TMI Blog2020 (10) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The assessment was made u/s 143(3) of the Act and the returned income was accepted - we quash the penalty levied u/s 271AAB of the Act and allow this appeal of the assessee. - ITA No. 326/Kol/2020 - - - Dated:- 30-9-2020 - Sri J. Sudhakar Reddy, Hon ble Accountant Member Sri Aby T. Varkey, Hon ble Judicial Member Shri S.M. Surana, Advocate, appeared on behalf of the assessee. Smt. Ranu Biswas, Addl. CIT D/R, appearing on behalf of the Revenue. ORDER J. Sudhakar Reddy, This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) 20, Kolkata, (hereinafter the ld.CIT(A) ), passed u/s. 250 of the Income Tax Act, 1961 (the Act ), dt. 26/02/2020, for the Assessment Year 2013-14. 2. Facts in brief:- A search and seizure operation was conducted u/s 132 of the Act on 13/12/2012 by the Investigation Wing, Kolkata, at the residences and various business premises of Ramkrishna Forging Ltd. and others. A search and seizure operation u/s 132 of the Act was conducted at the residence of Smt. Rashmi Jalan, the assessee at Flat No. 6A, Belmont Apartment, 6th Floor, 18/2, Alipore Road, Kolkata 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal. Before the ld. First Appellate Authority, the assessee contended that the three conditions specified in Section 271AAB of the Act for levy of penalty have not been satisfied. He also raised other contentions that a) Commodity profit/income was not discovered as a result of any incriminating material and that these were duly recorded in other documents which would have been disclosed by the assessee. b) The paper containing the commodity trading profit was not found during the course of search as evident from the panchanama drawn up in the name of the assessee. c) That the assessment itself is bad in law since it does not record that incriminating document was found during the course of search based on which the assessment was made. 3.1. The ld. CIT(A) rejected the contentions of the assessee and submitted that:- a) The entries relating to commodity trading profit was not maintained in the regular books of accounts of the assessee. b) From the document seized, it is evident that only net earnings were recorded therein and that there were several such transactions in the month. c) All these transactions in commodity trading were made in cash. The cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the following case-law:- Shri Padam Chand Pungliya vs. ACIT in ITA No. 112/JP/2018, Assessment Year 2014-15, order dt. 05/04/2019 Shri Ashok Bhatia vs. DCIT in ITA No. 869/Ind/2018, Assessment Year 2014-15, order dt. 05/02/2020 Shri Ravi Mathur vs. DCIT in ITA No. 969/JP/2017, Assessment Year 201516, order dt. 13/06/2018 5.2. That there is no statement recorded from the assessee u/s 132(4) of the Act. There is no whisper in the assessment of any undisclosed income being assessed. There is no finding in the assessment order that the assessee would not have disclosed the income arising out of the documents found but for the search. Admittedly, these documents were not found during the search of the assessee s bank locker and if at all the documents were found during the course of search of M/s. Ramkrishna Forging Ltd., a third party, were to be used, action u/s 153C of the Act would have to be taken against the assessee. He submitted that action u/s 153C of the Act, was not taken against the assessee. He distinguished the decision of the Hon ble Allahabad High Court in the case of Sandeep Chandak (supra) and the decision of the ITAT in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2016. PENALTY NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB OF THE INCOME TAX ACT. 1961. PAN - ABDPP 7196A To, Sh. Padam Chand Pungalia, 2372, MSB Ka Rasta, Johari Bazar, Jaipur. Whereas in the course of assessment proceedings before me for the A.Y. 2014-15, it appears to me that as per sections 274 and 275 read with section 271AAB of the Income-tax Act you are liable for penalty on assessed undisclosed income. You are hereby requested to appear before me at my office Room No. 103 (NA), N.C.R.B., Jaipur at 11.00 A.M. on 28.04.2016 and show cause why an order imposing penalty on you should not be made u/s 271AAB r.w.s. 274 of the Income tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through Authorized Representative, you may reply to show cause in writing on or before the said date which will be considered before any such order is made. Yours faithfully, Sd/- (Sushil Kumar Kulhari) Asstt. Commissioner of Income-tax, Central Circle-1, Jaipur. No. ACIT/CC-1/JPR/2016-17/928 Dated : 16.08.2016. PENALTY NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB OF THE INCOME TAX ACT, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to give a finding while imposing the penalty under section 271AAB. Even if the AO is satisfied and come to the conclusion that the assessee has not recorded the undisclosed income in the books of accounts or in the other documents / record maintained in normal course relating to specified previous year, the show cause notice shall also specify the default committed by the assessee to attract the penalty @ 10% or 20% or 30% of the undisclosed income. There is no dispute that the AO has not specified the default and charge against the assessee which necessitated the levy of penalty under section 271AAB of the Act. Consequently, the assessee was not given an opportunity to explain his case for specific default attracting the levy of penalty in terms of clauses (a) to (c) of section 271AAB(1) of the Act. The Channai Bench of the Tribunal in the case of DCIT vs. Shri R. Elangovan (supra) at pages 7 to 10 has held as under :- 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt rendered in the case of CIT vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565. 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed''. In the earlier case of Manjunatha Cotton and Ginning Factory (supra) their lordship had observed as under:- ''Notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy the requirement of law ; The assessee should know the grounds which he has to meet specifically. Otherwise, the principles of natural 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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