TMI Blog2018 (6) TMI 1744X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the ld Pr.CIT had not given clear finding on the issue. The Assessing Officer have levied penalty @ 10% and ld. Pr.CIT wants to levy 30% of penalty U/s 271AAB of the Act. The A.O. has not specified the sub clause in notice. In such a factual situation, in our considered view, the ratio laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [ 2000 (2) TMI 10 - SUPREME COURT] that an incorrect assumption of fact or an incorrect application of law will satisfy the requirement of the order being erroneous, shall not be applicable in this case. In absence of a clear cut finding of ld. Pr.CIT on the basis of documents found and seized and statements recorded during the search, the Pr.CIT. was not justified in issuing such direction. The Pr.CIT cannot reach at a conclusion that the provisions of Section 271AAB (1)(c) are applicable in assessee s case without clear and final finding on this issue. We would also like to hold that once the assessee has preferred the appeal against the order of AO for levy of penalty u/s 271AAB of the Act, there is no scope for the ld. Pr.CIT to invoke the provisions of Section 263 of the Act to cover any lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961 after issuing final certificate by the Pr. CIT- Central in Form-5 under the Direct Tax Dispute Resolution Scheme, 2016 which is ultravirus and against the principle of natural justice and without having any jurisdiction over the issue. 3. In the facts and circumstances of the case the ld. Pr.CIT, Jaipur-1, Jaipur has erred in passing the order u/s 263 of the Income Tax Act, 1961 by holding that the order passed by Ld. Assessing Officer u/s 271AAB of the Income Tax Act, 1961 dated 20.08.2015 was erroneous and prejudicial to the interest of the revenue. 4. In the facts and circumstances of the case the ld. Pr. CIT, Jaipur-1, Jaipur has erred in holding that the assessee has not substantiate the manner of earning of income in the statement recorded u/s 132(4) of the Income Tax Act, 1961. 5. In the facts and circumstances of the case the ld. Pr. CIT, Jaipur-1, Jaipur has erred in holding that the penalty us/ 271AAB of the Income Tax Act, 1961 is leviable @ 30% instead of 10% imposed by the Ld. Assessing Officer in the given circumstances. 4. The main issue involved in the appeal is passing order U/s 263 of the Act by the ld. Pr.CIT and confirming the penalty U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of revenue. It has necessitated the initiation of proceedings under section 263 of the Income Tax Act. This has been done in a very mechanical way. This action of the AO has resulted in an erroneous penalty order under Section 271AAB of the Income Tax Act, which is clearly prejudicial to the interest of revenue and clearly calls for invocation of section 263 of the Income Tax Act 1961. 12. Keeping the above discussion in view by the virtue of the powers conferred on the undersigned under the provisions of Section 263 of the IT Act 1961, I hold that the order under Section 271AAB dated 20/8/2015 for assessment year 2013-14 passed by the assessing officer is erroneous insofar as it is prejudicial to the interest of revenue as the order has been passed by the assessing officer in a routine and perfunctory manner by applying the incorrect clause of section 271AAB in the case of the assessee for imposing penalty. It is therefore liable to revision under explanation (2) clause (a), clause (b) of section 263 of the Income Tax Act. Therefore holding that there has been short levy of penalty of ₹ 2,99,56,404/- the penalty order dated 20/8/2015 is set aside on this issue with a dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rong provisions/clause of section 271AAB. (ii) The penalty order has been passed by the Ld. PCIT in a routine and perfunctory manner by applying the incorrect clause of section 271AAB. It is submitted that the order passed u/s 263 by the Ld. PCIT is erroneous and unlawful. In the penalty order the Ld. Assessing Officer has not referred to any clause of section 271AAB(1). As such the Ld. Pr. CIT is wrong in observing that the Ld. Assessing Officer has imposed penalty by applying wrong clause/incorrect clause. The entire problem in the penalty is that no clause has been quoted. Not only in the penalty order even in the assessment order while initiating penalty proceedings u/s 271AAB the specific clause (a), (b) or (c) of sub-section (1) have not been quoted. In view of this the order u/s 263 is assailed as under: - 2. Initiation of penalty proceedings is unlawful: - The assessment was completed u/s 143(3) r.w.s. 153B(1)(b) of the IT Act, 1961 almost accepted the income disclosed by the assessee. However the Ld. Assessing Officer initiated penalty proceedings u/s 271AAB of the Income Tax Act, 1961 as per para 5 of the assessment order scanned below: - The perusal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have