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Income Tax Appellate Tribunal, “DB” BENCH, PATNA
Before: DR. MANISH BORAD, AM & SHRI SONJOY SARMA, JM
These appeals at the instance of the same assessee are directed against the orders of Commissioner of Income-tax (Appeals), Patna-3 [learned CIT (A)] evenly dated 15th March, 2021 for A.Y. 2009-10 to 2014-15, which are arising from the orders of ld. ACIT Circle-2, Patna levying penalty under section 271(1)(c) of the Act for A.Ys. 2009-10, 2010-11, 2013-14, 2014-15 and u/s 271AAA of the Act for A.Y. 2011-12 to A.Y. 2012-13 vide orders evenly dated 30th July, 2018.
Since, common grounds have been raised for 53, 56 & 57/PAT/2021 against levy of penalty u/s 271(1)(c) of the Act for A.Y. 2009-10, 2010-11, 2013-14 “1. For that the grounds of appeal
hereto are without prejudice to each other.
2. For that the order of the ld. Commissioner of Income-tax (Appeals) and also the learned AO is bad both in law and on facts.
3. For that the order of the learned Commissioner of Income Tax (Appeal) and also the learned Assessing Officer. Is based on presumption, surmises and conjectures.”
03. Assessee has further raised additional grounds: - i. That the penalty u/s 271(1)(c) of the Act cannot be levied without recording satisfaction and mentioning specific direction of Income Tax Settlement Commissioner (ITSC). ii. That the quantum appeal is admitted is admitted by the higher authority, it means that the issue is debatable and therefore, penalty u/s 271(1)(c) of the Act cannot be levied. iii. Ld. CIT (A) erred in enhancing the penalty without issuing show cause.
& 55/PAT/2021 are concerned, the assessee has raised common grounds for A.Y. 2011-12 and 2012-13 against levy of penalty u/s 271AAA of the Act and the same reads as under: - “1. For that the grounds of appeal hereto are without prejudice to each other.
For that the order of the learned Commissioner of Income Tax (Appeal) and also the learned assessing officer is based on presumption, surmises and conjectures.
For that the order of the learned Commissioner of Income Tax (Appeal) and also the Id. assessing officer is further violative of the settled principles of natural justice in as much as no opportunity much less adequate opportunity was ever afforded to the appellant to furnish its defence in course of assessment proceedings.
5. For that the learned assessing officer has erred in imposing penalty under section 271AAA of the Act equivalent to 10% of the amount of tax leviable notwithstanding the fact that the default if any. occurred due to reasons beyond the control of the appellant and that the imposition of penalty under the said provision of the Act not automatic.
6. For that the learned Commissioner of Income Tax (Appeal) has erred in dismissing the appeal merely on the ground that the appellant had failed to pay the amount of tax in dispute quantified by the Hon'ble Settlement Commission in its entirety notwithstanding the fact that firstly, the appellant had explained the reason that led to the non- payment of tax in its entirety within the stipulated time and secondly, a request for was made for grant of some time to pay the balance of the amount of tax in dispute as quantified by the Hon'ble Settlement Commission.
7. For that the learned Commissioner of Income Tax (Appeal) has erred in dismissing the appeal on the grounds aforesaid without consideration of the fact that the default in the non-payment were beyond the control of the appellant and that the same was due to a reasonable cause and that the penalty u/s 271AAA is not automatic.
For that other various grounds which may be urged at the time of hearing.”
