TMI Blog2020 (9) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is much more grave because in the penalty notice under the heading of Section 274 r.w.s. 271AAB of the Act pre printed format of issuing notice u/s 271(1)(c) is appearing which relates to levy of penalty for concealment of particulars of income or furnishing inaccurate particulars of income. In the assessee s case Ld. A.O ought to have mentioned the specific charges provided u/s 271AAB of the Act rather than the charges of Section 271(1)(c) of the Act. CIT(A) reduced the penalty to 10% applying provisions of Section 271AAB(a) of the Act as against penalty levied @30% by the Ld. A.O u/s 271AAB(c) of the Act but to our surprise Ld. CIT(A) has not taken pain to issue a fresh notice before reducing the penalty thus not giving reasonable opportunity of being heard as mandated under the proviso to Section 275. We find that similar issue came up before us in the case of Shri Vivek Chug [ 2019 (4) TMI 1163 - ITAT INDORE] wherein the appeal was decided in favour of the assessee and penalty proceedings were quashed since Ld. CIT(A) partly deleted the penalty by confirming the penalty @10% as against 20% levied by Ld. A.O u/s 271AAB of the Act without affording reasonable opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .That the Ld. CIT(A) erred in confirming the penalty to the extent of Rs, 11,14,088/- u/s 271AAB. That on the facts and in the circumstances of the case and in law the penalty levied is wrong an uncalled for and prayed to be deleted. 5.That the Ld. CIT(A) erred in confirming the penalty levied u/s 271AAB by the AO on the additional income of ₹ 1,11,40,876/- offered u/s 132(4) and also offered in the return filed u/s 153A. That on the facts and in the circumstances of the case and in law the penalty levied is uncalled for and bad in law and it is prayed that the penalty very kindly be deleted. 6.That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. Revenue has raised following grounds of appeal; ITA No.879/Ind/2019 Assessment Year 2015-16 1.On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty to extent of ₹ 89,48,172/- levied by the Assessing Officer u/s 271AAB(1)(c) of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case, the Ld. Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case and in law the very initiation of the penalty proceedings through an invalid and defective notice issued u/s 274 r.w.s. 271 AAB in this case is wrong, bad in law and the penalty so levied ought to have been deleted by the Learned CIT(A). 2.That the Ld. CIT(A) erred in not appreciating that the penalty notice issued u/s 274 r.w.s. 271AAB mechanically, mentioning irrelevant and inapplicable charges and not mentioning the charges on which penalty was actually levied, was bad in law and had has led to vitiation of the entire penalty proceedings, therefore, the penalty levied ought to have been deleted in its entirety. 3.That the Learned CIT(A) erred In levying the penalty under clause (c) to section 271AAB(1) @10%, whereas the Learned AO having levied the penalty under clause (a) to section 271AAB(1), clearly indicating that the penalty levied by the AO mechanically and without requisite satisfaction was wrong and uncalled for, ought to have been deleted in full. 4.That the Ld. CIT(A) erred in confirming the penalty to the extent of Rs, 5,24,296/- u/s 271AAB. That on the facts and in the circumstances of the case and in law the penalty levied is wrong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. Smt. Neha Mittal, ITA No.856/Ind/2019 Assessment Year 2016-17 1.That on the facts and in the circumstances of the case and in law the very initiation of the penalty proceedings through an invalid and defective notice issued u/s 274 r.w.s. 271 AAB in this case is wrong, bad in law and the penalty so levied ought to have been deleted by the Learned CIT(A). 2.That the Ld. CIT(A) erred in not appreciating that the penalty notice issued u/s 274 r.w.s. 271AAB mechanically, mentioning irrelevant and inapplicable charges and not mentioning the charges on which penalty was actually levied, was bad in law and had has led to vitiation of the entire penalty proceedings, therefore, the penalty levied ought to have been deleted in its entirety. 