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Income Tax Appellate Tribunal, PUNE “B” BENCH, PUNE
Before: HON’BLE SHRI S.S. GODARA & SHRI G. D. PADMAHSHALI
॥ आयकर अपीलीय न्यायाधिकरण, पुणे “बी” न्यायपीठ, पुणे में ॥ IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE “B” BENCH, PUNE BEFORE HON’BLE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No. 296/PUN/2020 ननधधारण वषा / Assessment Year : 2015-16 Smt Taradevi R Bafna 91, Subhash Chow, Jalgaon. PAN : AADPB9424E . . . . . . . अपऩलधथी / Appellant बनधम / V/s. Asstt. Commissioner of Income Tax, Central Circle, Nasik . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : Shri Sunil Ganoo Revenue by : Shri M. G. Jasnani सपनवधई की तधरऩख / Date of conclusive Hearing : 06/10/2022 घोषणध की तधरऩख / Date of Pronouncement : 01/12/2022 आदेश / ORDER Per G. D. Padmahshali, AM; The present appeal is challenged against the first appellate order of Commissioner of Income Tax (Appeals-12), Pune [for short “CIT(A)”] dt. 30/07/2018 for assessment year [for short “AY”] 2015-16 passed u/s 250 of the Income-tax Act,1961 [for short “the Act”] which emanated out of order of penalty [for short “PO”] dt. 28/06/2017 passed by the ACIT, Central Circle-1(3), Nasik [for short “AO”] u/s 271AAB of the Act. ITAT-Pune Page 1 of 11
Smt Taradevi R Bafna ITA No.296/PUN/2020 AY: 2015-16 2. The substantive grievance under the present appeal hinges around the correctness of action of the tax authorities below [for short “TAB”] in imposing the penalty u/s 271AAB of the Act.
The grounds challenged through the memorandum of appeal are; “1. On the facts and in the prevailing circumstance of the case, the leaned CIT(A) has erred in law in confirming the penalty of Rs.48,38,948/- out of the total penalty of Rs.3,28,38,948/- imposed by the Assessing officer under s.271AAB of the Income-Tax Act 1961 without considering and appreciating the material fact that impugned jurisdictional show cause notice under section 274 of the Act, is itself illegal in the absence of any specific charged in the said notice, as admitted in the appellate order that, “in the notice issued mistake of quoting wrong section occurred.” Therefore, as impugned jurisdictional notice being illegal bad in law and hence penalty may please be deleted. 2. On the facts and in the prevailing circumstance of the case, the leaned CIT(A) has erred in holding said impugned notice is valid through it is not inconformity and without any specific charged, in accordance with mandates of law. Moreover, it is settled position of law that such defect is not curable u/s 292BB of the Act as the notice so issued, which gives jurisdiction is illegal and therefore is not sustainable in the eyes of law and hence, penalty imposed u/s 271AAB of the I T Act cannot be sustained and hence penalty my please be deleted.
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Smt Taradevi R Bafna ITA No.296/PUN/2020 AY: 2015-16 3. The impugned penalty was imposed on the basis of prior approval granted by the Jt CIT Central Range, Nashik, u/s 274(2)(b) of the I T Act, vide letter dt 28.06.2017 which being mechanically accorded and hence the penalty is bad in law and deserves to be deleted. 4. The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of hearing of the appeal.” 4. Laconically narrated facts of the case are; 4.1 The appellant is an individual engaged in the trading business Gold & Silver Ornaments, utensils in the trade name of “R. C. Bafna Jewellers”, upon whom a search & seizure operation u/s 132 and survey action u/s 133A of the Act was simultaneously carried out on 10/09/2014, consequently during the course of assessment proceedings u/s 143(3) r.w.s. 153B of the Act, the assessee returned an income of ₹47,50,43,810/- by filing original return of income [for short “ITR”] incorporating an additional income ₹28,00,00,000/- declared during the survey action and ₹4,83,89,485/- during search action u/s 132 of the Act, which eventually trigged the penalty provision u/s 271AAB of the Act. ITAT-Pune Page 3 of 11
Smt Taradevi R Bafna ITA No.296/PUN/2020 AY: 2015-16 4.2 During the penal proceedings, the assessee was put to a show cause notice [for short “SCN”] u/s 274 r.w.s. 271 dt. 28/12/2016, which the appellant strongly contended citing dual reasons, firstly; the provisions of section 271AAB of the Act are discretionary and not mandatory in nature, hence having regard to facts and circumstance of her case the levy penalty is unwarranted, and secondly unsustainability of penalty for reason of deficiency in the SCN issued depicting non-application of mind on the part of Ld. AO. However both these contentions failed to turned back the mind of Ld. AO asserting the due communication of allegation and reiterating the contents of SCN has culminated the proceeding imposing a penalty @10% in terms of 271AAB(1)(a) of the Act, on the total additional income disclosed.
