TMI Blog2020 (9) TMI 956X X X X Extracts X X X X X X X X Extracts X X X X ..... . 271AAB of the Act. - Decided in favour of assessee. - I.T.A. No. 61/Pat/2019 - - - Dated:- 17-9-2020 - Shri S. S. Godara, JM And Dr. A. L. Saini, AM For the Appellant : None For the Respondent : Shri Inderjit Singh, CIT, DR ORDER PER BENCH This assessee s appeal for assessment year 2014-15 arises against the Commissioner of Income-tax (Appeal)-3, Patna s order dated 13.12.2018 passed in case No.ITBA Appeal No.3/100215/2016-17, imposing penalty of ₹7,50,000/- in proceeding u/s. 271AAB of the Income-tax Act, 1961; in short to as the Act . None appeared on behalf of the assessee. Accordingly, we dispose of the appeal ex parte after hearing the learned CIT-Senior-DR 2. The assessee s sole substantive grievance that arises for our apt adjudication is that of correctness of the lower authorities imposing section 271AAB penalty of ₹7.50 lakhs. With the able assistance of Mr. Singh 30% of the undisclosed income to the tune of ₹25,00,000/- unearthed during the course of search. 132 of the Act. The Assessing Officer s penalty notice apparent to have nowhere specified as to under which limb the he sought to invoke sec. 271AAB penal act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore 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 per cent 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 as may be, apply in relation to the penalty referred to in this section. Explanation.-For the purposes of this section,- (a) specified date means the due date of furnishing of return of income under subsection (I) of section 139 or the date on which the period specified in the notice issued under section 153A for furnishing of return of income expires, as the case may be; (b) specified previous year means the previous year-- (i) which has ended before the date of search, but th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en heard, or has been given a reasonable opportunity of being heard . To comply with this requirement the notice u/s 274 should be clear enough to convey the assessee about the charge which is to be levied against him/her/it for levying the penalty for the contravention of the related provisions of the Act which in the instant case relates to not surrendering of undisclosed amount during the course of search which is subsequently admitted during the course of assessment and not challenged before the Ld. CIT(A). So it was incumbent for Ld. A.O that in the notice issued u/s 274 of the Act he should have mentioned that penalty u/s 271MB of Clauses (a)/(b)/(c) of section 271AAB of the Act. He should have the Act may be levied @10 /20 / 30% since the assessee falls in Clauses (a) / (b) / (c) of section 271AAB of the Act. He should have further mentioned that as the assessees case falls under clause-c of section 271AAB of the Act, why she should not be visited by penalty @ 30% of the undisclosed income. Against this charge the assessee should have been given a reasonable opportunity of being heard. 9. Now let us revert back to the fact of the instant case of the assessee and look ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appear before the undersigned on 10.06.2016 at 11.50AM in my office at Room No.101, AayakarBhawan, Main opp. White Church, Indore personally or through authorized representative to show cause as to why penalty u/s 271AAb of the LT. Act 1961 be not levied against you? If you do not want to appear personally, you may send your written reply on or before above mentioned date, otherwise penalty proceedings shall be decided on merits. Sd/- (Amit Kumar Soni) Deputy Commissioner of Income Tax (Central)-I Indore OFFICE OF THE Deputy Commissioner of Income Tax (Central)-I, Indore PAN. ACFPB4590H Date: 16.09.2016 To Shri Ashok Kumar Bhatia 33-A Radha Nagar Neelkanth Colony Indore-452006 Sir, Sub: Penalty fixation u/s 271AAB r.w.s. 1~9 of the Income Tax Act, 1961 -reg, Please refer to the above The following penalty proceeding are initiated during assessment as mentioned below: S.No. A.Y. Section Penalty initiated on 1 2014-15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 274 r.w.s. 271AAB of the Act observed that; It is clear from the Sub Section (3) of Section 271 AAB that Sections 274 and Section 275 of the Act shall, so far as may be, apply. Sub Section (1) of Section 274 of the Act mandates that order imposing penalty has to be imposed only after hearing the assessee or giving a assessee opportunity of hearing. Opportunity that is to be given to the assessee should be a meaningful one and not a farce. Notice issued to the assessee reproduced (supra), does not show whether penalty proceedings were initiated for concealment of income or for furnishing inaccurate particulars of income or for having undisclosed income within the meaning of Section 271AAB of the Act. Notice in our opinion was vague. Hon'bleKamataka High Court in the case of SSA 's Emerald Meadows (supra) relying in its own judgment in the case of Manjunatha Cotton and Ginning Factory (supra) had held as under:- 2. This appeal has been filed raising the following substantial questions of law. (1) Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atural justice are offended. On the basis of such proceedings, no penalty could be imposed on the assessee) taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law; penalty proceedings are distinct from the assessment proceedings: though proceedings for imposition of penalty emanate from proceedings of assessment, they are independent and a separate aspect of the proceedings; The findings recorded in the assessment proceedings in so far as concealment of income and furnishing of incorrect particulars would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the proceedings on the merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared invalid in the penalty proceedings . View taken by the Hon'ble Karnataka High Court in the above judgment was indirectly affirmed by the Hori 'ble Apex Court, when it dismissed an SLP filed by the Revenue against the judgment in the case of SSA's Emerald Meadows (supra), specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he section of penalty has not been correctly mentioned by the AO in the caption. However, the AO will get the benefit of section 292BB of the Income Tax Act, 1961 because firstly, the assessee has raised no objection before the AO in this regard. Secondly, last line of the notice clearly mentions section 271AAB. Thirdly, the assessee has given reply to said notice which shows that the assessee fully comprehended the implication of the notice that it is for section 271 AAB. The assessee has also challenged that the principles of natural justice has not followed by the AD. The detailed submissions of A.R. in this regard has already been reproduced above. The A.R. did not produce any evidence to show that he was not given proper opportunity of hearing. It is clear from the penalty order that the AO has given 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/ . 271AAB of the Act is confirmed . Thus it was found by the Hon'ble High Court that the mistake in mentioning the section in the show cause notice is covered under section 292BB and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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