3.That the Learned CIT(A) erred In levying the penalty under clause (c) to section 271AAB(1) @10%, whereas the Learned AO having levied the penalty under clause (a) to section 271AAB(1), clearly indicating that the penalty levied by the AO mechanically and without requisite satisfactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered in the return filed u/s 153A. That on the facts and in the circumstances of the case and in law the penalty levied is uncalled for and bad in law and it is prayed that the penalty very kindly be deleted. 6.That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. Smt. Shweta Mittal, ITA No.858/Ind/2019 Assessment Year 2016-17 1.That on the facts and in the circumstances of the case and in law the very initiation of the penalty proceedings through an invalid and defective notice issued u/s 274 r.w.s. 271 AAB in this case is wrong, bad in law and the penalty so levied ought to have been deleted by the Learned CIT(A). 2.That the Ld. CIT(A) erred in not appreciating that the penalty notice issued u/s 274 r.w.s. 271AAB mechanically, mentioning irrelevant and inapplicable charges and not mentioning the charges on which penalty was actually levied, was bad in law and had has led to vitiation of the entire penalty proceedings, therefore, the penalty levied ought to have been deleted in its entirety. 3.That the Learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 31.10.15 8441755 2532530 8441755 844176 Ankit Mittal 2015-16 7.9.15 5242960 1572888 5242960 524296 Neha Mittal 2015-16 31.10.15 3642852 1092856 3642852 364285 Neha Mittal 2016-17 14.9.16 6500000 1950000 6500000 650000 Shweta Mittal 2015-16 31.10.15 4575133 1372540 4575133 457513 Shweta Mittal 2016-17 22.9.16 5350000 1605000 5350000 535000 Total 4489358 4. Assessee(s) have challenged the following amount of penalty sustained by Ld. CIT(A). Name of assessee Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income at ₹ 3,47,20,240/- including the additional income of ₹ 3,35,40,876/- offered as business income which was offered u/s 132(4), which also included ₹ 2,24,00,000/- offered during the course of survey conducted u/s 133A on 01.09.2014. It is also pertinent to mention that the same income which was declared in the return filed u/s 139(1) was reiterated in the return filed u/s 153(A) r.w.s 139. The assessment proceedings were completed by passing a combined assessment order for all these years under section 153A r.w.s. 143(3) dated 30.11.2017. The income for this year was assessed at ₹ 3,47,55,240/- by making anominal adjustment of ₹ 35,000/- to the returned income. The additional income offered of ₹ 3,35,40,876/- was offered as business income and was also assessed as such. Coming back to the present appeal, a notice was served on the appellant requiring to show cause as to why penalty u/s 271AAB be not imposed on the appellant. In response to the same the appellant has filed a reply dated 23.05.2018 providing detailed explanations as to why penalty is not leviable u/s 271AAB in the appellant s case. However penalty order was passed by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) on or before the specified date- (A) pays 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 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, 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 percent of the undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) under which the penalty has been levied and also the observation of the Learned AO that the manner of earning income was not specified and substantiated were never communicated to the appellant through the penalty notice issued u/s 274 r.w.s. 271AAB. 1.7. Thus the show cause notice issued u/s 274 is without drawing requisite satisfaction for levy of penalty u/s 271AAB and was akin to a notice which is issued u/s 271(1)(c), where the limbs of section 271(1)(c) were mentioned and the limbs of section 271AAB were not mentioned. Such notice having been issued in mechanical manner, without proper application of mind and without affording proper opportunity to the appellant to rebut the charges is bad in law vitiating the very initiation of the penalty proceedings. 