Brief facts of the case are that search and seizure operation u/s 132 of the Act was conducted on 29th July,
Subsequently, assessee again filed fresh application on 26th June, 2014, before the ITSC (IT & WST) Additional Bench, Kolkata for A.Ys. 2006-07 to 2014-15 (nine Assessment Years) and the same was admitted and the ld. ITSC passed the order u/s 245D (4) of the Act on 31st December, 2015. After passing the order of ld. ITSC, the demand was raised but the assessee failed to make the payment of total demand. As a result of which, ld. ITSC withdrawn immunity granted to the assessee vide order dated 31st December, 2015. The outstanding amount which remained payable by the assessee in compliance to the order of the ld. ITSC order for A.Y. 2006-07 to 2014- 15 amounted to ₹2,74,40,648/-. When the ld. ITSC withdraw the immunity granted to the assessee, the assessee filed a Writ Petition before the Hon'ble High Court and on the date of hearing i.e. 25th August, 2021, the ld. counsel for the assessee stated that there was bonafide
Now, on one hand the assessee has challenged the order of ld. ITSC withdrawing the immunity granted to it before the Hon’ble High Court of Patna and on the other hand, the ld. AO on the basis ld. ITSC order of withdrawing mandate, initiated the penalty proceedings and levied the penalty u/s 271(1)(c) of the Act of the Act for concealment of income for A.Ys. 2009-10, 2010-11, 2013-14 and 2014- 15 at ₹1,93,52,140/-, ₹1,13,77,978, ₹90,09,772 and 1,33,60,445/- respectively. Penalty u/s 271 AAA of the Act for A.Y. 2011-12 and A.Y. 2012-13 was levied at Rs.36,48,167/- and Rs.25,47,388/- respectively. Perusal of the penalty orders, indicates that there was no compliance by the assessee and even when the assessee challenges the penalty u/s 271(1)(c) of the Act for the reference referred above the assessee failed to succeed as
8. As regards to the penalty levied u/s 271(1)(c) of the Act is concerned, the ld. counsel for the assessee who submitted that the ld. AO has levied the penalty without recording the satisfaction as to how the assessee has concealed the income or has furnished the inaccurate particulars of income. Reliance placed on the judgement of the Hon'ble Delhi High Courtin case of Ms. Madhushree Gupta vs. Union of India [2009] 183 Taxman 100 (Delhi) dated 24- 07-2009] and Hon'ble Karnataka High Court in case of Commissioner of Income-tax Vs. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Karnataka). He submitted that the basic foundation of levying the penalty is to first issue the notice u/s 274 of the Act levying the specific charge against the assessee but no such exercise has been carried out. He also submitted that when the order of ITSC is invoked and demands have been recovered against tax liability calculated then how can the penalty to be imposed to the assessee. Alternative submission was also made and when the issue is debatable then the penalty cannot be levied. He also submitted that the action of ld. CIT (A) of enhancing the penalty to 300% is illegal, bad in law and violation of principle of natural justice as no show cause notice was issued to the assessee.
The brief synopsis filed by the ld. counsel for the assessee against the levy of penalty u/s 271(1)(c) of the Act is reproduced below: - Dates Particulars of events 29.07.2011 Search and seizure operation was conducted on the business and residential premises of the appellant and his family members. No statement was recorded during the search proceeding or after. 31.12.2015 The appellant moved before Hon'ble Settlement Commission and the Hon'ble ITSC passed order u/s 254 D (4). 