9911796707
TMI Blog2017 (12) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... ise from the decision of the Income Tax Appellate Tribunal (in short 'ITAT') dated 2.1.2017 passed in I.T.A. No. 416/Lucknow/2016 (Assessment Year 2014-15), I.T.A. No.417/Lucknow/2016 (Assessment Year 2014-15) and I.T.A. No.418/Lucknow/2016 (Assessment Year 2014-15). Since the issue is same and the appeals arise against the common order and judgment, the same are decided by us by a common judgment. Following questions of law have been framed by the assessee : (A) Whether on the facts and circumstances of the case and in law, the Ld. ITAT has erred in not appreciating the facts that the notice was issued for imposition of penalty u/s 271AAB and 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 counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its order dated 31.5.2016 has dismissed the appeal and has affirmed the penalty order passed under Section 271AAB of the Act. Against the order of the CIT (Appeals) the appeals are filed before the ITAT, Lucknow, which are heard and are decided by a common judgment dated 2.1.2017 and the ITAT has allowed the appeal filed by the assessees and set aside the penalty order as well as the order of the CIT (Appeals). Against the order of the ITAT, Lucknow dated 2.1.2017 the instant appeals are filed by the Commissioner of Income Tax. We have heard the learned counsel for the appellants and learned counsel representing the assessee. Learned counsel for the appellant has submitted that the order impugned 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 28/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued u/s 271(1)(c) of the Act was valid for initiation of proceedings u/s 271AAB. Initiation of penalty proceedings, in my view, is the foundation for the validity of the imposition of penalty u/s 271AAB. On this basis itself, the penalty can be cancelled. This is also fact on record that no penalty proceedings either u/s 271(1)(c) of the Act (1)(c) or 271AAB has been initiated during the course of assessment proceedings. The ITAT has further held that the assessing authority should record the satisfaction report before proceeding under Section 271AAB which in the present case is disappeared. The ITAT at the end has recorded as follows : No opportunity has been given to the assessee in respect of the penalty 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned in the assessment order that the assesee has also earned non-taxable share of profit from partnership firm Chandak Infratech, where he is a partner. It has further mentioned in the assessment order that the assessee offered to tax on the income of ₹ 4 crores and accordingly, the assessment is completed at the total income as indicated hereinabove of ₹ 4,16,39,320/- under Section 143(3) of the Act. We find that while passing the assessment order under Section 143(3), the assessing authority has not initiated the penalty proceedings under Section 271(1)(c) of the Act. Section 271 provides the procedure in case of failure to furnish return, comply with notice, concealment of income etc. Sub clause (c) of Section 271(1) provides 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 Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 271 AAB. We find the substance in the submission of the learned counsel for the department and we noticed that the orders passed by the CIT (Appeals), affirming the orders of the penalty, are fully justified where the CIT (Appeals) has recorded a categorical finding with regard to the statement of Sri Kamal Kishore Chandak during the search and the issuance of the penalty notices under Section 271AAB, which is relevant. We have noticed that this fact has not been considered by the Tribunal. In this regard, we may reproduce the relevant finding of CIT (Appeals) hereinbelow : From the above provisions, it may be seen that the AO may impose the penalty under this section if following ingredients are fulfilled. 1. Search action u/s 132 of the Income Tax Act, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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