9911796707
TMI Blog2017 (5) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... "1. That the learned Commissioner of Income-tax (Appeals)-4, Kanpur has erred in law and on the facts in wrongly confirming the penalty of Rs. 40,00,000 imposed under section 271AAB of the Income-tax Act, 1961, without considering and appreciating that the income was duly recorded in the diary and related to the assessment year 2014-15, hence no penalty was exigible under section 271AAB of the Income-tax Act, 1961. 2. That the learned Commissioner of Income-tax (Appeals)-4, Kanpur has failed to consider and appreciate that the income shown in the return of income or assessed under section 143(3) of the Income-tax Act, 1961 vide order dated March 31, 2015, did not fall under the definition of undisclosed income within the meaning of clause (c) of Explanation below sub-section (3) of section 271AAB, hence no penalty was exigible. 3. That the impugned penalty order is insupportable in law and on facts and is liable to be quashed being illegal and void ab initio. 4. That the learned Assessing Officer as well as the learned Commissioner of Income-tax (Appeals)-4, Kanpur, have grossly erred in not considering and appreciating that had the penalty been mandatory then why the same wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed September 23, 2015 and asked the assessee to appear before him at 10.30a.m. on September 28, 2015 and show cause why an order imposing a penalty on the assessee should not be made under section 271(1)(c) of the Act. The said notice was received by the assessee on September 24, 2015. September 26 and 27 were the public holidays being Saturday and Sunday. The assessee attended the office of the Income-tax Officer on September 28, 2015 and submitted that counsel of the assessee was out of station as his wife was undergoing chemotherapy etc. in MAX Hospital at Delhi and requested the Assessing Officer to give any date after October 8, 2015 but the Assessing Officer just levied the penalty on the assessee under section 271AAB of the Act vide order dated September 29, 2015 by holding as under : "The claim of the assessee regarding surrender of undisclosed income is absolutely against the fact as narrated under paragraph 2 above and are available in the record. Further, so far as the direction for initiation of penalty on the face of the order dated March 31, 2015 is concerned, it is explicit that the penalty under section 271AAB of the Income-tax Act, should be imposed mandatorily a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income and the other which is not linked with the income of the assessee. So far the penalty imposable under section 271AAB is concerned, it is linked with the income of the assessee and has to be initiated during the assessment proceedings otherwise the levy of penalty will be void ab initio. It was also contended that the notice issued on September 23, 2015 and received by the assessee on September 24, 2015, nowhere states for which specific charge the penalty has to be imposed on the assessee. The reference has been given to the provisions of section 271(1)(c) of the Act. There is difference between the provisions of section 271(1)(c) of the Act and 6. section 271AAB of the Act. There were holidays on 26th and 27th of September being Saturday and Sunday. Thus, the assessee was given only three days to reply the notice as the Assessing Officer asked the assessee to appear before him at 10.30 a.m. on September 28, 2005. The penalty under section 271(1)(c) of the Act has to be initiated for failure to furnish the returns, comply with the notices, concealment of income etc. while the penalty imposable under section 271AAB relates to the undisclosed income in such case. Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5] 379 ITR 521 (SC) and that of the Hon'ble Delhi High Court in the case of CIT v. Rampur Engineering Co. Ltd. [2009] 309 ITR 143 (Delhi) [FB]. Attention was also drawn on the decision of the Hon'ble Delhi High Court in the case of CIT v. Harkaran Das Ved Pal [2011] 336 ITR 8 (Delhi) which relates to the levy of penalty under section 158BFA(2) of the Act. By drawing our attention towards the Explanation (c) which defines the undisclosed income, it was submitted that whatever income the assessee has returned and found during the course of search, was duly recorded in the diary regularly maintained by the assessee. Section uses the word along with the books of account or any document also therefore, is income cannot be regarded to be the undisclosed income. Our attention was drawn towards page 23 which is answer to the question No. 9 as well as submission before the Commissioner of Income-tax (Appeals). 7. The learned Departmental representative on the other hand relied on the orders of the authorities below and vehemently contended that section 271AAB nowhere requires that the Assessing Officer should record the satisfaction. Issuing the notice under section 271(1)(c) of the Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idity of the imposition of penalty under section 271AAB. On this basis itself, the penalty can be cancelled. This is also fact on record that no penalty proceedings either under section 271(1)(c) of the Act or 271AAB has been initiated during the course of assessment proceedings. We have gone through the decision of the Hon'ble Supreme Court in the case of CIT v. Jai Laxmi Rice Mills [2015] 379 ITR 521 (SC). We noted that in that case the Hon'ble Supreme Court has categorically held that absence of recording of the satisfaction for the penalty to be imposed under section 271E makes the penalty under section 271E illegal. Section 271E nowhere requires any specific terms that there must be satisfaction recorded for initiating the penalty proceedings under that section. Similarly, we noted the provision of section 271AAB nowhere requires that the Assessing Officer should record the satisfaction before initiating the penalty proceedings. We noted that the headnote of that decision of the Hon'ble Supreme Court reads as under (headnote) : "For the assessment year 1992-93, the assessment order was passed on the assessee on February 26, 1996, ex parte. While framing the assessment, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 271AAB stands cancelled. Since both the parties have argued on the issue of natural justice, we are of the view that natural justice is a concept of common law and represents higher procedural principles developed by the courts, which every judicial, quasi-judicial and administrative agency must follow while taking any decision adversely affecting the rights of a private individual. In short, natural justice implies fairness, equity and equality. The concept of rule of law would lose its validity if the instrumentalities of the State are not charged with the duty of discharging these functions in a fair and just manner. The principles of natural justice are enshrined in articles 14 and 21 of the Constitution of India. With the introduction of concept of substantive and procedural due process in article 21, all that fairness which is included in the principles of natural justice can be read into article 21. The violation of principles of natural justice results in arbitrariness and therefore violation of natural justice is a violation of equality clause of article 14. The principles of natural justice encompasses the following two rules : "1. Nemo judex in causa sua No one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rking days. Giving such a short period, in our opinion, cannot be regarded that the assessee has been given proper opportunity of being heard. This is a case which clearly shows undue haste on the part of the Assessing Officer. The penalty in this case is going to be barred by limitation on March 31, 2016. The learned Departmental representative was unable to explain as to what was the hurry with the Assessing Officer when the penalty proceedings was not going to be barred by limitation not to give the assessee adequate opportunity. We also noted that the assessee asked the Assessing Officer for adjournment after 18th October as the assessee's counsel was out of station because the wife of the counsel was undergoing chemotherapy etc. in MAX Hospital, Delhi. The Assessing Officer did not grant even any adjournment but levied the penalty on the assessee. We have gone through the decision of the Hon'ble jurisdictional High Court as relied on by the learned authorised representative of the assessee in the case of Rameshwaram Paper Mills (P) Ltd. v. State of U.P. [2009] 11 VLJ 33 (All) and that of Padam Traders v. State of U. P. [2009] 47 STJ 392 (All). In these decisions the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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