impugned order is set aside back to the file of the AO with the direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. The assessee in its own interests is advised to participate fully and fairly in the proceedings before the tax authorities. It is made clear that in the eventuality of abuse of the trust reposed the AO would be at liberty to pass an order on the basis of the material available on record. Said order was pronounced in the Open Court at the time of hearing itself.
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