recorded his satisfaction in the assessment order regarding the specific default committed by the assessee. None of this has been done by the Ld. Assessing Officer. Therefore the very initiation of the penalty proceedings was unlawful. Similarly while issuing penalty notice the Ld. Assessing Officer has again not specified the clause of section 271AAB(1) for which penalty was initiated. The penalty notice is scanned below: - Thus in view of the aforesaid facts it is clear that initiation of penalty proceedings was wrong on the following counts: - (i) The Ld. Assessing Officer did not record any satisfaction with reference to the specific clause of section 271AAB(1). Copy of assessment order is available on paper book page number 6 to 8. (ii) In the assessment order the Ld. Assessing Officer also did not initiated penalty proceeding with reference to any specific clause (a) to (c) of section 271AAB(1). (iii) The notice issued u/s 274 read with section 271 on 13.03.2015 along with the assessment order also did not mention any specific clause of section 271AAB such as 271AAB(1)(a), 271AAB(1)(b) or 271AAB(1)(c). In view of the aforesaid facts on record there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was within meaning of section 271(1)(c)-By virtue of disallowance which was disallowed was deemed to represent income in respect of which particulars had been concealed-Minimum penalty 100% of tax evaded on account of concealed income was worked out and penalty was levied u/s 271(1)(c)-CIT(A) upheld penalty u/s 271(1)(c)-Appellant-assessee challenged imposition of penalty u/s 271(1)(c)-Held, section 271(1)(c) empowered AO to impose penalty to extent specified if, in course of any proceedings under the Act, he was satisfied that any person had concealed the particulars of his income or furnished inaccurate particulars of such income-Penalty could be levied on existence of any of two situations, namely, for concealing particulars of income or for furnishing inaccurate particulars of income-Therefore, imposition of penalty was invited only when conditions prescribed u/s 271(1)(c) exist- Concealment of particulars of income' and furnishing of inaccurate particulars of income' referred to in section 271(1)(c) denote different connotations-In notice issued u/s 274 r.w.s. 271(1)(c) of even date, both limbs of section 271(1)(c) were reproduced in proforma notice and irrelevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be violated and consequently, no penalty could be imposed on the assessee if there was no specific ground mentioned in notice-Tribunal at one point of time did observe that since specific contention was not raised by assessee before Appellate Authority, it was mixed question of law and fact and same might also be permissible-Relevant observations of Tribunal were referred in order passed in M.A.No.62/BANG/15 for rectification and Tribunal, had not accepted contention raised therein-It was hardly required to be stated that if question of law was raised which goes to root of matter and for which no undertaking of factual examination was required, same could be permitted by Tribunal-Had it been case where notice for penalty was not on record in proceedings of assessment, matter might stand on different footing-In any case, where notice for imposition of penalty u/s 271(1)(c) was already there on record and when Tribunal was to examine applicability of this Court decision in case of M/s Manjunatha Cotton and Ginning Factory and law laid down, it was case where contention ought to have been considered and examined-As observed herein above, decision in case of M/s Manjunatha Cotton and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntiate his income during the assessment proceedings. But there is no such finding in the assessment order that assessee failed to substantiate his income. The copy of the assessment order is available on paper book page number 10 to 13. It is only during the course of assessment proceedings that assessee should have been afforded opportunity to substantiate his income. This was not done. Therefore the observation of the Ld. Assessing Officer in the penalty order is false that during the course of assessment proceedings the assessee failed to substantiate his income. Not only this even in the prolonged statement recorded u/s 132(4) on 18.07.2012, the assessee was not put any question regarding substantiating the income. He was never put to explain the source of income disclosed by him. Copy of statement is enclosed with the submission. Therefore it is wrong on the part of the Ld. Assessing Officer to have observed in the penalty order that the assessee failed to substantiate his income. And even it is far worse that the Ld. Pr. CIT was guided and led by this false observation of the Ld. Assessing Officer in the penalty order. She could have rather she should have perused the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch