TMI Blog2021 (12) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... inted form, wherein the specific finding of the AO as to whether he is initiating penalty for concealment of income or for furnishing inaccurate particulars of income is not mentioned. Further, the AO has also not mentioned that he intends to levy penalty under explanation 5 of Section 271(1)(c) and hence the said penalty U/s. 271(1)(c) is not justified and is directed to be deleted. Therefore, we direct to the delete the same. - Decided in favour of assessee. Penalty levied u/s 271AAB - Undisclosed income - HELD THAT:- Assessee has been able to explain the source of the alleged undisclosed income may be relevant for final imposition of the penalty, however, for initiation of the penalty proceedings, the provisions of section 271AAB are self contained and are not dependent upon commencement or finalization of the assessment proceedings. It is further pertinent to note here it is not mandatory for the AO to invoke provisions of section 271AAB of the Act in each every case of levy of penalty pursuant to search action. Assessee has neither made any surrender of any undisclosed income during the search action nor the penalty has been initiated on the basis of undisclosed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 considered the rival contentions and carefully perused the material placed on record. From perusal of the record, we noticed that the assessee is a director of M/s. Karan Kothari Jewellers Private Limited (in short, the KKJPL) and derives income consisted of remuneration from the company and income from other sources only. During the year under consideration, the KKJPL had opened office in Mumbai and he was entrusted with the work of purchases from Mumbai. Hence, he used to frequently travel to Mumbai for business purposes of the company and had developed business contacts. During the search action on 10/09/2014 at the premises of the company KKJPL, the diaries containing the personal transactions were seized and he was asked to explain the said transactions. When he enquired with his representative, he was advised to declare income out of such transactions in his personal returns. He was ready to declare 2 % as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint 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 impose penalty . The Coordinate Bench of the Mumbai ITAT has also taken a specific view in the case of Spykar Lifestyles (P) Ltd. 2021 182 TR (A) 93 -Mum Trib -2020 TaxPub(DT) 4773 wherein the Coordinate Bench has also taken a view that where there is no clear cut finding of the AO on the point whether the A.O. intends to levy penalty for assessee s concealing the particulars of income or for his furnishing inaccurate particulars of such income, in view thereof, the order of penalty is liable to be struck down. We also draw strength from the decision in the case of CIT and others Vs. Manjunatha Cotton Ginning Factory others (2013) 359 ITR 565, (KAR)-HC), wherein it was held that while issuing the notice under section 274, the AO has to come to conclusion as to whether it is concealment of income or furnishing of inaccurate particulars of income and sending printed forms where all grounds a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 the case of assessee before us also the notice issued U/s. 271AAB of the Act, that except for mentioning the levy of penalty U/s. 271AAB, it does not mention about the various conditions provided under the said section. Further, the AO has also casually mentioned in the notice that penalty is leviable at 10%. Our attention was also drawn to the judgment in the case of Vivek Chug Vs. ACIT-2019 TaxPub (DT) 2665 (Ind-Trib) wherein, the Coordinate Bench of the Indore Tribunal has held that Where notice for initiating penalty under section 271AAB, was issued in a casual fashion and where assessing officer did not apply his mind and no specific charge was mentioned in such notice for which the assessee was required to be show caused, in absence of the requisite contents of specific charge, the initiation of proceedings under section 271AAB, could not be sustained being bad in Law. We a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less 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 attracted if the surrendered income would not fall in the definition of undisclosed income as defined under explanation to section 271AAB of the Act. 16. On a perusal of the provisions of section 271AAB, it is evident that the Section 271AAB is self-contained. There can be no doubt that there is no discretion with the AO as the parameters by which the AO or the tax authorities are bound in regard to the rate of penalty and the circumstances on the basis of which the penal provision can be attracted are self-explanatory. It can be noticed that the Co-ordinate Benches of the Tribunal have categorically held that the expression undisclosed income is given a definite and specific meaning and the word has not been described in an inclusive manner so as to enable the tax authorities to give wider or elastic meaning which enables them to bring within its ambit the species of inco ..... 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