TMI Blog2018 (12) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... AO directed the assessee to appear before him on specific date seeking explanation why an order u/s 271AAB of the Act be made? Therefore, in our opinion, the said notice does not appear to be defective and ambiguous as contended by Ld.AR. In the last paragraph of the said notice, the AO clearly mentioned the provision u/s 271AAB of the Act so therefore, it is clear that the AO conveyed on which provision the proceedings are being initiated and the assessee filed reply to the said notice. Therefore, Ground No.2 raised in C.O filed by the assessee fails and it is dismissed. Imposition of penalty @ 30% instead of 10% or 20% - In order to fall under clause (a) of sub-section (1) of section 271AAB of the Act to compute the penalty @ 10%, the assessee has to fulfill the conditions therein. On perusal of the clause (a), the assessee fulfilled all the conditions therein and therefore, penalty shall be @ 10% in terms of clause (a) of sub-section (1) of section 271AAB of the Act. Therefore, the AO is not justified in impose penalty @ 30% vide clause (c). Therefore, the AO is directed in imposing penalty @ 10% under clause (a) of subsection (1) of section 271AAB - ITA No. 1537/KOL/2017, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission stating that we are offering an amount of ₹ 1,23,00,000/- as an additional income in the hands of Shri Vishal Agarwal. The manner of earning of the same is out of business activities of trading in sarees, ghagra sets, suits, dress materials, furnishings and related activities which are part of the family business activities. This substantiates the manner as they are out of the same business activities which are part of the family business activities. The application of funds to the tune of ₹ 98,00,000/-out of additional income offered to tax by Shri Vishal Agarwal in F. Y. 2012- 13 would have been deployed in receivables capital circulating in the business in various forms. However, such amount has since been realized. The balance amount of ₹ 25,00,000/- has been invested in Watches, Gold/Silver items/ Jewelleries Ornaments etc. . 5. Considering the above submissions of assessee, the AO recorded satisfaction that it is a fit case to initiate penalty proceedings u/s 271AAB of the Act by holding that the assessee admitted undisclosed income of ₹ 1,23,00,000/- which was recorded under statement u/s 132(4) of the Act. 6. In pursuance of the sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the said case are similar to the present case and the Hon ble High Court held that the imposition of penalty u/s 271AAB is automatic. The Ld.DR supported the order of AO. 9. The Ld.AR made two sets of arguments. First is that no charge has been specified in the notice dated 29.02.2016 issued u/s 274 r.w.s. 271 of the Act and placed on record the same. The Ld.AR argued that the notice is defective for not specifying the charge of penalty and on such defective notice imposition of penalty is not maintainable. 10. Second is, regarding the decision of Hon ble High Court of Allahabad in the case of Sandip Chandak (supra), it was argued that no substantive question of law was framed before the Hon ble High Court of Allahabad in the case of Sandip Chandak (supra) and the observation made therein by the Hon ble High Court in respect of imposition of penalty u/s 271AAB are obiter dicta and are not binding to place reliance. The Ld.AR supported the order of CIT-A 11. It is noted that the AO levied penalty @ 30% under sub-section (1)(c) of section 271AAB(1)(c) of the Act on undisclosed income offered by the assessee. The provision of section 271AAB is reproduced hereunder for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the tax on undisclosed income disclosed by the assessee made at the stage of making statement u/s 132(4) of the Act or during the assessment proceedings. In the present case as discussed above that the assessee in his reply to the AO in assessment proceedings offered an additional income of ₹ 1,23,00,000/- u/s 132(4) of the Act. It is also noted that the same has been computed as undisclosed income in the return of income. There is no dispute regarding the payment of tax together with interest in respect of such undisclosed income and the specified date of filing return of income. So, therefore, it is clear from the record that the assessee admitted undisclosed income and the statement was recorded u/s 132(4) of the Act to that effect. The assessee also explained the manner of such earning is out of business activities of trading in sarees, ghagra sets, suits, dress materials, furnishings and related activities and paid taxes together with interest, but, however, according to AO the assessee failed to substantiate the manner in which the undisclosed income was derived by producing documentary evidence. The assessee explained the manner and substantiated it is through f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person which fulfill the requirement of Section 274 of the Act. In the present case, the provisions of Section 271AAB are fully applicable as of the conditions so stipulated or attracts as a search has been initiated under Section 132 and during the course of search the statement of the assessee has been recorded under sub section (4) of Section 132, in which the assessees admit undisclosed income and specifies the manner in which such income has been derived. We have gone through the contents of the penalty notice and we find that in the penalty notice, which has been issued under Section 274 read with Section 271 , the assessing authority has clearly indicated that the proceedings under Section 271AAB being initiated and the reply to the show cause notice in writing on or before the date so as indicated will be considered before any such order is made under Section 271 AAB. We find the substance in the submission of the learned counsel for the department and we noticed that the orders passed by the CIT (Appeals), affirming the orders of the penalty, are fully justified where the CIT (Appeals) has recorded a categorical finding with regard to the statement of Sri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven proper opportunity of hearing. It is clear from the penalty order that the AO has given penalty notice and which was also replied by the assessee. Therefore, in my opinion, principle of natural justice has not been violated. Thus in view of above discussion penalty imposed by AO u/s 271AAB of the Act is confirmed. Since admittedly, no proceeding under Section 271(1)(c) are initiated by the assessing authority during the course of the assessment proceeding under Section 143(3), the impugned penalty proceedings under Section 271AAB are fully justified and are initiated in accordance with law. We find that the order of the ITAT cannot sustain, therefore, the same is set aside and the penalty orders under Section 271AAB passed by the assessing authority, confirmed by the CIT (Appeals), are affirmed and are restored. 14. On perusal of the afore-mentioned decision of Hon ble High Court of Allahabad that there was no substantial question of law was framed therein in respect of imposition of penalty u/sec 274AAB of the Act. A contention was raised by the assessee that unless satisfaction is recorded and since the same has not been recorded by the assessing authority and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contested by filing reply to the said show cause notice in the penalty proceedings. Further on perusal of the said notice, it is observed in the last paragraph that the AO directed the assessee to appear before him on specific date seeking explanation why an order u/s 271AAB of the Act be made? Therefore, in our opinion, the said notice does not appear to be defective and ambiguous as contended by Ld.AR. In the last paragraph of the said notice, the AO clearly mentioned the provision u/s 271AAB of the Act so therefore, it is clear that the AO conveyed on which provision the proceedings are being initiated and the assessee filed reply to the said notice. Therefore, Ground No.2 raised in C.O filed by the assessee fails and it is dismissed. 20. Ground No.3 is relating to challenging the imposition of penalty @ 30% instead of 10% or 20% in the facts and circumstances of the case. In order to fall under clause (a) of sub-section (1) of section 271AAB of the Act to compute the penalty @ 10%, the assessee has to fulfill the conditions therein. On perusal of the clause (a), the assessee fulfilled all the conditions therein and therefore, penalty shall be @ 10% in terms of clause (a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