2. Case laws on defective show cause notice u/s 274 r.w.s. 271AAB: (i) Hon ble ITAT, Indore in the case of Dr. Rajesh Jain Vs. DCIT ITA No. 905/Ind/2018 dated 19.02.2020 (ii) Hon ble ITAT, Indore in the case of Shri Vivek Chugh Vs. ACIT ITA No. 636/Ind/2017 dated 28.03.2019 (iii) Hon ble Income Tax Appellate Tribunal, A Bench, Chennai in case of DCIT Corporate Circle-1, Coimbatore v/s Shri. R. Elangovan (11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s 274 was defective as it did not spelled out the ground / charge on which the penalty is sought to be imposed, such as (i) CIT V/s Manjunath Cotton Ginning Factory (2013) 359 ITR 0565 (Karnataka). (ii) CIT V/s SSA S Emerald Meadows, (2016) 73 taxmann.com 248 (SC). (iii) Pr. CIT V/s Kulwant Singh Bhatia IT No. 9 to 14 of 2018 (MP) 1.10. The appellant further wish to further add that in the case of Kulwant Singh Bhatia (supra), the Honourable High Court of Madhya Pradesh in its latest decision dated 09.05.2018 dismissing the appeals filed by the revenue held in Para 11 of the order on due consideration of the arguments of the Learned Counsel of the appellant, so also considering the fact that the ground mentioned in show cause notice would not satisfy the requirement of law, as notice was not specific, we are of the view that the Learned Tribunal has rightly relying on the decision of CIT V/s Manjunath Cotton Ginning Factory (supra) and CIT V/s SSA S Emeralds Meadows (supra) rightly allowed the appeal of the assessee and set aside the order of penalty imposed by the authorities .(Copy enclosed at page no. 74 to 77 of the common case law paper book PB-B). The case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 274. On a perusal of the show cause notice u/s 274r.w.s. 271AAB issued to the appellant it is amply evident that the Learned AO has issued the notice in a mechanical manner without application of mind mentioning irrelevant and inapplicable charges. No penalty has been levied on the charges mentioned in the show cause notice and the charge on which penalty has been actually levied was not mentioned in the notice. Thus the very initiation of the present penalty proceedings is not in accordance with the law and has led to vitiation of entire penalty proceedings. It is therefore most humbly prayed that the penalty proceedings ought to be quashed and the consequent penalty levied be deleted. 2. IMPOSITION OF PENALTY ON INCOME OFFERED IN THE RETURN OF INCOME FILED U/S 153A AS BUSINESS INCOME IS BAD IN LAW. Without prejudice to the above basic contention of the appellant that the penalty levied is without jurisdiction since the penalty notice issued was bad in law, it is submitted that the penalty has also been levied on incorrect premises which is discussed here under:- 2.1. The appellant for the year under consideration filed her return of income u/s 139(1) and again u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiated merely on the basis of income offered by the appellant, without bringing anything adverse on record. There is no objection as to the filing of return offering additional income, moreover the income offered as business income was accepted as such. Neither the Investigation Wing nor the Learned AO pointed out any discrepancies or defect in the offering and working of the appellant. The additional income was offered to avoid penal proceedings and to buy peace of mind. 2.5. A perusal of the penalty order will show that the only reason for which the penalty has been levied is the observation of the Ld. AO that the assessee could not specify and substantiate the manner in which the said undisclosed income was derived.(Para 4 of the penalty order). Further in Para 6 it is stated that the assessee was given a chance to explain the manner in which the undisclosed income was derived during the assessment proceedings and it is also stated that the assessee could not explain the manner even during the penalty proceedings. From perusal of para 7 8 of the penalty order it is evident that the sole basis for levying the penalty under section 271AAB(1)(c) is the observation of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings. The appellant wishes to draw Your Honours kind attention to the questionnaire issued u/s 142(1), which is enclosed at page no. 09 to 16 of the PB.A perusal of item no. A-2 of part A of this questionnaire will show that the appellant was only required to state that whether any voluntary disclosure of income was made u/s 132(4) that too in a prescribed format. Similarly through item no. B-1 to B-5 of part B the appellant was required to explain cash, jewellery etc. These facts substantiate the contention of the appellant that the appellant was never called upon to explain the manner of deriving such income during the assessment proceedings and the observations made by the Learned AO to this effect in the penalty order in Para 6 is factually incorrect. During penalty proceedings (iv) The allegation in the penalty order that the appellant did not explained the manner even during the course of penalty