TMI Blog2019 (1) TMI 1392X X X X Extracts X X X X X X X X Extracts X X X X ..... Regarding the decisions relied on by the Ld.AR, which were considered by us and the principles canvassed by the Ld.AR does not come to the rescue of the present case in view of our discussion made herein above at para 15 of this order. Regarding striking out relevant charge, the notice issued u/s 274 of the Act is of no relevance in view of our finding at para 17. - Decided against assessee - C.O.No.-31/KOL/2017 [In ITA No.222/KOL/2017], C.O.No.-32/KOL/2017 [In ITA No.216/KOL/2017], C.O.No.-34/KOL/2017 [In ITA No.221/KOL/2017], C.O.No.-36/KOL/2017 [In ITA No.220/KOL/2017] And C.O.No.-93/KOL/2017 [In ITA No.2180/KOL/2017] - - - Dated:- 25-1-2019 - SH. J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SH.S.S.VISWANETHRA RAVI, JUDICIAL MEMBER For The Appellant : Sh. A. K. Tribwal And Sh. Amit Agarwal, Ld. AR For The Respondent : Sh. R.Shyam, CIT DR ORDER PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER All these cross-objections by the assessee against the separate orders dated 08.11.2016, 07.11.2016, 09.11.2016, 08.11.2016 07.11.2016 passed by the CIT(A)-20, Kolkata for AY 2013-14 wherein he partly confirmed the penalty imposed by the AO u/s 271AAB(1)(a) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of penalty u/s. 27lAAB of the l.T. Act, 1961. Penalty proceeding u/s. 271AAB has been initiated separately. 5. Considering the details as furnished by the assessee during the course of assessment proceedings, 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 an amount of ₹ 2,25,00,000/- as undisclosed income which was not recorded in the books of accounts as found during the search and seizure operation and offered in the disclosure petition u/s 132(4) of the Act. 6. In pursuance of the satisfaction recorded vide assessment order dated 31.03.2015, the AO initiated penalty proceedings by issuing a notice u/s 274 r.w.s. 271 of the Act. In response to the penalty notice, the assessee filed written submission dated 05.06.2015 by raising an objection on imposition of penalty on the entire undisclosed income. The disclosure corresponding to the first limb of ₹ 75,00,000/- was made on account of undisclosed cash during the course of search. Further it was contended penalty is not leviable on the amount of offering of ₹ 1,50,00,000/- as the definition of undisclosed inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and submitted that no penalty u/s 271AAB of the Act should be imposed. Further placed reliance on the decision of Girish Devchand Rajani [2013] 33 taxmann.com 174 (Guj.) which held that no penalty is leviable when the assessee offers additional income to buy peace and to avoid protracted litigation. 8. We find that the assessee reiterated the same submissions before the CIT(A) in respect of ₹ 1,50,00,000/- that no penalty shall lie as it was offered suo moto to buy peace, it was not backed by any evidence of undisclosed income or any undisclosed assets/items that had been found in inventorized by the Revenue department. Further placed reliance on the decision of Hon ble High Court of Gujarat in the case of Girish Devchand Rajani [2013] 33 taxmann.com 174 (Gujarat) and in the case of Punjab Tyres [1986] 162 ITR 517 (Madhya Pradesh). The CIT(A) cancelled the penalty to an extent of ₹ 1,50,00,000/- imposed by the AO u/s 271AAB(1)(c) of the Act by placing reliance in the case of Sudharsan Silk Sarees 300 ITR 30 (SC) for the proposition that no penalty is leviable on the amount offered by the assessee suo motto to buy peace of mind and directed the AO to levy penalty on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c were found and seized of the value of ₹ 7500000/- only. Nothing incriminating/ no evidences were found regarding ₹ 15000000/- which was offered for taxation by the assessee suo moto in order to buy peace of mind. I also find that neither the officers in the investigation wing in the post search investigation nor the Assessing Officer during assessment process found any discriminating evidence of undisclosed income other than the statement of the assessee for making the addition of ₹ 15000000/-. Further I find that the AO has levied penalty u/s 271AAB (1)(a). This section reads like sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. Thus, it is clear that in order to levy penalty two things are essential (1) undisclosed income and (2) specified previous year. Here in this case ₹ 15000000/- was offered for taxation by the assessee suo moto in the statement recorded at the time of search. From the ratio decided by the Hon'ble Supreme Court in the case of Sudarshan Silk Saries (supra), it is clear that only the stat.ement of the assessee without any corroborating evidence cannot be the only bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourts - all flowering from the same principle - converge to the conclusion that a decision once rendered must later bind like cases. We do not intend to detract from the rule that, in exceptional instances, where by obvious inadvertence or oversight a judgment fails to notice a plain statutory provision or obligatory authority running counter to the reasoning and result reached, it may not have the sway of binding precedents. It should be a glaring case, an obtrusive omission. 