25.01.2016 Demand notice u/s 156 was issued to the assessee giving effect to the order of amount ₹2,13,63,076/- 17/18th Jan. Settlement Commission had withdrawn Immunity from penalty and 2018 prosecution against the assessee 30.07.2018 Penalty order passed against the assessee u/s 271(1)(c) of the act Imposing penalty leviable @ 100% amounting to Rs. 1,93,52,140/- 15.03.2021 The appellant preferred appeal against the order of the Ld. AO and the Ld. CIT (Appeal) without looking in the merits of the case enhances the penalty leviable @ 300% of the tax sought to be evaded. Synopsis of Argument Without recording satisfaction and In the assessment order the Ld.AO has mentioned about mentioning specific direction of the the specific direction of the Hon'ble Settlement Hon'ble Settlement Commission penalty Commission which was followed by the Ld.AO while under sec. 271(1) (C) cannot be levied imposing penalty u/s 271(1)(c) of the Act. Penalty u/s 271(1)(c) cannot be exercised in deemed or presumption basis. It must be specific with satisfaction. In our case no satisfaction was recorded by the Ld. AO. All the basis ingredients for invoking penalty against the assessee under sec 271(1)(c) is being miss out. The penalty imposed on the basis of casual grounds u/s 271(1)(c) is not applicable in our case and fit to be declare non-est. The assessee relied upon following case laws -
Madhushree Gupta vs. Union of India [2009] 183 TAXΜΑΝ 100 (DELHI) Ajaybhai I Gogia Vs ITO (ITAT Rajkot) CIT vs. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565(Kar.) If the quantum appeal Is admitted by The appellant had filed settlement application before the Higher authority, it means that the Hon'ble Settlement Commission on 26/06/2014 for A.Ys. Issue is debatable and penalty under 2006-07 to 2014- 15 (9 assessment years). sec. 271(1) (C) cannot be levied Subsequently, the Hon'ble Settlement Commission, (IT and WT), Additional Bench, Kolkata has admitted the application filed by the assessee it means that the quantum amount is not disputed by the department. Once the quantum was not disputed and admitted by the Hon'ble Settlement Commission the Issue will become debatable. Hence, when the Issue in debatable and penalty u/s 271(1)(c) Is unlawful. The assessee relied upon following case laws:
The assessee has relied upon following case laws: Meetu Bansal Vs. DCIT (Uttarakhand High Court) Syed Maqsoodulla Vs. ITO (ITAT Bangalore) Syed Maqsoodulla Vs ITO (ITAT Bangalore) of CIT vs. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 (SC) 010. As regards the penalty u/s 271AAA of the Act, he submitted that the preliminary requirement for invoking penalty u/s 271AAA of the Act is basis of the statement recorded during the course of search u/s 132(4) of the Act. However, in the case of the assessee no such statement was recorded and in support to that an affidavit has been filed by the Director of the assessee company and therefore since the basic conditions which needs to be fulfilled for invoking penalty u/s 271AAA of the Act has not been complied by the Revenue authorities, the impugned penalty deserves to be deleted. A brief synopsis filed in this regard by the ld. counsel for the assessee reads as under: - Dates Particulars of events 29.07.2011 Search and seizure operation was conducted on the business and residential premises of the appellant and his family members. No statement was recorded during the search proceeding or after. 31.12.2015 The appellant moved before Hon'ble Settlement Commission and the Hon'ble ITSC passed order u/s 254 D (4). 25.01.2016 Demand notice u/s 156 was issued to the assessee giving effect to the order of amount ₹17,01,193/- 17/18th Jan. Settlement Commission had withdrawn Immunity from penalty and 2018 prosecution against the assessee 30.07.2018 Penalty order passed against the assessee u/s 271AAA of the act Without recording statement imposition Preliminary requirement for invoking penalty u/s of the penalty u/s 271AAA is not 271AAA is basis of statement recorded during the period sustainable. of search u/s 132(4) of the Act. But in our case no such statement was recorded. The director of the assessee company is submitting affidavit on oath containing that no statement was recorded during the search proceeding. (The affidavit is enclosed as annexure for your honour record.)