4.3 The said imposition of penalty was agitated before the first appellate authority [for short “FAA”] on legal as well on meritare ground, wherein the Ld. CIT(A) gave partial relief deleting the penalty imposed on the additional income disclosed during the course ITAT-Pune Page 4 of 11
Smt Taradevi R Bafna ITA No.296/PUN/2020 AY: 2015-16 of survey action and retained the balance penalty imposed on additional income disclosed during the search action carried out u/s 132 of the Act. Aggrieved thereby, the appellate is in appeal before us on the grounds of appeal set in para 2 hereinbefore.
During the course of physical hearing, the learned representative for the assessee [for short “AR”] at the outset referring to affidavit and application filed for condonation of delay in instituting the present appeal, reiterated its contents and prayed for condonation, which the learned departmental representative [for short “DR”] objected for unconvincing reasons. Insofar as the first two legal grounds are concerned, the Ld. AR adverting to SCN contended that, initiation as well imposition of penalty u/s 271AAB suffers from voice of non-application of mind of the Ld. AO and therefore the penalty deserves to be deleted in limine for being fatal & incurable u/s 292BB of the Act. While coming to third substantive ground alleging the mechanical approval granted by the Ld. JT CIT, the Ld. AR adverting to para 8 of penalty order pinpointed ITAT-Pune Page 5 of 11
Smt Taradevi R Bafna ITA No.296/PUN/2020 AY: 2015-16 that, the date of order imposing the penalty vis-à-vis date of according approval as one i.e. 28/06/2017. Per contra, the Ld. DR on first two grounds supported the orders of Ld. TAB and insofar as the mechanical approval is concerned the Ld. DR strongly argued that, the order imposing the penalty was culminated after the receipt of approval from the Ld. JCIT, which cannot be flare backed to colour otherwise.
After hearing to rival contentions of both the parties; and subject to the provisions of rule 18 of Income Tax Appellate Rules, 1963 [for short “ITAT, Rules”] perused the material placed on records till the conclusive hearing, case laws relied upon by the appellant as well the respondent and duly considered the facts of the case in the light of settled legal position forewarned to either parties.
First thing first, in so far as the delay days in instituting the present appeal is concerned, we having regards to facts & circumstance, find force in the submission of the appellant in establishing the sufficiency of reasons in ITAT-Pune Page 6 of 11
Smt Taradevi R Bafna ITA No.296/PUN/2020 AY: 2015-16 belated filing, consequently in the light of decision of Hon’ble Apex Court in “Collector Land Acquisition Vs MST Katiji and Others” reported at 167 ITR 5 (SC) and Hon’ble Bombay High Court in “CIT Vs Velingkar Brothers” reported at 289 ITR 382 (Bom), the delay stands condoned in the larger interest of justice.
We shall now deal with ground number 1 and 2 first, which alleges the deficiency in the SCN dt 28/12/2016 issued u/s 274 r.w.s. 271 to the appellant pursuant to which the penalty u/s 271AAB of the Act is levied, it’s apt to quote the text of the such SCN which reads as; “You are hereby requested to appear before me at my office at the address mentioned above at 11.30AM on 27.01.2017 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or thorough authorised representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271AAB.” 9. On a perusal of the provisions of section 271AAB, it is distinctly evident that the section 271AAB of the Act ITAT-Pune Page 7 of 11
Smt Taradevi R Bafna ITA No.296/PUN/2020 AY: 2015-16 is self-contained. It is worthy to note that, on one hand, the sub section (1) thereof authorises levy of penalty on undisclosed income where the proceedings u/s 132 of the Act is initiated, and on the other hand the sub-section (2) puts an embargo on imposing of penalty u/s 270A and u/s 271(1)(c) of the Act on such undisclosed income falling within the realm of sub- section (1). This clearly establishes the solitary domain of section 271AAB over undisclosed income where the proceedings u/s 132 of the Act is initiated and at the same time it drags out the authorisation of imposition of penalty u/s 270A and 271(1)(c) of the Act as extra- territorial.
