×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
This appeal by assessee is arising out of order of the Commissioner of Income Tax (Appeals)]-48, Mumbai [in short CIT(A)], in Appeal No. CIT(A)-48/I.T.-05/DC CC-2(4)/2017-18 vide dated 20.06.2018. The Assessment was framed by the Dy. Commissioner of Income Tax, Circle-2(4), Mumbai (in short DCIT/ AO) for the A.Y. 2013-14 vide order dated 16.03.2015 under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the levy of penalty under section 271AAB of the Act. For this, the assessee has raised the following 4 grounds: -
“The appellant prefers an appeal against the order dated 20/05.2018 passed by Ld. Commissioner of Income Tax (Appeal)-48, Mumbai on following amongst other grounds each of which are without prejudice to any other: -
1.0 On facts and circumstances of the case and n law, Ld. CIT(A) erred in confirming the Penalty under section 271AAB of ₹7,95,000/- @ 10% of ₹79,50,000/- on ignoring the fact that no search under section 132 was initiated against the appellant;
2.0 The levy of Penalty under section 271AAB confirmed by Ld. CIT(A) of ₹7,95,000/- is erroneous since the notice under section 274 was issued in mechanical manner without framing a specific charge of the undisclosed income;
3.0 The levy of penalty is erroneous since Ld. AO had not recorded the satisfaction while initiating the Penalty under section 271AAB of the Act;
4.0 The Ld. CIT(A), before confirming the Penalty under section 271AAB, ought to have considered the bonafide explanation and existence of debate under which circumstances the levy of Penalty Under section 271aAAB is bad in law.”
3. At the outset, the learned Counsel of the assessee stated that the provisions of Section 271AAB of the Act are not at all applicable to the assessee. Hence, according to him, the penalty levied under section 271AAB of the Act is bad and illegal. Brief facts relating to this issue are that a search under section 132 of the Act was conducted in the case of one Shri Chandrakant Gavade on 09.11.2012. There was no search warrant under section 132 of the Act issued in the name of the assessee. During the course of search in the case of Shri Chandrakant Gavade, the unexplained money of ₹79,500/- found in the locker No. 400 held with Gold Sukh Safety Vaults Ltd. The assessee in a statement recorded under section 132(4) of the Act stated that it was engaged in the business of money transfer, wherein he had collected and delivered the money as per the directions of his clients of unorganized sector and earned commission of ₹100 to 130 per lakh. As the assessee could not prove the identity of the real owners of the funds and following the deeming provision of section 292C of the Act, the assessee admitted the money found during the course of search the third party i.e. Chandrakant Gavade amounting to ₹79.50 lacs is unaccounted money and paid the tax accordingly. The assessee filed his return of income disclosing this money found during the course of search and seized amounting to ₹79.50 lacs. The assessment was completed 143(3) read with section 153C of the Act dated 16.03.2015. The AO extrapolated the figures and made addition to the total income and estimated the total income at ₹1,36,42 784/ . The CIT(A) deleted the addition made on estimate basis but sustained the addition of unexplained money found and seized during the course of search on Gold Sukh Safety Vaults Ltd in locker No. 400 amounting to ₹79.50 lacs as unaccounted money. The AO issue penalty notice under section 271AAB of the Act and levied the penalty vide Para 6 as under: -
“6. On considering the facts of the case and submissions of the assessee including case laws relied thereon, the penalty matter is decided as under: -
a) The assessee has admitted undisclosed income in the stamen under sub section (4) of section 132.
b) Specified the manner in which such income has been derived.
c) Filed return on 15.11.2013 declaring total income, 82,06,510/- and vide letter filed on 13.11.2013, requested for the adjustment of the cash seized with the tax on such undisclosed income within the date specified.
Accordingly, the penalty u/s 271AAB is computed in understand manner: -
4. Aggrieved, assessee preferred the appeal before CIT(A). Before CIT(A), the assessee contended that the penalty levied by AO under section 271AAB of the Act is without any provision and there was no search conducted on the assessee under section 132 of the Act but the CIT(A) noted that there is no need for levy of penalty under section 271AAB of the Act that search warrant should be in the name of the assessee. The CIT(A) admitted that there is no search warrant in the name of