proceedings is also factually wrong as the appellant categorically mentioned in the reply filed during the course of penalty proceedings that the income was offered as business income and also explained the methodology of earning and offering the said income. Copy of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings, as evident from the assessment order. Further there were no queries asked at any stage to explain the manner of earning of the income. For the above proposition the appellant places reliance on the following decisions which support the contention of appellant. i. Honb le Gujarat High Court in case of Principal CIT v/s. Shahlon Silk Mills Pvt. Ltd dated 05.02.2018 wherein also no question was raised by Revenue Authorities while recording the statement about the disclosure of manner in which income was earned, relying on the decisions of the Honourable Gujarat High Court in the case of CIT V/s Mahendra Singh Shah (2008) 299 ITR 305, the penalty levied u/s 271AAA was deleted. ii. Hon ble ITAT, Ahmedabad in the case of ACIT v. Shreenarayan Sitaram Mundra [(2017) 166 ITD 47 where it was held that where no question was asked during statement recorded under section 132(4), in respect of earning of income declared, revenue later could not plead deficiency on part of assessee for satisfying manner of earning said income and, thus, penalty under section 271AAA could not be levied. The Concluding observation of the Honourable ITAT are in Para 9.3 and the operative p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in Para 7 to 7.6, deleted the penalties after discussing the decisions of various High Courts and ITATs concluded in Para 7.6 that: In view of the above facts of the present case where from it is evident that during the course of search proceedings the authorized officer of the department has not raised any specific query regarding manner in which the undisclosed income has been derived and on the contrary the assessee has explained that undisclosed income is being surrendered in the basis of loose papers, discrepancies found in seized materials and valuables found during search. We thus respectfully following the above decisions of Honourable Allahabad High Court and Honourable Gujarat High Court and coordinate bench of various tribunal as discussed above hold that in absence of query raised by the authorized officer during the course of search recording the statement u/s 132(4) about the manner in which the undisclosed income has been derived and about its substantiation, the AO was not justified in imposing penalty u/s 271AAA of the Act specifically when the surrendered undisclosed income has been accepted and due taxes has been paid by the assessee. Hence, we hereby se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the knowledge of the department as the same was already offered in the survey before the date of search. (iv) In respect of this income due advance tax of ₹ 72,40,000/- was already paid by the assessee on 13th and 15th September 2014, much prior to the date of search on 04.09.2015. (v) The said income was also deposited in the bank account of the appellant before 31st March 2015 i.e. well before the date of search on 04.09.2015. The documents substantiating the above facts such as the copy of diary which was impounded during the survey u/s 133A on 01.09.2014 and on the basis of which income was offered, copy of the statement of Shri Dinesh Chand Mittal recorded on 01.09.2014, copy of clarification filed after the survey, copies of challans of advance tax paid by the appellant etc are at page no. 77 of the paper book. Therefore the said income of ₹ 2,24,00,000/- nevertheless also offered u/s 132(4) cannot be roped into the ambit of undisclosed income and is out of the clutches of the penal provisions of section 271AAB. 2.7. The fact that this income was offered in the survey conducted u/s 133A on 01.09.2014, the relevant advance tax was deposited immedia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Dr. (Mrs.) Alaka Goswami v. CIT (2004) 138 Taxman 212/ 268 ITR 178 where it was held that the income disclosed on account of payment of the advance tax cannot be held to be undisclosed income for the purposes of block assessment. The appeals of the assessees are allowed to that extent and the assessment orders would be modified taking the income on payment of advance tax as disclosed income and not as the undisclosed income. iii. Hon ble High Court of Madras in the case ofCIT v. Kerala Roadways