Section 271AAB of the Income Tax Act

The decision most relied on for Section 271AAB is CIT v. Manjunatha Cotton & Ginning Factory (359 ITR 565), cited in 2,590 of the 797 judgments on BharatTax that turn on this section.

Leading authorities on Section 271AAB

CIT v. Manjunatha Cotton & Ginning Factory
359 ITR 565 · 2013 · High Court
2,590
citing judgments

A penalty notice issued under section 274 read with section 271(1)(c) is invalid if it fails to specify whether the penalty proceedings are initiated for concealment of income or for furnishing inaccurate particulars of income. This non-specification vitiates the penalty proceedings.

CIT v. SSA’s Emerald Meadows
73 Taxmann.com 248 · 2016 · Supreme Court
953
citing judgments

A notice issued under Section 274 read with Section 271(1)(c) is invalid if it fails to specify whether penalty proceedings are for concealment of particulars of income or furnishing inaccurate particulars of income. Such lack of specificity vitiates the penalty proceedings.

CIT v. Kaushalya
216 ITR 660 · 1995 · High Court
511
citing judgments

A penalty levied under Section 271(1)(c) for concealment or furnishing inaccurate particulars of income is not invalidated by the Assessing Officer's failure to strike off irrelevant portions in the show cause notice, provided the assessee understood the exact charge and suffered no prejudice, indicating an application of mind by the AO.

CIT v. Mithila Motor's (P.) Ltd.
149 ITR 751 · 1984 · High Court
248
citing judgments

Minor defects or mistakes in a penalty notice issued under Section 274 do not invalidate penalty proceedings under Section 271(1)(c) if the assessee suffers no prejudice and is aware of the charge. However, significant vagueness or ambiguity that demonstrates non-application of mind or causes prejudice can still render the notice invalid.

Dilip N. Shroff v. Jt. CIT
161 Taxmann 218 · 2007 · Supreme Court
236
citing judgments

Mens rea is a necessary ingredient to attract penalty under Section 271(1)(c) of the Income Tax Act, as 'inaccurate' signifies a deliberate act or omission by the assessee. Clause (iii) of Section 271(1) grants discretionary jurisdiction to the assessing authority regarding penalty amounts.

Ltd. v. DCIT
22 SOT 7 · 2008 · ITAT
123
citing judgments

An adverse inference cannot be drawn against an assessee based on a document found with a third party during a search, as possession is only attributable to the searched person. An addition to income based solely on an undated, unsigned seized document, without further corroborative evidence or inquiry, is not sustainable.

CIT v. Khoday Eswarsa & Sons 1972 CTR (SC) 295
83 ITR 369 · 1972 · Supreme Court
94
citing judgments

Penalty under section 271(1)(c) cannot be levied solely on the basis of findings in the assessment proceedings. The Assessing Officer must discharge the burden of proving concealment or inaccurate particulars with additional material.

Sir Shadilal Sugar and General Mills Ltd. v. CIT
168 ITR 705 · 1987 · Supreme Court
86
citing judgments

An assessee's agreement to an addition or voluntary disclosure of income does not automatically establish concealment for levying penalty under Section 271(1)(c). While such agreement may arise from various reasons like avoiding litigation, the assessee must still discharge the burden of proving that the addition was not due to concealment.

ACIT v. Marvel Associates
92 Taxmann.com 109 · 2018 · ITAT
80
citing judgments

Penalty under section 271AAB cannot be levied mechanically; the Assessing Officer must apply an independent mind, grant a hearing, and record satisfaction that the income genuinely falls within the statutory definition, which requires discovery of an unrecorded asset or income entry during search.

Janki Ram Bahadur Ram v. CIT
57 ITR 21 · 1965 · Supreme Court
67
citing judgments

The onus is on the Income Tax Department to prove that a particular receipt or amount is taxable and falls under the provisions of the Income-tax Act.

Judgments on Section 271AAB

Shri Om Prakash Modi, Jaipur vs. Deputy Commissioner of Income Tax, Jaipur

In the result, this appeal of the assessee is partly allowed

ITA 196/JPR/2018[2014-15]Status: DisposedITAT Jaipur18 Mar 2021AY 2014-15

Bench: Shri Sandeep Gosain, Jm & Shri Vikram Singh Yadav, Am Vk;Dj Vihy La-@Ita No. 196/Jp/2018 Fu/Kzkj.K O"Kz@Assessment Year :2014-15 Shri Om Prakash Modi, Cuke D.C.I.T., Vs. B-49, Keshav Path, Suraj Nagar Central Circle-2, (West), Civil Lines, Jaipur. Jaipur. Lfkk;H Ys[Kk La-@Thvkbzvkj La-@Pan/Gir No.: Acfpm 8683 C Vihykfkhz@Appellant Izr;Fkhz@Respondent Fu/Kzkfjrh Dh Vksj Ls@ Assessee By: Shri Manish Agarwal (Ca) Jktlo Dh Vksj Ls@ Revenue By : Shri Varinder Mehta (Cit-Dr) Lquokbz Dh Rkjh[K@ Date Of Hearing : 04/03/2021 Mn?Kks"K.Kk Dh Rkjh[K@ Date Of Pronouncement : 18/03/2021 Vkns'K@ Order Per: Sandeep Gosain, J.M. The Present Appeal Has Been Filed By The Assessee Against The Order Of The Ld. Cit(A)-4, Jaipur Dated 01/01/2018 For The A.Y. 2014-15, Wherein The Assessee Has Raised Following Grounds Of Appeal: “1. On The Facts & In The Circumstances Of The Case The Ld. Cit(A) Has Grossly Erred In Confirming The Penalty U/S 271Aab Imposed At Rs. 3,75,00,000/-, Arbitrarily, Thus The Order So Passed Deserves To Be Quashed. 2. On The Facts & In The Circumstances Of The Case The Ld. Cit(A)Has Erred In Ignoring The Fact That The Appellant Has Duly Disclosed In The Statements U/S 132(4) & The Mode & Manner Was Also Explained, Further Due Tax Was Also Paid, Therefore, The Penalty Of Rs. 3,75,00,000/- So Levied Deserves To Be Deleted. 2.1 That The Ld. Cit(A) Has Grossly Erred In Confirming The Penalty Imposed On Additional Income Of Rs. 12,50,00,000/- Duly Offered

For Appellant: Shri Manish Agarwal (CA)For Respondent: Shri Varinder Mehta (CIT-DR)
Section 132(4)Section 271ASection 274