Once the statement was not recorded the imposition of sec. 271AAA is invalid in any circumstances. The Ld. CIT(A) on the ground that the assessee is a habitual offender passed the appeal order which is not a basis to impose penalty u/s 271AAA. The Ld. CIT(A) has not verified that on the date of search statement was recorded u/s 132(4) of the Act by the Ld. AO. No merit was discussed appeal order was passed by the CIT(A). The CIT(A) has brushed aside the provision of section 271AAA which is mandatory to be verified. But in our case on theground that the assessee is a habitual offender passed the appeal orderwhich itself make order impugned. If the Ld. Has not mentioned aboutthe statement recorded u/s 132(4) before imposing penalty u/s 271AAAthe Ld. CIT(A) must mention about it in the appeal order. No statement was recorded during search and date of the statement recorded in not mentioned in the order. Enquiry was also noconducted in our case. In absence of statement enquiry is not possible. On that reason the Ld. AO has not conducted enquiry. Hence, in absence of both the mandatory ingredient penalty u/s 271AAA is not sustainable. The assessee has relied upon the following case law: Pr.CIT vs. M/s. Emirates Technologies Pvt. Ltd. (ITA No. 400/2017) order dated 18.07.2017 CIT vs. Mahendra C Shah reported as 299 ITR 305 (GJ) PCIT vs. Mukeshbhai Ramanlal Prajapati 398 ITR 0170(GJ) Page no.8 011. On the other hand, the ld. DR vehemently argued supporting the order of the ld. lower authorities and submitted that since the assessee did not follow the direction of ld. ITSC by way of making payment within the
We have heard the rival contentions and perused the records available on record. The assessee is aggrieved with levy of penalty u/s 271(1)(c) and 271AAA of the Act levied for the following assessment years:
.Y. Penalty u/s Amount 54/PAT/2021 2011-12 271AAA 36,48,167 55/AT/2021 2012-13 271AAA 25,47,388 52/PAT/2021 2009-10 271(1)(c) 1,93,52,140 53/PAT/2021 2010-11 271(1)(c) 1,13,77,978 56/PAT/2021 2013-14 271(1)(c) 90,09,772 57/PAT/2021 2014-15 271(1)(c) 1,33,60,445 013. We note that post search action on the assessee, the application filed before the learned ITSC on 26th June, 2014, for A.Y. 2006-07 to A.Y. 2014-15 (nine years) was admitted and learned ITSC passed the order under Section 245D of the Act calculating the settlement amount for A.Y. 2006-07 to A.Y. 2014-15 at ₹6,51,35,358/-. In compliance to the said order the assessee immediately paid a sum of ₹3,78,94,711/-, but the balance amount of ₹2,72,40,647/- could not be paid on account of shortage of funds and other bonafide reasons. For the short payment by the assessee, the learned ITSC took cognizance and withdrew the immunity granted to the assessee. Against the said order of withdrawing of immunity assessee filed Writ Petition before the Hon'ble High Court where Hon'ble High Court directed the assessee to make payments of the outstanding amount. Compliance to the direction of Hon'ble High Court, assessee further deposited
We further observe that the Hon'ble Court has directed to set off the delayed payments against the demand raised towards either interest or principal dues standing against the petitioner assessee as the statute mandates. It is also not in dispute that immediately after passing of the order by ITSC on 31st December, 2015, assessee has paid a considerable amount which is almost 58.23% and the remaining amount has been paid thereafter.
Now in the backdrop, these facts about the assessee’s application to ld. ITSC having been accepted and the settlement amount stands deposited though not on schedule time but major part of the amount has been deposited immediately after passing the orders of learned ITSC. We note that there is no allegation against the assessee that the order of ld. ITSC u/s 245D (4) of the Act has been obtained by the assessee by any fraud or misrepresentation of facts as provided u/s 245D (6) of the Act. We also notice that when the assessee is unable to make payments in accordance with the order of ld. ITSC Section 245D(6A) of the Act comes into action and the same reads as under: -
“Section 245D(6A) in The Income Tax Act, 1961 (6A)Where any tax payable in pursuance of an order under sub-section (4) is not paid by the assessee within thirty-five days of the receipt of a copy of the order by him, then, whether or not the Settlement
As per Section 271(1)(c) of the Act, the assessee can be subjected to levy the penalty if it is found that the assessee has concealed the particulars of income or has furnished inaccurate particulars of income. Now, the said penalty can be levied only if the ld. AO or ld. CIT (A) or ld. PCIT during the course of any proceeding in this act are satisfied. The word ‘satisfied’ is of great importance in the present context before levying the penalty he/ she he has to first satisfy as to whether assessee has concealed any particulars of income or furnished any inaccurate particulars of such income. In the instant case, the Revenue authorities have failed to prove on record by placing any such evidence which could establish that prior to levy of penalty under Section 271(1)(c) of the Act, any satisfaction has been recorded by the learned AO. For reference we would like to reproduce below the penalty order u/s 271(1)(c) of the Act for A.Y. 2009-10, and the same reads as under:-
“A search and seizure operation was conducted on 29/07/2011 in the business and residential premises of Shri Anil Kumar and his family members including their business concerns, namely M/s Patliputra Builders Ltd., M/s Patliputra Shoppers Plaza Pvt. Ltd. and other group companies. M/s Patliputra Builders Ltd. and its sister concerns are mainly engaged in the business of real estate, retail chain, entertainment and hospitality. Notice u/s 153A of the Income- tax Act, 1961 was issued on 08/02/2013 for filing of return of Income.