Keeping aforesaid in mind, we find that, the appellant’s contention that, the aforestated SCN represents the non-application of mind in communicating the exact charge for rebuttal falls like a house of cards on two counts; i) Firstly, the impugned SCN calling upon the appellant to showcase the reasons as to why a penalty u/s 271AAB should not be imposed clearly concluded ITAT-Pune Page 8 of 11
Smt Taradevi R Bafna ITA No.296/PUN/2020 AY: 2015-16 intimating the consideration of representation before concluding proceedings imposing penalty u/s 271AAB of the Act, as it ostensible from the reproduced text of SCN laid at para 8 hereinbefore.
ii) Secondly, the sub-section (2) of section 271AAB intractably expunges the levy of penalty u/s 270A and 271(1)(c), consequently, it communicates the exact charge left i.e. levy of penalty u/s 271AAB(1) for undisclosed income where the proceedings u/s 132 of the Act is carried out.
In this context, we heedful to quote that, our aforesaid view finds fortified by the decision of Hon’ble Apex Court in the case of “Sandeep Chandak Vs PCIT” reported in 93 taxmann.com 406 where in similar facts and circumstance their lordship have dismissed the appeal of the assessee and upheld the order of Hon’ble High Court sustaining the penalty imposed u/s 271AAB of the Act, as under; A search u/s 132 of the Act was carried out in case of assessee, and in the course of search, assessee made a statement admitting certain undisclosed ITAT-Pune Page 9 of 11
Smt Taradevi R Bafna ITA No.296/PUN/2020 AY: 2015-16 income. Assessing Officer added said amount to assessee's taxable income and thereupon, issued a notice u/s 274 r.w.s. 271 of the Act for initiating penalty proceedings to which assessee submitted written reply. Assessing Officer having rejected assessee's explanation, passed a penalty order u/s 271AAB. Tribunal proceeding on presumption that penalty proceedings had been initiated u/s 271(1)(c), set aside penalty order. High Court took a view that where assessee in course of search admits undisclosed income and the manner in which such income has been derived, then provisions of section 271AAB would automatically be attracted and further the High Court opined that since opportunity of hearing as prescribed u/s 271AAB had been given to assessee, penalty order passed by Assessing Officer was to be restored. Supreme Court held that, on facts, there was no ground to interfere with impugned order passed by High Court and, therefore, instant petition was to be dismissed 12. In view of the aforestated discussion, the case laws relied upon the appellant does not come to rescue and thus finding no merits in the ground raised; we therefore dismiss the ground number 1 and 2 of the present appeal.
Coming to ground number 3 of the appeal, we vouched that, the order imposing penalty was passed ITAT-Pune Page 10 of 11
Smt Taradevi R Bafna ITA No.296/PUN/2020 AY: 2015-16 after the receipt of due approval from the Ld. JCIT. However the appellant during the course of physical hearing failed adduce any evidential material showcasing the mechanical approval and further failed to demonstrate the deficiency in the proceedings, for the reason this ground of appeal finds no legs to stand, ergo ordered accordingly.
Resultantly, the appeal of the appellant assessee is DISMISSED in terms of aforestated observation. In terms of rule 34 of ITAT Rules, 1963 the order is pronounced in the open court on this Thursday 01st day of December, 2022.
-S/d- -S/d- -S/d -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 01st day of December, 2022. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1. अपऩलधथी / The Appellant. 2.प्रत्यथी / The Respondent. 3. The Pr. CIT-Central-2, Nashik (Mh-India) 4. The CIT(A)-12, Pune (Mh-India) 5. नवभधगऩय प्रनतनननध, आयकर अपऩलऩय न्यधयधनधकरण, पपणे “बऩ” बेंच, पपणे / DR, ITAT, Pune “B” Bench, Pune. 6. गधर्ाफ़धइल / Guard File. आदेशधनपसधर / By Order, वररष्ठ ननजऩ सनचव / Sr. Private Secretary आयकर अपऩलऩय न्यधयधनधकरण, पपणे / ITAT, Pune.
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