SHRI UMESH LILANI,INDORE vs. THE ACIT (CENTRAL) I, INDORE

आदेश / O R D E R

PER BENCH:

These appeals by different assessees captioned above

pertaining to the assessment year 2013-14 are directed against

different orders of the Commissioner of Income Tax (Appeals)-III,

Indore, arising out of different assessment orders all dated

28.7.2015 passed u/s 271AAB of Income Tax Act (in short referred

as ‘Act’) Act framed by the DCIT, Central-I, Indore.

together and are being disposed of by this consolidated order for the

sake of convenience.

common legal ground has been taken by all the different assessees

which reads as under :-

(i) That on the facts and in the circumstances of the case and in law the ld. CIT(A) erred in holding that penalty imposed u/s 271AAB on the basis of printed notice form without mentioning in the notice or in the assessment order that the proceedings are initiated for concealment of income or on account of furnishing inaccurate particulars of income is valid and legal.” 4. Since the facts relating to the above issue are identical in all

these appeals, we would like to dispose there appeals through this

common order.

seizure operation u/s 132 of the Act was carried out at the business

and residential premises of the Chugh Group and other associated

concerns and individuals assessee’s on 21.9.2012. Unaccounted

income was surrendered during the course of search under various

names of individual/companies and offered to tax and the same

was duly paid. Subsequently, the Assessing Officer after issuing the

notice under section 274 read with section 271AAB of the Act levied

penalty on the confirmed addition u/s 271(1)(c) of

the Act. On appeal, the learned Commissioner of Income Tax

(Appeals) scaled down the penalty by applying the provisions of

section 271AAB of the Act (which provides for 10% penalty on the

surrendered income) as against the penalty levied by the Ld. AO

u/s 271(1)(c) of the Act.

issued u/s 274 read with section 271AAB of the Act, relied on

various judgments Annexed in the paper book and pleaded that the

impugned notices in all these seven cases are liable to be quashed,

as the Ld. AO has not specified the charge on the assessee as to

whether the penalty proceedings are initiated for “furnishing

inaccurate particulars of income or for “concealing the particulars

of income”.

lower authorities.

available on record placed before us and carefully gone through the

judgment referred and relied by both the parties. In these bunch of

seven appeals relating to the penalty levied u/s 271AAB/ 271(1)(c)

of the Act, The Ld. CIT(A) has confirmed the penalties in following

cases:

Name of assessee A.Y. Penalty u/s 271AAB Amount Rs. Rajendra Mansukhani 2013-14 271AAB 3,00,000 Suresh Lilani 2013-14 271AAB 90,000 Umesh Lilani 2013-14 271AAB 1,10,000 Gopal Maheshwari 2013-14 271AAB 3,00,383 Pulkit Maheshwari 2013-14 271AAB 92107 Radheshyam 2013-14 271AAB 300383 Maheshwari Anurag Maheshwari 2013-14 271AAB 307153

quantum of penalty confirmed by Ld. CIT(A), grounds have also

been taken on the legality of the notices issued notice u/s 274 r.w.

section 271AAB/ 271(1)(c) of the Act. We, therefore, like to

adjudicate the legal issue first.

Act. It is not disputed at the end of both the parties that similar

type of notice has been issued in all these cases. We, therefore,

reproduced below the notice issued u/s 274 of the Act in the case of

Rajendra Mansukhani for A.Y. 2013-14 in ITA No. 172/Ind/17:

“11.8 We have considered the rival submissions and perused the material on record. It is evident from the notices u/s 274 r.w.s. 271 of the Act dated 27.12.2007 and 6.3.2012 that the AO has not specifically specified under which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated by him, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Hon’ble High Court of Karnataka in the case of CIT v. Manjunatha Cotton & Ginning Factory reported in 359 ITR 565 (Kar) has inter-alia held as under:

“(p) Notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c) i.e., whether it is for concealment of income or for furnishing of inaccurate particulars of income (q) Sending printed form where all the ground mentioned in section 271 are mentioned would not satisfy requirement of law.” 11.9 The above said decision of Hon’ble High Court of Karnataka in the case of CIT v. Manjunatha Cotton & Ginning Factory (supra) has been followed by the Hon’ble High Court of Karnataka in the case of CIT v. SSA’s Emerald Meadows 73 taxmann.com 241 and the relevant portion is as under: “2. This appeal has been filed raising the following substantial questions of law: 1 Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case? 2 Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the penalty notice under Section 274 r.w.s. 271(1)(c) is bad in law and invalid despite the amendment of Section 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 v. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250 (Kar.). 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed. 11.10 The SLP filed by the revenue against the above judgment has been dismissed by Hon’ble Supreme Court of India and the decision of Hon’ble Supreme Court is reproduced here in below: “1 Delay condoned 2 We do not find any merit in this petition. The special leave petition is accordingly dismissed. 3 Pending application, if any stands disposed off.” 11.11 Therefore, in the circumstances and on the facts of the present case and in light of the judgments of the Hon’ble Karnataka High Court and the Hon’ble Supreme Court reproduced hereinabove, we are of the considered view that the Assessing officer is required to specify as to under 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. From the perusal of the notice u/s 274 r.w.s. 271 of the Act, Assessing officer has not specified as to under which of the two limbs the penalty is imposable. In the circumstances and facts of the case, the penalty proceedings so initiated by the AO are bad in law and accordingly the penalties so initiated are ordered to be cancelled and the order/s of the learned CIT (A) are reversed. Thus, the legal ground raised is decided in favour of the assessee and is allowed.” 13. We also find that the Hon'ble jurisdictional High Court in the case of CIT vs. Agrawal Construction Co. (2018) 32 ITJ 724 (MP) adjudicating very same issue upheld the finding of the Tribunal observing that, “in the absence of any such finding in respect of inaccurate particulars of income, further proceedings imposing the penalty against the respondent could not have been initiated by the authority concern and the authorities are required to record, a subjective satisfaction for initiating penalty proceedings”.

Sd/- Sd/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore; �दनांक Dated : 26/ 07/2018 ctàxÄ? P.S/.�न.स.

Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Private Secretary/DDO, Indore