After receiving the Settlement order, the effect to the order was given and demand raised Rs 2,13,63,076/-. The demand notice u/s 156 was issued to the assessee on 25/01/2016.
But, the assessee did not pay entire demand. Further, show cause was issued to the assessee for payment of demand on 27/07/2017 & 30/11/2017. But, the assessee did not pay the demand. The Hon'ble Settlement Commission, (IT & WT), Additional Bench, Kolkata has withdrawn immunity from penalty and prosecution in the case of the assessee M/s Patliputra Builders Ltd. (PAN - AACCP0629B) on 17th/18th January, 2018.
Letters were issued on 28/06/2018 & 05/07/2018 for information regarding withdrawal of immunity from penalty and prosecution in the case of the assessee M/s Patliputra Builders Ltd. and also to provide final opportunity before passing penalty order u/s 271(1)(c) of the Income-tax Act, 1961. Compliance requested on 12/07/2018.
On 13/07/2018, the assessee filed time petition for payment of income- tax through its director which is as under :-
"... I would like to convey that our Patliputra Group is one of the reputed names in business community in the State of Bihar. For the past many years we are regular taxpayer and contributed significantly to State exchequer. However in the past few years, the business scenario of Bihar has been gloomy one, especially for real estate sector. Some policy changes of State Govt. have hit us hard and our revenue has been badly affected. As such we
Sir, I would like to categorically assure you that we are honest taxpayer of the nation and we always strive for payment of all statutory dues against us. We just want some support from the department in form of some relaxation in time missioner period of payments of demands. Therefore, we request you to kindly grant us time period of at least 60 days, so that we will be able to clear all tax dues against us.
The reply of the assessee is not tenable in view of the fact that the assessee failed to make payment of the demand determined by the Hon'ble ITSC and Hon'ble ITSC has withdrawn immunity granted to the assessee earlier. The assessee is totally silent in that as pact. Hence, after withdrawal of immunity by the Hon'ble ITSC, the undisclosed income declared by the assessee for SOF as well as further amount of undisclosed income adjusted and determined by the Hon'ble ITSC is liable for penalty for concealment of income u/s 271(1)(c). Therefore, keeping in view facts of the case, I have left with no other option but to impose penalty u/s 271(1)(c) of the Income-tax Act, 1961 for concealment.
Hence, penalty, as calculated below is being levied on this issue.
Calculation of Penalty:
(i) Income determined by Hon'ble Settlement Commission Rs. 6,56,65,495/- (ii) Returned income Rs. 96,03,759/- (iii) Tax on (i) above including surcharge Rs. 2,23,19,702/- (iv) Tax on (ii) above including surcharge Rs. 29,67,562/- (v) Undisclosed income declared by the assessee and further amount determined by the Hon'ble ITSC for A.Y. 2009-10 =Rs. 5,60,61,736/- (vi) Tax sought to be evaded on above (iii - iv) = Rs. 1,93,52,140/- (vii) Minimum penalty leviable @ 100% tax sought to be evaded u/s 271(1)(c) of the Income tax Act. Rs. 1,93,52,140/- “If ofter applying his mind, the AO made himself satisfied that there was no concealment/furnishing of inaccurate particulars of income and accordingly, did not initiate the penalty proceedings in the body of assessment order, he cannot proceed for penalty proceedings. The absence of direction for initiation of penalty proceedings under Section 271(1)(c) in the body of assessment order, cannot even be ratified by issue of notice under Section 271(1)(c) r.w.s. 274 along with assessment order or by taking recourse to Section 154/2928 otherwise it will render Section 271(1B) meaningless and otiose."