Ltd. [(2010) 322 ITR 609 where it was held that where the return is filed though after search showing income in respect of which advance tax and self- assessment tax has been paid and tax had been deducted at source, such income could not be treated as undisclosed income. In view of the above, it is submitted that the learned AO erred in levying the penalty u/s 271AAB on income of ₹ 224 Lacs, which stood already offered in the survey u/s 133A, much before the date of search u/s 132 on which not only advance tax was also paid, but the said income was duly recorded in the books of accounts and was deposited in the regular bank account of the appellant and was also shown in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty to the extent of 10% whereas the Learned AO levied the penalty under clause (c) of section 271AAB(1) which itself indicate that the Learned AO levied the penalty in a mechanical manner and without requisite satisfaction. Therefore, the penalty levied by the AO is uncalled for and prayed to be deleted. The penalty u/s 271AAB is neither automatic nor mandatory and is purely discretionary. Considering the overall conduct of the appellant of honouring the offer of additional income in letter and spirit and timely payment of taxes and also considering the cooperation extended during the search proceedings and also during the assessment proceedings, the discretionary penalty ought not to have been levied. For the proposition that penalty u/s 271AAB is discretionary and not mandatory, the appellant places reliance on the following: (i) ACIT V/s Marvel Associates (ITAT Vizag) ITA No. 147/Vizag/2017 dated 16.03.2018. (para 7) (ii) Shri Ravi Mathur V/s DCIT Central Jaipur (Jaipur ITAT) ITA No. 969/JP/2017 dated 13.06.2018 for AY 2015-16. (Para 4,5 6) (iii) Suresh Chand Mittal V/s DCIT Central 2 Jaipur (ITAT Jaipur) ITA No. 931/JP/2017 AY 2014-15, dated 02.07.2018. (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d into the proceedings. In support Ld. DR relied upon the judgment of Hon ble Madras High Court rendered in the case of Sundaram Finance Ltd V/s ACIT. 12. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments relied by both the parties. In this bunch of seven appeals filed by various assessee(s) common two issues have been raised. Firstly legal issue challenging the validity of penalty proceedings initiated u/s 271AAB of the Act being bad in law since the notice issued u/s 274 r.w.s 271AAB of the Act do not fulfill the requirement of law. Second common issue is on merits challenging the action of Ld. CIT(A) sustaining the penalty u/s 271AAB(A) @10% of the undisclosed income surrendered during the course of search conducted u/s 132 of the Act on 4.9.15. 13. We will first take up the legal issue challenging the legality of penalty proceedings initiated by issuing notice u/s 274 r.w.s. 271AAB of the Act. At the first appellate stage the assessee was not able to succeed on the legal ground as Ld. CIT(A) decided against the assessee s observing as follows:- 4.1 Ground No. 1 :_ Through this ground of appeal, the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 274 r.w.s. 271AAB and therefore, the challenge of the appellant in respect of the initiation of the penalty proceedings under wrong section is not valid. Accordingly this ground of appeal is Dismissed. 14. For adjudicating the legal issue in detail, we first need to look into the penalty notices issued to the assessee(s). It is accepted by both the parties that similar type of notices has been issued u/s 274 r.2.s. 271AAB in all these cases. We are therefore reproducing below the notice issued in the case of Smt. Rajrani Mittal for Assessment Year 2015-16:- OFFICE OF THE Deputy Commissioner of Income Tax (Central)-I, Indore PAN. AGLPM0530E Date: 30/11/2017 To Smt. Rajrani Mittal, 15A/22, Manak, Y.N. Road Indore-452001 NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB OF THE INCOME TAX ACT, 1961 Whereas in the course of proceedings before me for the assessment year 2015-16 it appears to me that you :- have concealed the particulars of your Income or furnished inaccurate particulars of such Income. You are hereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 274 of the Act. For better understanding we reproduce the provisions of Section 271AAB and 274 of the Act which reads as follows:- Section 271AAB. '271AAB. Penalty where search has been initiated.