investigation-Revenue s Appeal dismissed. (ii) ASSISTANT COMMISSIONER OF INCOME TAX vs. RITU SINGAL (DELHI TRIBUNAL) (2016) 49 ITR (Trib) 0664 (Delhi) Penalty for failure to keep and maintain information and document in respect of international transaction- Deletion of Penalty- Search and seizure action u/s 132 was carried out in case of Company B - Case of assessee was also covered u/s. 132- Assessee had filed return of income for AY 2010-11, electronically, declaring income of ₹ 20,47,14,190- During course of assessment proceedings, it was noticed by AO that assessee had made disclosure of undisclosed income earned during financial year 2009-10 (relevant to assessment year 2010-11) to extent of ₹ 20 Crores during course of search and post search proceedings on basis of seized material found during course of search- It was further noted by AO that provisions of section 271AAA were applicable with respect to undisclosed income found during course of search and declared by assessee in her return of income for assessment year 2010- 11- AO initiated penalty proceedings u/s. 271AAA during assessment proceedings on ground that assessee had not specified manner i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecially when offered undisclosed income had been accepted and due tax had been paid by assessee-Penalty imposed u/s 271AAA set aside- Assessee s appeal allowed 4. Dispute Resolution Scheme under Finance Act, 2016- Order u/s 204(2) r.w.s. 206 of the Finance Act, 2016 dated 09.11.2016 by Pr. CIT (Central), Jaipur - Over and above the submission made in the forgoing paras it is submitted that during the course of proceedings u/s 263 it was brought to the kind notice of the Ld. Pr. CIT that the assessee has availed benefit of the direct tax dispute resolution scheme-2016. In this regard copies of order passed by Pr. CIT(Central), Jaipur dated 18.10.2016 and 09.11.2016 were produced before him. Under the dispute resolution scheme the assessee was required to only ₹ 37,44,551/- in place of penalty levied u/s 271AAB of ₹ 1,49,78,202/-. The matter thus got finality after the payment made by the assessee of ₹ 37,44,551/-. During the course of proceedings u/s 263 the assessee furnished reply under letter dated 20.03.2018 copy of which is available on paper book page no. 53 to 61. The relevant portion is quoted below: - 5. Subsequently the Ld. Assessing Officer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n scheme 2016 as he was not entitled for the same, it being a case of search. In this regard the submission of the assessee is that the assessee is not expected to know the scheme better than the officers of the department of the level of Pr. CIT (Central). The order passed u/s 204(2) r.w.s. 205 of the Finance Act 2016 dated 09.11.2016 is none other than by Pr. CIT (Central), Jaipur who deals only with search cases. The jurisdiction of Pr. CIT (Central) is exclusively were search and seizure cases. Further the matter of penalty u/s 271AAB which is also directly related with search cases and such penalty is imposed only in such assessments. The facts being so how could it be that the dispute resolution scheme was not applicable to the assessee despite the Ld. Pr. CIT (Central) Jaipur granted the certificate. There is no fault of the assessee in availing scheme. Once a certificate u/s 204(2) r.w.s. section 205 has been granted, the Ld. Pr. CIT-1 was precluded in passing order u/s 263 of the Income Tax Act, 1961. The order passed u/s 263 deserves to be quashed. 6. On the other hand, the ld CIT DR has relied on the order of the ld. Pr.CIT and prayed to uphold the order. 7. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued in terms of clauses of Direct Tax Dispute Resolution Scheme, 2016, the issue regarding levy of penalty U/s 271AAB of the Act got finalize. Further it has been also observed from the order of the ld. Pr.CIT that during the proceedings U/s 263 of the Act, ld. Pr.CIT has not arrived at a clear and final conclusion that penalty levied by the Assessing Officer @ 10% was not justified in view of the materials collected and statement recorded during the search. Ld. Pr.CIT in his order U/s 263 of the Act has directed that the penalty order dated 20/08/2015 is set aside on this issue with a direction to the A.O. to pass the same in the case of assessee de novo in accordance with law after making the necessary examination and verification regarding issue under discussion. Thus, the ld Pr.CIT had not given clear finding on the issue. The Assessing Officer have levied penalty @ 10% and ld. Pr.CIT wants to levy 30% of penalty U/s 271AAB of the Act. The A.O. has not specified the sub clause in notice. In such a factual situation, in our considered view, the ratio laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT (supra) that an incorrect assumption ..... X X X X Extracts X X X X X X X X Extracts X X X X
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