2019 (7) TMI 1443 - HC - Income Tax

Penalty u/s 271AAB or 271AAA - non issue of notice under Section 274 read with Section 271AAB - corrigendum issued stating that Section 271AAA should be read as Section 271AAB - HELD THAT - The two documents which have been placed on record today indicate that the penalty order passed in the case of the appellant herein was approved by the Joint Commissioner of Income Tax. There is no substantial difference between Section 271AAA and Section 271AAB of the Act, except that Section 271AAA would apply in cases where search has been initiated under Section 132 on or after the first day of June 2007 but before the first day of July 2012, whereas Section 271AAB would apply in cases where search has been initiated under Section 132 on or after the first day of July 2012. No interference is warranted with the order passed by the Appellate Tribunal. The Appellate Tribunal could not be said to have committed any error, much less an error of law, in passing the impugned order. - Decided against assessee

Summary

Issues Involved:
1. Validity of penalty under Section 271AAB without a separate notice under Section 274 read with Section 271AAB.
2. Whether the corrigendum issued to correct the reference from Section 271AAA to Section 271AAB was valid.
3. Whether prior sanction was required for initiating penalty proceedings under Section 271AAB.

Detailed Analysis:

1. Validity of Penalty under Section 271AAB without Separate Notice:
The appellant contended that no separate notice under Section 271AAB was issued, arguing that the penalty proceedings were vitiated. The Tribunal and the High Court noted that the Assessing Officer initially issued a notice under Section 271AAA and later issued a corrigendum correcting the reference to Section 271AAB. The High Court held that this correction was a typographical error and did not invalidate the proceedings. The Court emphasized that the appellant had full opportunity to defend against the penalty, and the proceedings were not vitiated by the lack of a separate notice under Section 271AAB.

2. Validity of Corrigendum Issued to Correct Reference:
The appellant argued that the corrigendum issued to correct the reference from Section 271AAA to Section 271AAB was not valid and that a fresh notice should have been issued. The Tribunal observed that both Sections 271AAA and 271AAB concern penalty proceedings related to undisclosed income detected during a search, with the primary difference being the quantification of the penalty. The High Court agreed with the Tribunal's view that the correction was a technical defect and did not impinge on the jurisdiction or the substantive basis of the penalty proceedings. The Court held that the corrigendum was a valid rectification under Section 292B of the Act.

3. Requirement of Prior Sanction for Initiating Penalty Proceedings:
The appellant contended that the initiation of penalty proceedings under Section 271AAB required prior sanction, which was not obtained. The High Court clarified that the inquiry was whether the initial notice, though titled under Section 271AAA, was proceeded by sanction. The Court reviewed the documents and found that the penalty order was approved by the Joint Commissioner of Income Tax, thus satisfying the requirement of sanction. The Court also noted that the legislative framework did not mandate the formation of satisfaction during the assessment proceedings for penalties under Sections 271AAA or 271AAB, unlike Section 271(1)(c). Therefore, the satisfaction could be formed post-assessment, and the corrigendum did not require a fresh notice with prior sanction.

Conclusion:
The High Court concluded that there was no substantial difference between Sections 271AAA and 271AAB, except for the applicable periods. The Court found no error in the Tribunal's decision and held that the penalty proceedings were validly conducted. The appellant's contentions were dismissed, and the appeal was rejected, affirming the penalty of ?30,00,000 under Section 271AAB.