-(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 1st 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; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) on or before the specified date- (A) pays 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted.'. Section 274 (1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. (2) No order imposing a penalty under this Chapter shall be made- (a) by the Income- tax Officer, where the penalty exceeds ten thousand rupees; (b) by the Assistant Commissioner, where the penalty exceeds twenty thousand rupees, except with the prior approval of the Deputy Commissioner.] (3) An income- tax authority on making an order under this Chapter imposing a penalty, unless he is himself the Assessing Officer, shall forthwith send a copy of such order to the Assessing Officer'] 9. From perusal of the above provision we observe that sub section 3 of Section 271AAB of the Act talks about issuing the notice u/s 274 of the Act. So for initiating the penalty proceedings u/s 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le cause failed to comply with a notice under section 22(4)/23(2) of the India Income Tax Act, 1922 or under section 142(1)/143(2) of the Income Tax Act 1961, No. dated have concealed the particulars of your Income or furnished inaccurate particulars of such Income. You are hereby requested to appear before me on 21.04.2016 at 04.00 PM and show cause why an order imposing a penalty on you should not be made under section 271AAB of the Income Tax Act 1961 if you do not wish to avail yourself of this opportunity of bearing heard in person or through authorized representative you may show cause in writing on or before the side date which will be considered before any such order is made under section 271AAB. Sd/- (Amit Kumar Soni) Asstt. Commissioner of Income Tax (Central)-1 Indore 11. From going through the above notice issued to the assessee, we find that there is no mention about various conditions provided u/s 271 AAB of the Act. In the notice dated 22.03.2016 the Ld. A.O has very casually used the proforma used for issuing notice before levying penalty u/s 271(1)(c) of the Act for the concealment of income or furnishing of inaccurate particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the penalty notice under Section 274 r.w.S. 271(1)(c) is bad in law and invalid despite the amendment of Section 271 (1 B) with retrospective effect and by virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the same? (3) Whether on the facts and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued under Section 274 without taking into consideration the assessment order When the assessing officer has specified that the assessee has concealed particulars of income? 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271 (1)(c) of the Income Tax Act, 1961 (for short 'the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of SSA's Emerald Meadows (supra), specifically observing that there was no merits in the petition filed by the Revenue. Considering the above cited judgments, we hold that the notice issued ujs.274 r.w.s. 271AAB of the Act, reproduced by us at para 5 above was not valid. Ex-consequenti, the penalty order is set aside. 14. The view taken by the Co-ordinate Bench of Chennai in the case of DCIT V/s R. Elangovan 1199/CHNY/2017 order dated 05.04.2018 has been subsequently followed by the Co-ordinate Bench of Jaipur in the case of Ravi Mathur Vs. DCIT, ITA No.969/JP/2017 holding that such show cause notice issued u/s 274 r.w.s. 271AAB of the Act are not sustainable in law . 15. As regards to judgment of Hon'ble Allahabad High Court in the case of Pr. CIT Vs Sandeep Chandak (supra) which has been relied by the Departmental Representative is concerned, we find that in the decision rendered by the Co-ordinate Bench of Jaipur in the case of Ravi Mathur Vs DCIT (supra) wherein also similar issue of defective notice u/s 274 r.w.s. 271AAB was adjudicated, the judgment of Hon'ble Allahabad High Court in the case of Pr. CIT Vs Sandeep Chandak (supra) has been discussed and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered under section 292BB and the AO will get the benefit of the same. The said decision will not help the case of the revenue so far as the issue involves the merits of levy of penalty under section 271AAB. As regards the decision of Kolkata Benches of the Tribunal in the case of DCIT vs Amit Agrawal (TS-7675- ITAT-2017(Kolkata)-O) (Supra), we find that the said decision was subsequently recalled by the Tribunal and a fresh order dated 14th March, 2018 was passed by the Tribunal in favour of the assessee. Therefore, the decision relied upon by the Ld D/R is no more in existence. 