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TMI Blog2021 (12) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... . A search and seizure operation U/s 132 of the Act was carried out at the residential premises of the assessee on 10/09/2014. The A.O. completed the assessment vide order dated 29/12/2016 determining total income of the assessee at Rs. 43,66,100/-. Thereafter proceedings U/s 271(1)(c) of the Act was initiated and the A.O. levied penalty of Rs. 7,20,000/- U/s 271(1)(c) of the Act. 5. Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A), who after considering the submissions of both the parties and material placed on record, upheld the action of the A.O. in levying the penalty U/2 271(1)(c) of the Act. 6. Now the assessee is in appeal against the order of the ld. CIT(A) in upholding the penalty levied U/s 271(1)(c) of the Act. 7. The ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and also relied on the written submissions filed before the ld. CIT(A). For the cost of repetition, there is no need to reproduce the written submissions filed before the ld. CIT(A). 8. On the contrary, the ld. DR has vehemently supported the orders of the lower authorities. 9. We have consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 5 of section 271(1)(c) of the Act. We find that the only words used in the Assessment order are, "It is found that the assessee has shown additional income of Rs. 24,00,000/- in the computation of income filed with the return, hence proceedings for penalty under section 271(1)(c) of the Act are to be initiated". Further, the Final Show-cause notice issued on 29/12/2016 alongwith the Assessment order clearly mentions the words "Whereas in the course of proceedings before me for A.Y.2014-15, it appears that you have concealed the particulars of your income or furnished inaccurate particulars of such income", and the AO has not stricken off the not applicable words. In this regard, we draw strength from the decision, as relied by the ld. AR, in the case of Manu Engineering Works (1980)122 ITR 306 (Guj), wherein it was held that "where there is no clear cut finding recorded by the AO on the point whether he intends to levy penalty for assessee's concealing the particulars of income or for his furnishing inaccurate particulars of such income, the order of penalty is liable to be struck down. It is for the assessing officer to clearly say as to under which provision he is going to imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ou are therefore liable to pay, by way of penalty, a sum computed at the rate of ten percent of the undisclosed income of that year." However, the penalty was ultimately levied at 30% of the undisclosed income. This shows total non-application of mind on the part of the AO and hence the said penalty is required to be deleted as laid down in the case of Rainbow Products P. Ltd. Vs. ACIT (ITA 61/PAT/2019), wherein the Coordinate Bench of Patna ITAT, has held that "From going through the above three notices issued to the assessee on 22.03.2016, 03.06.2016 and 16.09.2016, we find that there is no mention about various conditions provided u/s 271 AAB of the Act. 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 particulars of income. Except mentioning the Section 271AAB of the Act in the notice, it does not talk anything about the provision of section 271AAB. Certainly, such notice has a fatal error and technically is not a correct notice in the eyes of law because it intends to penalize an assessee without spelling about the charge against the assessee." In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71AAB of the Act. That the choice of the expression 'may' and not 'shall' in the opening Section of 271AAB shows that the Legislature did not intend to make the levy of penalty statutory, automatic and binding on the Assessing Officer but the Assessing Officer has been given discretion in the matter of levy of penalty. Further that as per sub section (3) of section 271AAB of the Act, the provisions of section 274 and 275 of the Act have been made applicable in relation to the penalty referred to section 271AAB of the Act. It has been further observed that Section 274 deals with the procedure for levy of penalty, wherein, it directs that no order imposing penalty shall be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. Therefore, from plain reading of section 271AAB of the Act, it is evident that the penalty cannot be imposed unless the assessee is given a reasonable opportunity and assessee is being heard. Once the opportunity is given to the assessee, the penalty cannot be mandatory and it is on the basis of the facts and merits placed before the competent authority. It has also been held that the penalty u/s 271AAB will not be at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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