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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: MS. SUCHITRA KAMBLE & SHRI BHAGIRATH MAL BIYANI
PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
This appeal is filed by the Revenue against the order dated 10.08.2021 passed by the CIT(A)-3, Bhopal for the Assessment Year 2011-12.
The grounds of appeal raised by the Revenue are as under :
“1) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the penalty of Rs.63,94,140/- levied u/s.271AAA and has overlooked the findings of the AO mentioned in the penalty order.
2) On the fact and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in holding that there is no valid initiation of penalty u/s 271AAA however, as per provision of section 292B a mistake of quoting charges with respect to 271(1)(c) in the notice issued u/s 271AAA cannot be a deterrent in levying of penalty in the light of the fact that the assessee also did not submit any objection to the notice being defective during the penalty proceedings.
3) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law by equating specific charge u/s 271AAA with two charging
Page 2 of 4 limbs of section 271(1)(c) and consequently erred in applying ratio of decision of the Hon’ble High Court judgement in case of Kulwant Singh Bhatia in the instant case.”
The assessee is an individual and is deriving income from proprietary concern namely M/s. D.P. Industries. Search proceedings in the case of the assessee were carried out on 09.07.2011 and consequently proceedings under Section 153A of the Income Tax Act, 1961 were initiated. The assessee filed regular return of income on 31.03.2012 declaring total income of Rs.3,79,93,930/- including undisclosed income of Rs.3,60,00,000/- in compliance to the notices issued under Section 153A on 30.05.2013. The search assessment proceedings were completed under Section 153A read with Section 143(3) of the Act on 28.02.2014 determining total income at Rs.25,03,84,440/-. The assessee was aggrieved with the order of the Assessing Officer and, therefore, filed appeal before the CIT(A). The CIT(A) partly allowed the said appeal vide order dated 15.01.2018. The Assessing Officer in the meanwhile initiated penalty proceedings under section 271AAA of the Act. During the penalty proceedings the Assessing Officer found that undisclosed income of Rs.6,39,41,429/- was unearthed only as a result of search & seizure operation and, therefore, relying to the provisions of Section 271AAA imposed penalty at 10% of the undisclosed income.
Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee.
Ld. DR submitted that the CIT(A) has deleted the penalty without taking cognisance of the provisions of Section 271AAA of the Act thereby clearly stating that the said provision is invoked in search proceedings where the undisclosed income was found by the Assessing Officer. Ld. DR further submitted that the CIT(A) was not correct in holding that there is no valid initiation of penalty under Section 271AAA of the Act. However, as per the provisions of Section 292B of the Act a mistake of quoting charges with respect to Section 271(1)(c) of the Act in the notice issued under Section 271AAA of the Act cannot be a deterrent in levying of penalty in the light of the fact that the assessee also did not submit objection to the notice being defective. During the penalty proceedings, the ld. DR submitted that the ratio of decision of the Hon’ble M.P. High court in case of PCIT vs. Kulwant Singh Bhatia dated 09.05.2018 (ITA No.9 to 14 of 2018) as the said case related to the invoking of Section 271(1)(c) of the Act in respect of two limbs mentioned in the said Section itself.
Page 3 of 4 6. The Ld. AR submitted that the notice issued to the assessee has not given the details whether particulars of income was concealed or the assessee has furnished inaccurate particulars of such income. Thus, the decision of the Hon’ble Jurisdictional High Court in the case of Kulwant Singh Bhatia (supra) is applicable. The Ld. AR also relied upon the following decisions:-
1) ITAT, Indore Bench in the case of Shri Vivek Chugh vs. ACIT (Central)- 2, Indore (ITA No.636/Ind/2017, order dated 28.03.2019) 2) Hon’ble Gujarat High Court in the case of Ramgopal Chhavlal Maheshwari vs. DCIT (2019) 417 ITR 710 (Guj) 3) DCIT vs. Rajendra Prasad Dokania (2012) 32 CCH 260 (Ahd. Trib.) 4) CIT vs. Mahendra C Shah (2008) 299 ITR 305 (Guj) 5) CIT vs. Radha Kishan Goel (2005) 278 ITR 454 (All. HC) 6) PCIT vs. Akshar Infrastructure 2018 (1) TMI 1310 (Guj. HC) 7) Crossings Infrastructure Pvt. Ltd. vs. CIT (Central) & Anr. (2014) 267 CTR 519 (All. HC) 8) Shri Dipak Kumar Kalani, Shri Pankaj Kalani vs. JCIT 2020 (9) TMI 144 (ITAT Indore) 9) DCIT vs. Shri Himanshu Verma 2019 (12) TMI 410 (ITAT Delhi) 7. Ld. AR relied upon the order of CIT(A).
We have heard both the parties and perused all the relevant material available on record. It is an admitted fact that notice issued under Section 274 of the Act read with Section 271AAA of the Act has not specified the limb in respect of imposing penalty. As required under Section 271AAA of the Act when the provisions of Section 274 and 275 of the Act are applicable in relation to the penalty referred to the said Section has given in Section 271AAA(4) of the Act. Issuance of notice is mandatory as per the Income Tax Statute and specifying the charges/initiation of penalty in the present appeal under the specific clause of Section 271AAA of the Act was a necessity. In fact, the revenue has not treated the mandatory provisions of the Act properly and in respect of the decision of the Hon’ble Supreme Court in the case of CIT vs. SSA’s Emerald Meadows, 73 taxmann.com 248 (SC) and CIT vs. Manjunatha Cotton & Ginning 359 ITR 565 (Karnataka) are squarely applicable in the present case. Besides this, from the perusal of the assessment order it can be seen that the assessee has given details of undisclosed income during the invocation of Page 4 of 4 proceedings under Section 153A of the Act. Though from the perusal of the assessment order and penalty order it can be seen that the amount of Rs.6,39,41,429/- would not have been taxed had there been no search and seizure operation. The provisions of section 271AAA(1) of the Act are clearly applicable in the present case. But, due to the defective notice which is part of mandatory procedure to be followed by the Department, the penalty order does not survive. Therefore, appeal of the Revenue is dismissed.
In the result, appeal filed by the Revenue is dismissed.
Order pronounced in the open Court on this 28th day of June, 2022.