11. Further Ld.AR referred to decision of Hon ble High Court of Calcutta in the case of A.K.Mukherjee in GA 1489 1246 of 2019 APO No.156 of 2018 in AP No.423 of 2018 (Cal HC) for a doctrine of per incurium, if the judgement is passed in ignorant of ay provision of Statute or in ignorance of an authority which binding on the forum but is not noticed, the said judgement is said to be per incurium. The relevant portion of which is reproduced herein below:- A feeble argument is sought to be made on behalf of the respondent herein that it is apparent from the judgment in Ambica Construction (2017) that it was rendered on a matter governed by the 1996 Act and since the judgment in Ambica Construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue before the Hon'ble Court. It was with a view to judge the constitutional validity of section 44AB that the workability of section 44AB together with section 139(9)(e) and section 271B together was considered and the observation on harmonious construction were made as quoted above. In this context we may also refer the observation made in the second para on page 164 of the Report to the effect that- The next limb of the argument of learned counsel for the petitioner is that the present section is unworkable because it is inconsistent with the various other provisions of the Act, In this regard the contention raised was that there was no discretion with the Assessing Officer under section 271B for levy of penalty for violation of section 44AB, whereas under section 139(2) there was discretion with the ITO. From the perusal of the cited judgment it clearly appeals that the observations made by the Hon'ble High Court regarding the levy of penalty on page 165 of the Report were in the contest of judging the workability of section 44AB together with section 271B so as to adjudicate upon the issue of constitutional validity of section 44AB. Obvious as it is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether the penalty under section 271B be levied or not for not furnishing of the audit report under section 44AB within the specified date, as provided in Explanation (ii) of section 44ABwas not therefor adjudication before the Hon'ble Rajasthan High Court and the specific issue before the Hon'ble Court was regarding the constitutional validity of section 44AB. There is no gain saying the fact that the considerations for judging the constitutional validity of a statutory provision are different from those for judging the leviability of penalty under a particular statutory provision. The settled legal position is that while the Courts are slow in declaring a provision constitutionally invalid that is they need preferably be liberal in upholding the validity of provision whereas they need preferably construe the penalty provision strictly. At the same time it is also settled position of law that in interpreting a fiscal statute the Court cannot make good the deficiencies if there be any. The Court must interpret the statute as it stands and in case of doubt in a manner favourable to the tax payers. This position has been laid down by the Hon'ble Supreme Court in Shaa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax together with interest, if any, in respect of the undisclosed income; and ( B) furnishes the return of income for the specified previous year declaring such undisclosed income therein; ( b) a sum computed at the rate of twenty percent of the undisclosed income of the specified previous year, if such assessee - ( i) in the course of search, in a statement under sub-section (4) of section 132, does not admit the undisclosed income; and ( ii) on or before the specified date - ( A) declares such income in the return of income furnished for the specified previous year; and ( B) pays the tax, together with interest, if any, in respect of the undisclosed Income; ( c) a sum which shall not be less than thirty percent but which shall not exceed ninety 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 sub-section (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied manner