TMI Blog2020 (12) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. - I.T.A. Nos. 2372 and 2373/Kol/2018 - - - Dated:- 22-10-2020 - J. Sudhakar Reddy, Member (A) And S.S. Godara, Member (J) For the Appellant : Miraj D. Shah, A/R For the Respondents : Ranu Biswas, Addl. CIT ORDER S.S. Godara, Member (J) 1. These assessee's two appeals for assessment years 2013-14 2014-15 arise against the Commissioner of Income Tax (A) - 21, Kolkata's separate orders both dated 27.08.2018 passed in Case No. 10527 10538/DCIT, CC-4(3)/CIT(A)-21/KOL/2016-17 involving proceedings u/s. 271AAB of the Income Tax Act, 1961; in short 'the Act'; respectively. Heard both the parties. Case files/records perused. 2. The assessee's identical sole substantive grievance in both these appeals challenges correctness of the lower authorities' action imposing section 271AAB penalties of ₹ 44,93,035/- @30% of the alleged undisclosed income of ₹ 1,49,76,784/- each by the Assessing Officer in his twin separate orders; both dated 28.09.16 and restricted to 10% each in the CIT(A)'s lower appellate discussion reading as under: 05. FINDINGS DECISION: 1. I have carefully considered the submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the validity of the penalty proceedings since according to him the Ld. AO did not give proper notice in the manner prescribed. The Ld. AR further submitted in the alternate that the penalty, if any, leviable, ought to have been levied under clause (a) i.e. @ 10% instead of clause (c) i.e. 30% as levied by the Ld. AO. 3. After giving a thoughtful consideration to the facts involved in the present case, I do not find much force in the primary contention of the appellant is that the income of ₹ 1,49,76,784/- assessed by way of profit derived from commodity dealings etc. did not constitute 'undisclosed income defined in Explanation (c) to Section 271AAB of the Act. In this regard it would therefore be relevant to examine the term 'undisclosed income' as defined in Explanation (c) to Section 271AAB of the Act, which reads as follows: Explanation: For the purposes of this Section (C) undisclosed income means (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elating to such previous year. 8. In the facts involved in the present case, it is evident that the sum of ₹ 1,49,76,784/- assessed as appellant's income for the relevant year did not represent any unexplained money, bullion, jewellery, valuable article or any other asset , for the simple reason that no such asset had been identified either by the Ld. AO and no undisclosed asset came to light as a result of the search conducted by the Investigation Authorities. Accordingly the first limb i.e. (a), is not applicable to the facts of the present case. 9. The next limb of Section 271AAB defines undisclosed income as, any entries found in the books of accounts or any documents seized in the course of search which was either not recorded in the (i) regular books on or before the date of Search, or (11) in the documents maintained in normal course of business. In the facts of the present case the appellant is a private limited company formed with the Intention to earn profit. The said company is statutorily required to maintain books of accounts under the provisions of Companies Act, 1956 as well as under provisions of Section 44AA of the Income-tax Act, 1961. Und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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; 12. In view of the above provisions the appellant was required to satisfy the following Conditions so as to ensure that minimum penalty 10% is levied under Section 271AAB of the Act. (a) Assessee must have admitted the undisclosed income in statement recorded u/s. 132(4); (b) Assessee specifies substantiates the manner in which such undisclosed income was derived (c) Pays Tax Interest on such undisclosed income before the specified date (d) Files the ROI for specified previous year declaring such undisclosed income therein 13. In the facts of the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining the corresponding incriminating document(s); DKM-4 alleged to have been found/seized in the course of search dated 11.04.13. His case first of all is that the said document(s) clearly indicate the assessee's corresponding income derived from commodities in both these assessment years. Mr. Shah accordingly pleads that once all these documents form part of the regular books of accounts, the lower authorities' impugned penalties cannot be held to be based on any undisclosed income found/seized during the course of search as defined in section 271AAB Explanation (c)(i)(A) containing the clinching statutory expression not been recorded on or before the date of search in the books of accounts . 4. Learned counsel's next argument is that the CIT(A)'s findings under challenge that the assessee had very well substantiated the manner of having derived this alleged undisclosed income as provided u/s. 271AAB(1)(a) stood duly satisfied; has attained finality and therefore the assessee is entitled for relief against the entire penalty sum. And also that the Assessing Officer's penalty show-cause notices; both dated 31.03.2016, nowhere specified the relevant limb un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parts rendered the entire penal action invalid as follows: 8. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 9. The notice issued u/s. 274 r.w.s. 271 on 31/03/2015, by the Assessing Officer has been extracted by us above. The charge in this notice is not specified. The Jaipur Bench of the Tribunal in the case of Padam Chand Pungliya (supra) held as follows:- We further note that in the case in hand, the AO in the show cause notice has neither specified the grounds and default on the part of the assessee nor even specified the undisclosed income on which the penalty was proposed to be levied. For ready reference we reproduce the show cause notices issued by the AO under section 274 read with section 271AAB on 30th March, 2016 and 16th August, 2016 as under:- No. ACIT/CC-l/JPR/2015-16 Dated : 30.03.2016. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Appeal No. 534/2008 dated 06.12.2016 has concurred with the view taken by Hon'ble Karnataka High Court in case of Manjunatha Cotton Ginning Factory (supra) which was subsequently upheld by the Hon'ble Supreme Court by dismissing the SLP filed by the revenue in the case of SSA's Emerald Meadows (supra). Accordingly, following the decision of the Coordinate Bench as well as Hon'ble Jurisdictional High Court, this issue is decided in favour of the assessee by holding that the initiation of penalty is not valid and consequently the order passed under section 271AAB is not sustainable and liable to be quashed. 10. Similarly, the Indore Bench of the ITAT in the case of Shri Ravi Mathur (supra) has held as follows:- 7. As regards the validity of notice under section 274 for want of specifying the ground and default, we find that when the basic condition of the undisclosed income not recorded in the books of accounts does not exists, then the same has to be specified by the AO in the show cause notice and further the AO is required to give a finding while imposing the penalty under section 271AAB. Even if the AO is satisfied and come to the conclusion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 271(1B) 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') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of CIT vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565. 4. In our view, since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuous. In view of the decision of the Chennai Bench (supra), the show cause notice issued by the AO in the case of the assessee is not sustainable. 10.1. Similar are the decisions in the other case-law relied upon by the assessee. 11. Applying the propositions of law laid down in these case-law to the facts of the case, we have no other alternative but to hold that the penalty in question is bad in law as the show-cause notice issued by the Assessing Officer does not specify the charge/s against the assessee for levy of penalty, as required by law. Thus, on this ground, the penalty is quashed. 12. Even otherwise, Section 271AAB of the Act, contemplates imposition of a penalty pursuant to the disclosure of income in statement recorded u/s. 132(4) of the Act by the assessee. It is an admitted fact that no such statement has been recorded from the assessee. Thus, on this ground also, the levy of penalty fails. Nowhere in the assessment order it is stated that undisclosed income has been assessed. The assessment was made u/s. 143(3) of the Act and the returned income was accepted. Thus, for all these reasons, we quash the penalty levied u/s. 271AAB of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
