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TMI Blog2017 (12) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... not for imposition of penalty u/s 271(a)(c) of the Act ? (B) Whether on the facts and circumstances of the case and in law, the Ld. ITAT has erred in not appreciating the facts that the specific charge 'have in a statement under sub section 4 of section 132 during the course of search and seizure operation admitted undisclosed income' was mentioned in the notice ? (C) Whether the benefit of Section 292BB was correctly denied to the AO/appellant by the ITAT?" We have heard Sri Manu Ghildyal, learned counsel for the appellant and Sri Abhinava Mehrotra, learned counsel for the assessee respondent. The brief facts of the present case are that a search operation has been held and M/s. Chandak group of cases was searched under Section 132 of the Income Tax Act, 1961 (hereinafter referred to as 'Act') on 24.10.2013. During the course of search the father of the assessee Sri Kamal Kishore Chandak has surrendered undisclosed income of Rs. 12 crores on behalf of himself, his wife and his son, namely Kamal Kishore Chandak, Smt. Shakuntala Chandak and Sri Sandeep Chandak. This statement of Sri Kamal Kishore Chandak has been recorded under Section 132(4) on 25.10.2013. Dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned passed by the ITAT are wholly illegal, arbitrary as well as an order which has been passed without application of mind. Learned counsel for the appellant has placed the relevant paragraph of the impugned order of the Tribunal namely para 8, which is quoted hereinbelow : "The penalty proceeding has been initiated by issuing notice u/s 274 read with section 271(1)(c) of the Act (1)(c) on 23/09/2015 asking the assessee to appear before the Assessing Officer at 10:30 A.M. On 28/09/2015." Counsel for the appellant has submitted that the penalty proceedings are being initiated under Section 271AAB of the Act and not under Section 271 (1)(c) of the Act. He has pointed out that the Tribunal has wrongly proceeded on the basis of the fact that the impugned penalty proceedings are being carried out under Section 271(1)(c). He has submitted that from the perusal of the penalty notice dated 23.9.2015 it is crystal clear that the notice has been issued under Section 274 read with section 271 of the Act. Counsel for the appellant (Revenue) has submitted that in the said notice dated 23.9.2015 the assessing authority of the assessee has categorically and clearly mentioned and has requested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to be levied u/s271AAB of the Act. On this basis also, the order passed by the Assessing Officer is against the principles of natural justice of providing the proper opportunity to the assessee and accordingly I quash the order of the Assessing Officer. I have also gone through the provisions of section 271AAB and noted that this section specifies three different situations under which the penalty can be imposed on the assessee under different clauses (a), (b) and (c), the penalty has to be imposed on different rate. The Assessing Officer has not specified in the notice in respect of which clause the penalty is going to be levied on the assessee. On this basis also, in my opinion, the penalty cannot be sustained." At the end the Tribunal has held that since the provisions of Section 271AAB are not mandatory therefore, levy of penalty in each and every case where ever the assessee has made default is unjustified. On the other hand, learned counsel for the assessee has submitted and has relied upon the findings recorded by the ITAT and has emphasised that in the present case unless the satisfaction is recorded and in the present case since the same has not been recorded by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if the assessing authority in the course of any proceedings under the Income Tax Act is satisfied that any person "has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty." In the present case, the regular assessment proceedings are being carried out under Section 143(3), which is a proceeding of assessment as so stipulated under Section 143 and sub section (3) of Section 143 provides the procedure to be adopted by the assessing authority during the course of the assessment proceedings. Section 271AAB provides the procedure for penalty where the search has been initiated. In the present case, admittedly a search and seizure operation is carried out in which the assessees have surrendered the amount of Rs. 4 crores each (Rs.4 lakh each by all the three assessees) and therefore, in view of the provisions of Section 271AAB the assessees are required to pay, by way of, penalty in addition to tax, if any, a sum computed @ 10% of undisclosed income of the specified period or previous years. In the case where the assessee in the course of search in a statement (under Section 4 of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961 should be initiated u/s 132 on or after 01.06.2012. 2. The assessee has made disclosure of undisclosed income during the course of search action, has paid the tax together with interest and has filed return of income. 3. The assessee substantiates the manner in which he has earned the undisclosed income. From the analysis of the above Provisions of Act, it is clear that action of imposition of penalty u/s 271AAB(a) is independent of the enquiries made and subsequent additions made during course of assessment proceedings. In other words, this penalty is not based upon the facts gathered during course of assessment proceeding. It is dur to this reason, in my opinion, satisfaction of the AO is not required to be recorded by AO during assessment proceedings or at the time of completion of the proceedings. Thus, initiation of the penalty after the completion of assessment proceeding is not vitiated by law. The Ld. A.Rs have also challenged that the caption of the notice mentioned only Section 271 and not 271AAB. In this respect, the copy of notice has been produced by the Ld. A.R. before me. It is seen that the Ld. A.R. is correct in observing that the section of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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