×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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These are four appeals filed by the respective assessees against the respective orders of ld. CIT(A)-4, Jaipur dated 20.11.2017 & 21.11.2017 for Assessment Year 2015-16. Since the common issue relating to levy of penalty u/s 271AAB is involved, all these appeals were heard together and are being disposed off by this consolidated order.
ITA No. 124/JP/2018
2. For the purposes of appreciation of facts and present discussions, the case of M/s Suraj Mal Bansal (HUF) in ITA No. 124/JP/2018 is taken as the lead case with the consent of both the parties. In its appeal, the assessee HUF has taken the following grounds of appeal:
“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. AO 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. 22,50,000/- imposed by the ld. Assessing Officer u/s 271AAB of the I.T. Act, 1961.”
3. Briefly the facts of the case are that the assessee HUF is a partner in two partnership firms and deriving income in the form of interest and share in the profits from these two partnership firms. A search u/s 132 of the Act was conducted on 05.02.2015 in case of Bundi Silica Group, Kota and the assessee HUF is part of the said Group. During the course of search proceedings, the statement of the Karta of the HUF, Shri Chandra Behari Bansal was recorded u/s 132(4) of the Act wherein he has declared undisclosed income of Rs. 2,25,00,000/- as additional income of the HUF. Subsequently, the assessee e-filed its return of income on 29.09.2015 declaring total income of Rs. 2,46,19,600/- which includes additional income of Rs. 2,25,00,000/- offered to tax during the course of search. The assessment proceedings were subsequently completed u/s 143(3) r.w.s 153B(1)(b) wherein the returned income of Rs. 2,46,19,600/- was accepted. The Assessing Officer separately initiated the penalty proceedings u/s 271AAB by way of issue of notice u/s 274 r.w.s 271AAB of the Act dated 15.12.2016 which was duly served on the assessee.
4. During the course of penalty proceedings, the Assessing Officer stated that all the essential requirement of section 271AAB(1)(a) are satisfied in the instant case and given that the assessee had admitted undisclosed income of Rs. 2,25,00,000/- in its statements u/s 132(4) of the Act and paid the taxes thereon before specified date, penalty @ 10% u/s 271AAB on the undisclosed income of Rs. 2,25,00,000/- amounting to Rs 22,50,000 was levied on the assessee.
5. Being aggrieved, the assessee carried the matter in appeal before ld. CIT(A). The ld. CIT(A) has confirmed the levy of penalty u/s 271AAB of the Act holding that the penalty is mandatory in nature and there is no discretion with the AO and unlike section 271AAA wherein immunity from imposition of penalty is possible subject to fulfillment of conditions in section 271AAA(2), there is no immunity clause provided from penalty u/s 271AAB. Being aggrieved, the assessee is now in appeal before us.
6. During the course of hearing, the ld AR submitted that the show cause notice issued by the Assessing Officer initiating the penalty proceedings has been issued in a routine manner without mentioning under which clause of section 271AAB of the Act, the assessee is liable for penalty. It is submitted that section 271AAB(1) has three clauses (a) to (c) and each clause of sub-section (1) to section 271AAB provides for separate rate of penalty and unless the same is specified, the assessee is not in a position to respond and thus, the principles of natural justice are violated. It was submitted that there is no application of mind on the part of the AO, at the time of issuing the show cause notice, as the show cause notice issued by the AO do not specify 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 its defense. Thus in the absence of specific charge against the assessee, the assessee was not in a position to respond to the show cause notice issued by the AO. It was submitted that though the A while passing the impugned order has imposed the penalty as per clause (a) of section 271AAB(1) of the Act, however, no such ground