16. We, therefore respectfully following the judgment/decision referred above and in the given facts and circumstances of the case wherein the matter written in the body of the notice issued u/s 274 of the Act does not refer to the charges of provision of Section 271AAB of the Act makes the alleged notice defective and invalid and thus deserves to be quashed. Since the penalty proceedings itself has been quashed the impugned penalty of ₹ 2,04,900/- stands deleted. We accordingly allow the legal ground raised by the assessee challenging the validity of notice issued u/s 274 r.w.s. 271AAB of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivek Chugh (supra) ; 2. Briefly stated facts are that a search and seizure operation /s 132 was carried out on the business as well as residential premises of the Chugh Group of Indore including the assessee. Thereafter, a notice u/s 153A was issued, in response thereto, the assessee filed his return of income on 22.12.2014 including additional income of ₹ 35,00,000/- declared during the search. The assessing officer observed that the assessee could not specify and substantiate the manner in which the said undisclosed income has been derived hence penalty proceedings u/s 271AAB was initiated. Subsequently, the assessing officer imposed a penalty of ₹ 7,00,000/- @ 20% of the concealed income. 4. Aggrieved by this the assessee preferred an appeal before the Ld. CIT(A) who however reduced the penalty and restricted the same @10% of the undisclosed income i.e. amounting to ₹ 3,50,000/-. The assessee is in present appeal against the order of the Ld. CIT(A). At the outset, Ld. counsel for the assessee submitted that initiation of penalty u/s 271AAB of the is ex facie bad in law. He drew our attention towards the notice dated 05.08.2015 and enclosed at page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejoinder Ld. counsel for the assessee submitted that even the Ld. CIT(A) has sustained penalty u/s 271AAB(1)(a) of the Act while the assessing officer had initiated penalty u/s 271AAB(1)(b) of the Act. No notice of initiating penalty u/s 271AAB(1)(a) was given to the assessee. This fact is sufficient to set aside the impugned order. 6. We have heard the rival submissions and perused the material available on records and gone through the orders of the authorities below. We find that the assessing officer had given a notice which enclosed in the paper book at page 25 for the sake of clarity notice is reproduced as under: 7. A bare reading of the above notice suggests that the notice has been issued in a casual fashion. The Assessing officer has not applied his mind and no specific charge is mentioned for which the assessee was required to be show caused. In absence of the requisite contents of specific charge the initiation of proceedings cannot be sustained being bad in law. Admittedly, Ld. CIT(A) reduced the penalty by applying the provisions of section 271AAB(1)(a). There is no ambiguity under the law so far powers of Ld. CIT(A) is concerned, he can modify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms indicated above. 23. Now we take up Revenue Appeal No.879/Ind/2019 for Assessment Year 2015-16. Revenue has challenged the action of Ld. CIT(A) partly deleting the penalty levied by the Ld. A.O u/s 271AAB(c) of the Act. We find that in the case of Smt. Rajrani Mittal while adjudicating the ground raised by the assessee in ITA No.853/Ind/2019 we allowed the legal ground and quashed the penalty proceedings being vague and bad in law since specific charge was not mentioned in the penalty notice issued u/s 274 r.w.s. 271AAB of the Act. For deciding so we have relied on the decision of Co-ordinate Bench in the case of Dr. Rajesh Jain (supra) and Shri Vivek Chugh (supra) and also the ratio laid down by the Hon'ble jurisdictional High Court in the case of Kulwant Singh Bhatia (supra) . Since the penalty proceedings in the case of Smt. Rajrani Mittal for Assessment Year 2015-16 stands quashed the instant appeal of revenue becomes infructuous. Thus the ground raised by the Revenue are dismissed. 24. In the result all the appeals of the assessee(s) ITA No.852 to 858/Ind/2019 are allowed and that of Revenue in ITA No.879/Ind/2019 is dismissed. The order pronounced in the open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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