TMI Blog2019 (2) TMI 1631X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order. 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 i.e. out of commodity profit at page No.18 of AO s order. In our opinion, the assessee is liable to pay penalty as the facts and circumstances of the present case fulfilled the conditions that required to attract penalty @ 10% in terms of clause (a) of sub-section (1) of section 271AAB The Hon ble Supreme Court has upheld the above judgement and is reported as Sandeep Chandak vs Pr.CIT [ 2018 (6) TMI 106 - SC ORDER] pleased to hold that 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 assessee have surrendered the amount u/s 132(4) statement of undisclosed income, specify the manner in which this income was derived, filed return of income, admit the same and had paid taxes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contention, The Ld.DR, Shri Kedia placed reliance in the case of Galaxy Nirman Private Limited and submitted that the AO show caused the assessee in clear why an order imposing a penalty on you should not be made u/s 271AAB in the second para of notice and assessee also duly responded to said charge. He argued that it is a well settled principle of law that mentioning of wrong provision or non-mentioning of a provision does not invalidate of an order if the court and/or statutory authority had the requisite jurisdiction thereof. Further, he submitted that the AO has requisite jurisdiction to impose penalty under section 271AAB of the Act. 6. Further, he replaced reliance in the case of Ram Sundar Ram reported in [2007] 9 SCALE 197 and submitted that it is well settled that if an authority has power under the law merely because while exercising that power, the source of powers is not specifically refer to or a reference is made to a wrong provision of law that by itself does not vitiate the exercise of power so long as the power does exist. The Ld. DR argued that quoting of wrong provision by the competent authority does not take away the jurisdiction of the authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the undisclosed income, penalty @ 10% was rightly imposed under section 271AAB. He contended that the commodity profit was not reflected in the books of accounts of the assessee and since it was reflected in the documents seized during the course of search and it was a clear case of undisclosed income attracting penal provision of section 271AAB of the Act. 10. Heard both parties and perused the material available on record. It is noted from the record that there was a search conducted in Jallan Group of cases on 06/07.09.2012 and subsequent dates. The said group involved in the business of manufacturing of rail track products including joints, Fist Plates, Base Plates, Points and Crossing, Steel Sleepers, Bridge Channel Sleepers, various types of Bolts and Nuts. During the course of search on 06.09.2012, a panchnama was drawn in the name of M/s. Ganpati Industrial Private limited which is assessee before us. 11. The return of income was filed on 26.09.2013 disclosing a total income of ₹ 7,94,66,300/-. The assessee through its representative appeared and produced the details requisitioned by the AO. The AO determined the total income of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee challenged the same before the CIT(A). The specific contention was made before the CIT(A) that penalty under section 271AAB is not mandatory for the reasons as there was no concealment of income, return was filed within due date, manner of earning income was also specified and tax and interest on the said income was also duly paid. The CIT(A) considering the submissions of the assessee and record containing the penalty order, assessment order confirmed the order of AO in imposing the penalty under section 271AAB of the Act. The relevant portion of which is reproduced herein below:- The relevant penalty order, assessment order and the submission of the appellant are referred and perused. It is apparent from the facts and circumstances of the case, as mentioned in the relevant penalty order, that the Assessing Officer was justified in the levying of penalty u/s. 271AAB of the Act. Penalty @10% of the disclosed income i.e. ₹ 50,00,000/- has been correctly levied u/s. 271AAB of the Act, by the Assessing Officer. Appeal on this ground is dismissed. 15. In answer to the submissions made by Ld. Counsel for the assessee that the penalty notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, pays the tax together with interest and furnishes return of income, the penalty provisions u/s 271AAB of the Act would attract. Therefore, the contentions raised by the Ld.AR are not tenable and are rejected. 18. As discussed above, the AO levied penalty @ 10% under sub-section (1)(a) of section 271AAB of the Act on undisclosed income offered by the assessee and for ready-reference the provision of section 271AAB of the Act is reproduced hereunder:- Penalty where search has been initiated. 271AAB. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1 st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, - (a) a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year, if such assessee - (i) in the course of the search, in a statement under sub- section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 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 i.e. out of commodity profit at page No.18 of AO s order. In our opinion, the assessee is liable to pay penalty as the facts and circumstances of the present case fulfilled the conditions that required to attract penalty @ 10% in terms of clause (a) of sub-section (1) of section 271AAB of the Act i.e: under sub-clause (i) of clause (a) of section 271AAB(1) for the reason that there was a search, statement was made u/s 132(4), admitted the undisclosed income and specified the manner of such income has been derived. Under sub-clause (ii), the assessee substantiated the manner of deriving such income in commodity profit. under sub-clause (iii) (A), the assessee paid the tax together with interest regarding the undisclosed income, and under (B) furnished the return of income declaring the such undisclosed income. 20. In the case of Sandip Chandak supra, the Hon ble High Court of Allahabad held a procedure is provided u/s 271AAB of the Act where the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Kamal Kishore Chandak during the search and the issuance of the penalty notices under Section 271AAB, which is relevant. We have noticed that this fact has not been considered by the Tribunal. In this regard, we may reproduce the relevant finding of CIT (Appeals) hereinbelow : From the above provisions, it may be seen th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 21. The Hon ble Supreme Court has upheld the above judgement and is reported as Sandeep Chandak vs Pr.CIT [2018] 93 taxmann.com 406 (SC) dated 23.04.2018. On perusal of the afore-mentioned decision, the Hon ble High Court of Allahabad was pleased to hold that 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, specify the manner in which this income was derived, filed return of income, admit the same and had paid taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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