×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.
11-04-2019, Gopal Das Sonkia, Section 271AAB, 132(1), Tribunal Jaipur
This appeal by the assessee is directed against the order dated 13th December, 2017 of ld. CIT (A)-4, Jaipur arising from the penalty order passed under section 271AAB of the IT Act for the assessment year 2015-16. The assessee has raised the following grounds :-
“ 1. That the notice issued by assessing officer for initiating the penalty u/s 271AAB of the I.T. Act, 1961 is not in accordance with law not being specifically pointing out the default for which the ld. A.O. sought to impose penalty u/s 271AAB.
2. That without prejudice to the ground No. (1) above on the facts and in the circumstances of the case the ld. CIT (A) is wrong, unjust and has erred in law in confirming penalty of Rs. 90,10,000/- imposed by the ld. Assessing Officer u/s 271AAB of the IT Act, 1961.
3. That the appellant craves the permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.”
Ground No. 1 is regarding validity of initiation of penalty proceedings under section 271AAB of the IT Act for want of specifying the default as per clause (a) to (c) of section 271AAB(1) of the IT Act.
2. The assessee is an individual deriving income from trading in shares and securities, LTCG and STCG on sale of shares and interest under the head Income from other sources. A search and seizure action under section 132(1) of the I.T. Act was carried out on 15th October, 2014 in case of Surana group, Jaipur in which the case of assessee was also covered. In the course of search and seizure action, certain documents were found and seized marked as Annexure-B Exhibit-1 containing the entries of advances for land and other loans/advances. In the statement recorded under section 132(4) of the Act the assessee offered an additional income of Rs. 9,01,00,000/- as recorded in the seized document. The assessee filed his return of income under section 139(1) on 30th September, 2015 declaring total income of Rs. 12,29,00,990/- including the amount of Rs. 9,01,00,000/- disclosed during the course of search and seizure action. The assessment was completed under section 143(3) read with section 153B(1)(b) of the Act on 14th December, 2016 accepting the returned income. The AO initiated the penalty proceedings under section 271AAB by issuing show cause notices dated 14th December, 2016, 10th March, 2017 and thereafter on 15th May, 2017. The assessee filed his reply to the show cause notice but the same was not accepted by the AO and consequently a penalty of Rs. 90,10,000/- was imposed under section 271AAB of the Act while passing the order dated 14th June, 2017. The assessee challenged the action of the AO before the ld. CIT (A) being wrong, unwarranted and bad in law. However, the ld. CIT (A) has confirmed the levy of penalty by holding that the penalty under section 271AAB is mandatory in nature.
3. Before us, the ld. A/R of the assessee has submitted that the AO while issuingthe show cause notice under section 274 read with section 271AAB has not specified the default of the assessee in terms of clause (a) to (c) of section 271AAB of the Act. Therefore, the initiation of penalty proceedings is illegal due to show cause notice is defective. Therefore, the notices were issued in routine manner without mentioning under which clause of section 271AAB(1) of the Act the assessee is liable for penalty. He has referred to the provisions of section 271AAB(1) and submitted that there are three clauses (a) to (c) and each clause of sub-section (1) provides the circumstances and violation attracting the penalty @ 10%, 20% and 30% of undisclosed income of the specified previous year. The assessee should know the grounds which he has to meet specifically otherwise the principles of natural justice are violated. Even in the assessment order the AO has not specified under which clause the penalty is liable to be imposed but the AO has mentioned that the penalty proceedings under section 271AAB of the Act are being initiated. There is no application of mind at the time of issuing the show cause notices as the AO has not specified the undisclosed income on which the assessee is required to show cause. Even the AO has not given any ground for levy of penalty for which the assessee could put his defence. Thus in the absence of specific charge against the assessee, the assessee was not given the proper opportunity to counter the show cause notice issued by the AO as well as to file the cogent reply to the same. In the absence of any grounds specified in the show cause notice as well as any amount to be treated as undisclosed income of the assessee for the purpose of levy of penalty under section 271AAB, the initiation of penalty is not valid and, therefore, the consequential order passed under section 271AAB of the Act is also liable to be quashed. In support of his contention, he has relied upon the following decisions :-