P R SUDEEP,ALATHUR vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, THRISSUR

O R D E R PerSanjay Arora, AM This is an Appeal by the Assessee against the confirmation of penalty under section 271AAB of the Income Tax Act, 1961 (‘the Act’)for Assessment Year (AY) 2014-15, levied per order dated 28.6.2017, in first appeal by the Commissioner of Income Tax (Appeals), Kochi-3 [CIT(A)], vide his order dated 01.01.2021.

3.2 Our first observation in the matter is that the order u/s. 292B of the Act, which is to be read in conjunction with the assessment order dated 27.12.2016 inasmuch as the same becomes a part thereof, has not been challenged by the assessee in appeal. In fact, given the clear position of law, as afore-noted, it could not be. How could, then, that being the case, the levy of penalty be assailed for being u/s. 271AAB, more so when the assessee also stands show caused there-under? This is as s.292B – which reads as under (read out during hearing), order operates to remove the infirmity of specifying the wrong section in the assessment order and the ensuing penalty notice:- “Return of income, etc., not to be invalid on certain grounds. 292B. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.” Even otherwise, as long as the AO has the requisite power, non-mention or wrong mention of the section or the provision of law under which the action has been taken

ITANo. 01/Coch/2022 (AY: 2014-15) P.R. Sudeep vs. Dy. CIT or is otherwise sustainable, would be of no consequence (Hukumchand Mills Ltd. v.State of MP [1964] 52 ITR 583 (SC); Isha Beevi v. TRO [1975] 101 ITR 449 (SC)).

3.3 Without prejudice, the subject matter of sections 271(1)(c) and 271AAB is the same, i.e., penalty for undisclosed income; the latter being only qua search cases, under which category the assessee’s case undisputedly falls. The notice u/s. 274 r/ws. 271(1)(c) of the Act cannot, therefore, i.e., in view of section 292B, be regarded as defective. What, then, we wonder, is the controversy about; the assessee being only aware that the correct section for the purpose is, in view he being a searched person, s.271AAB, and not s.271(1)(c) of the Act? No prejudice stands caused, nor in fact is claimed to. As explained by the Hon'ble Courts time and again, proceedings become irregular only when prejudice is caused, and where so, the proceedings are liable to be restored to the stage where an irregularity intervenes (Suptd. CE v.Pratap Rai [1978] 114 ITR 231 (SC);Guduthur Bros. vs. ITO[1960] 40 ITR 298 (SC)). Reference be also made to T.A. Abdul Khader vs. CWT [2008]296 ITR 20 (Ker), where the Hon'ble jurisdictional High Court, with reference to sec.42C of the Wealth Tax Act, 1957 (corresponding to s. 292B of the Act), found no prejudice caused in view of the hearing granted, as obtains in the instant case.

3.4 Shri Venkitaraman would next submit that inasmuch as section 271AAB notice does not specify the sub-clause thereof that is attracted, the notice thereunder is defective. Even as we have found that grant of hearing operates to remove the prejudice, if any, the argument is false on facts inasmuch as it is the assessee’s response on the detection of undisclosed income assessable for the relevant year that decides the sub-clause under which his case falls. What, then, we wonder, is the assessee’s case? This is as, again, no prejudice whatsoever has been caused or shown to be so. Even otherwise, a defective notice, as per trite law, does not invalidate the proceedings. Case law on this, even in the context of penalty notice, is legion, and toward which we may though cite some for reference: Kantamani Venkata Narayana Page 3

ITANo. 01/Coch/2022 (AY: 2014-15) P.R. Sudeep vs. Dy. CIT & Sons vs. First Addl. ITO[1966] 63 ITR 638 (SC);T.A. Abdul Khader(supra). The case law relied upon is de hors the facts of the case.