Madhushree Gupta vs. Union of India [2009] 183 TAXMAN 100 (DELHI)] held as under: - “in this case it was held that "an assessment order should contain at least a direction for initiation of penalty proceedings to constitute satisfaction of the AO for initiation of penalty proceedings under Section 271(1)(c). Even post Section 271(18), still a prima facie satisfaction of Assessing Officer that the case may deserve imposition of penalty should be discernible from order passed during the course of assessment proceedings."
In light of the above judgement on the legal ground itself, the assessee deserves to succeed as the penalty proceedings have not been initiated in accordance with law
Now, we take up the grounds challenging the levy of penalty u/s 271 AAA of the Act, which deals with the penalty levied under certain circumstances where search has been carried out u/s 132 of the Act. and for necessary reference Section 271 AAA of the Act is reproduced below: -
“Section 271AAA in The Income Tax Act, 1961 271AAA. [ Penalty where search has been initiated. [ Inserted by Act 22 of 2007, Section 77 (w.e.f. 1.4.2007).] (1)The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has (2)Nothing contained in sub-section (1) shall apply if the 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)pays the tax, together with interest, if any, in respect of the undisclosed income.
(3)No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1).
(4)The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section.
Explanation. - For the purposes of this section,- (a)"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 course of a search under section 132, which has-
(A)not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B)otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of search; or (ii)any income of the specified previous year represented, either wholly or partly, by any entry in respect of an (b)"specified previous year" means the previous year-
(i)which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii)in which search was conducted.]”
Before examining the facts of the case in light of the above provisions, we would first like to note the observation of the ld. AO in the penalty order u/s 271AAA of the Act and for reference, the penalty order for A.Y. 2011-12 is reproduced below: - “A search and seizure operation was conducted on 29/07/2011 in the business and residential premises of Shri Anil Kumar and his family members including their business concerns, namely M/s Patliputra Builders Ltd., M/s Patliputra Shoppers Plaza Pvt. Ltd. and other group companies. M/s Patliputra Builders Ltd. and its sister concerns are mainly engaged in the business of real estate, retail chain, entertainment and hospitality. Notice u/s 153A of the Income- tax Act, 1961 was issued on 08/02/2013 for filing of return of Income.
However, the assessee filed settlement application before Hon'ble Settlement Commission, (IT & WT), Additional Bench, Kolkata on 05/06/2014 for A.Y. 2006-07 to 2012-13 (7 assessment years). However, the applications were not allowed to Tax interest. be proceeded with on account of short payment of tax and interest. Subsequently, the assessee filed fresh settlement application on 2.P28/06/2014 before the Settlement Commission, (IT & WT), Additional Bench. Kolkata for A.Ys. 2006-07 to 2014-15. (9 assessment After receiving the Settlement order, the effect to the order was given and demand raised Rs. 17,01,193/-. The demand notice u/s 156 was issued to the assessee on 25/01/2016.
But, the assessee did not pay entire demand. Further, show cause was issued to the assessee for payment of demand on 27/07/2017 & 30/11/2017. But, the assessee did not pay the demand. The Hon'ble Settlement Commission, (IT & WT), Additional Bench, Kolkata has withdrawn immunity from penalty and prosecution in the case of the assessee M/s Patliputra Builders Ltd. (PAN AACCP0629B) on 17th/18th January, 2018.