in which such income has been derived, then the provisions of Section 271AAB automatically attracts. The relevant portion is reproduced hereunder for ready-reference:- In the present case, the regular assessment proceedings are being carried out under Section 143(3), which is a proceeding of assessment as so stipulated under Section 143 and sub section (3) of Section 143 provides the procedure to be adopted by the assessing authority during the course of the assessment proceedings. provides the procedure for penalty where the search has been initiate Section 271AABed. In the present case, admittedly a search and seizure operation is carried out in which the assessees have surrendered the amount of ₹ 4 crores each (Rs.4 lakh each by all the three assessees) and therefore, in view of the provisions of Section 271AAB the assessees are required to pay, by way of, penalty in addition to tax, if any, a sum computed @ 10% of undisclosed income of the specified period or previous years. In the case where the assessee in the course of search in a statement (under Section 4 of Section 132) admits the undisclosed income and specified manner in which such income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 01.06.2012. 2. The assessee has made disclosure of undisclosed income during the course of search action, has paid the tax together with interest and has filed return of income. 3. The assessee substantiates the manner in which he has earned the undisclosed income. From the analysis of the above Provisions of Act, it is clear that action of imposition of penalty u/s 271AAB(a) is independent of the enquiries made and subsequent additions made during course of assessment proceedings. In other words, this penalty is not based upon the facts gathered during course of assessment proceeding. It is dur to this reason, in my opinion, satisfaction of the AO is not required to be recorded by AO during assessment proceedings or at the time of completion of the proceedings. Thus, initiation of the penalty after the completion of assessment proceeding is not vitiated by law. The Ld. A.Rs have also challenged that the caption of the notice mentioned only Section 271 and not 271AAB. In this respect, the copy of notice has been produced by the Ld. A.R. before me. It is seen that the Ld. A.R. is correct in observing that the section of penalty has not been correctly mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing 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. Further, it was held that this fact has not been considered by the Tribunal. The provisions of Section 271AAB automatically attracts and the proceedings are to be carried out/completed where a search and seizure operation is carried out in which the assessees have surrendered the amount u/s 132(4) statement of undisclosed income, specific the manner in which this income was derived, filed return of income admit the same and had paid taxes and interest on the same. 18. In the present case, the AO levied penalty @ 10% on an amount of ₹ 2,25,00,000/- which was admitted under disclosure statement u/s 132(4) of the Act, but, the CIT(A) held that no penalty u/s 271AAB of the Act is justified on ₹ 1,50,00,000/- as it was offered by the assessee suo moto to buy peace and directed the AO to calculate and levy penalty on ₹ 75,00,000/- [Rs.2,25,00,000/- - ₹ 1,50,00,000/-] u/s 271AAB of the Act. It was submitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Revenue in the afore-mentioned paragraphs and the view taken by us in C.O.No.- 32/Kol/2017 is applicable to this cross-objection also. Therefore, sole ground raised by the assessee in this cross-objection is liable to be dismissed and it is dismissed. 23. In the result, the cross-objection filed by the assessee is dismissed. C.O.No.-34/KOL/2017 [ In ITA No.221/KOL/2017] ( ASSESSMENT YEAR-2013-14) 24. In this Cross-objection as discussed above, the assessee challenged the action of the CIT(A) in confirming the penalty to an extent of ₹ 22,24,733/- of disclosure amount. The facts and circumstances in this cross-objection are identical to the facts and circumstances in C.O.No.- 32/Kol/2017. We find that the issue raised in this cross-objection is similar to the grounds raised in C.O.No.-32/Kol/2017. Since the issue raised in C.O.No.-32/Kol/2017 has been decided in favour of the Revenue in the afore-mentioned paragraphs and the view taken by us in C.O.No.- 32/Kol/2017 is applicable to this cross-objection also. Therefore, sole ground raised by the assessee in this cross-objection is liable to be dismissed and it is dismissed. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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