Letters were issued on 28/06/2018 & 05/07/2018 for information regarding withdrawal of immunity from penalty and prosecution in the case of the assessee M/s Patliputra Builders Ltd. and also to provide final opportunity before passing penalty order u/s 271AAA of the Income-tax Act, 1961 on 02/07/2018. Compliance requested on 10/07/2018.
On 13/07/2018, the assessee filed time petition for payment of income- tax through its director which is as under :-
"... I would like to convey that our Patliputra Group is one of the reputed names in business community in the State of Bihar. For the past many years we are regular taxpayer and contributed significantly to State exchequer. However in the past few years, the business scenario of Bihar has been gloomy one. especially for real estate sector. Some policy changes of State Govt. have hit us hard and our revenue has been badly affected. As such we are facing lot of hardship in running day to day business affairs due to crunch of funds.
Sir, I would like to categorically assure you that we are honest taxpayer of the nation and we always strive for payment of all statutory dues against us. We just want some support from the department in form of some relaxation in time period for payment of demands. Therefore, we request you to kindly grant The reply of the in view of the fact that the assessee is not tenable in view of the fact that the assessee failed to make payment of the demand determined by the Hon'ble ITSC and Hon'ble ITSC has withdrawn immunity granted to the assessee earlier. The assessee is totally silent in that as pact. Hence, after withdrawal of immunity by the Hon'ble ITSC, the undisclosed income declared by the assessee for SOF as well as further amount of undisclosed income adjusted and determined by the Hon'ble ITSC is liable for penalty u/s 271AAA. Keeping in view facts of the case, I have left with no other option but to impose penalty u/s 271AAA of the Income-tax Act, 1961. It is considered a fit case to levy a penalty of Rs. 36,48,167/- u/s 271AAA, being 10% of the amount of tax leviable in respect of the undisclosed income of Rs. 3,64,81,666/-. Hence, after considering fact of the case, penalty order passed u/s 271AAA of the Income-tax Act, 1961. Penalty of Rs. 36,48,167/- u/s 271AAA of the Income-tax Act, 1961 is imposed.
This order is passed with the prior approval of Joint CIT, Central Range- 1, Patna received vide letter no. JCIT/CR-1/Pat/Penalty Approval/2018- 19/1014 dated 27/07/2018.
Issue demand notice & challan accordingly.”
While dealing with the penalty u/s 271(1)(c) of the Act, in the preceding paras, similar is the fact with regard to penalty order u/s 271AAA of the Act because, the ld. AO has not made any discussion about the conditions provided u/s 271AAA of the Act on the fulfilment of which the penalty could be levied. Revenue has also failed to place any evidence on record which could prove that whether any show cause notice was issued to the assessee prior to the passing the order levying penalty u/s 271AAA of the Act. The ld. AO has again followed the same course of action and jumped on the conclusions by levying penalty u/s 271AAA of the Act without even having
In the light of the above judgement/ decision, we find that in the penalty order u/s 271AAA of the Act, the ld. AO has not referred to any conditions prescribed u/s 271AAA of the Act nor there is any mentioned of any statement recorded u/s 132(4) of the Act nor is there any mention about the assessee having being asked to explain the manner of earning undisclosed income. Therefore, when the conditions prescribed u/s 271AAA of the Act remains to be fulfilled, the initiation of penalty proceedings u/s 271AAA of the Act are itself void, illegal and bad in law and therefore, the penalty proceedings u/s 271AAA of the Act for A.Ys. 2011-12 and 2012-13 are hereby quashed and impugned penalty levied u/s 271AAA of the Act are hereby deleted. Relevant grounds raised by the assessee for the said assessment years challenging the penalty levied u/s 271AAA of the Act are hereby allowed.
In the result, all the captioned appeals of the assessee for A.Y. 2009-10 to 2014-15 are allowed.
Order pronounced in the open court on 30.09.2024.