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TMI Blog2019 (3) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... , Adv. For the Revenue : Smt. Ashima Gupta, CIT ORDER PER MANISH BORAD, AM. The above captioned appeal is filed at the instance of the assessee pertaining to Assessment Year 2012-13 and is directed against the orders of Ld. Commissioner of Income Tax (Appeals)-III (in short Ld.CIT(A) ], Indore dated 24.01.2017 which is arising out of the order u/s 271AAB of the Income Tax Act 1961(In short the Act ) dated 23.09.2015 framed by ACIT(Central)-1, Indore. 2. Assessee had raised following grounds of appeal; The following grounds of Appeal are without prejudice to each other:- 1) On the facts and circumstances of the case as well as in Law, the Learned Assessing Officer has erred in levying a penalty u/s.271AAB of the Income Tax Act' 1961 instead of u/s.271 (1 )(c) of the Income Tax Act, 1961, without considering the facts and circumstances of the case. 2) On the facts and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer erred in levying a penalty of ₹ 86,85,000/- U/s 271AAB of the Income Tax Act,1961,being 30 of the additional income of ₹ 2,89,50,000/-- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- declared by the assessee in the return filed in response to notice u/s 153A of the Act was assessed as total income. The Ld. A.O initiated the penalty only proceedings u/s 271AAB of the Act. Thereafter penalty proceedings u/s 271AAB were completed and Ld. A.O levied penalty of ₹ 86,85,000/- being 30% of the undisclosed income observing that the assessee s case falls under Sub Clause (c) of the Section 271AAB(1) providing for levy of penalty of not less than 30% but not exceeding 90% of the undisclosed income. Ld. A.O also observed that the assessee has not substantiated the manner of earning the undisclosed income. 4. Against the levy of penalty assessee preferred appeal before Ld. CIT(A) and pleaded that the assessee s case falls under section 27AAB(1)(a) of the Act and penalty of 10% only needs to be levied in its case as the undisclosed income has been accepted by the assessee during the course of search and duly offered to tax in the return of income along with paying due taxes. However, Ld. CIT(A) did not find any merits in the contentions of the assesee and sustained the finding of Ld. A.O thereby confirming the penalty of ₹ 86,85,000/- imposed u/s 271AAB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271AAB of the Act which was calculated by the Ld. A.O on the undisclosed income surrendered by the assessee during the course of search u/s 132 of the Act conducted on 21.09.2012 admitting that the details of nine share applicants giving a total sum of ₹ 2,89,50,000/- on the share application money to the assessee could not be verified and also showed his inability to prove the creditworthiness and genuineness of the amount received. 9. The assessee filed its regular return of income on 13.9.12 for Assessment Year 2012-13 disclosing income of ₹ 43,775/-. Search u/s 132 of the Act was conducted on 21.9.2012. Undisclosed income surrendered and offered to tax during the course of search. Revised return was filed on 31.3.2013 declaring income of ₹ 2,89,93,780/-. Subsequently in compliance to notice u/s 153A of the Act return of income was filed on 28.1.2014 including the surrendered income of ₹ 2,89,50,000/- thereby showing the total income of ₹ 2,89,93,775/-. This income was accepted by the Ld. A.O as assessed income. After assessing the income u/s 153A r.w.s. 143(3) of the Act for Assessment Year 2012- 13 accepting the return of income as assessed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch income in the return of income furnished for the specified previous year; and (B) pays the tax, together with interest, if any, in respect of the undisclosed income; (c) a sum which shall not be less than thirty per cent but which shall not exceed ninety per cent of the undisclosed income of the specified previous year, if it is not covered by the provisions of clauses (a) and (b). (2) No penalty under the. provisions of clause (c) of subsection (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1). (3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in this section. Explanation.-For the purposes of this section- (a) specified date means the due date of furnishing of return of income under sub-section (1) of section 139 or the date on which the period specified in the notice issued under section 153A for furnishing of return of income expires, as the case may be; (b) specified previous year means the previous year- (i) which has ended before the date of search, but the date of furnishing the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the assessee has not furnished the return of income for the previous year before the date of search; or (ii) in which search was conducted. 14. Ld. A.O has adopted assessment year 2012-13 by bringing the case of the assessee under category (i) referred above. Now for coming under category (i) requirement is that the due date of furnishing return of income should not expire before the date of conducting the search u/s 132 of the Act and the assessee has not furnished the return of income for the previous year before the date of search. However in the case of the assessee though the date of search is 21.9.2012 which is before the due date of filing of return of income on 30.9.2012, but the assesee has already furnished its Income Tax Return on 13.9.2012 i.e. before the date of search. This return of income was e-filed by the assessee showing income of ₹ 43,775/-. Thus we can safely conclude that the assessee does not fall under category (i) of the specified previous year. What remains is category(ii) i.e. the year in which search was conducted i.e. Assessment Year 2013-14 as the date of search was on 21.09.2012 falling under financial year 2012-13. But the penalty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee to escape the levy of the penalty u/s 271(1)(c) of the Act. 17. Before us the revenue authorities have not disputed this fact that the Ld. A.O has only invoked the provisions of Section 271AAB of the Act and no notice have been issued for initiating penalty proceedings u/s 271(1)(c) of the Act, which means that Revenue has missed the chance to issue notice u/s 271(1)(c) of the Act.. 18. We therefore in the given facts and circumstances of the case wherein penalty proceedings ought to have been intimated u/s 271(1)(c) of the Act but were wrongly initiated u/s 271AAB of the Act for Assessment Year 2012-13 are of the view that as the basic requirements for invoking Section 271AAB of the Act is not fulfilled, we have no option left except to allow the legal grounds raised by the assessee and quash the penalty proceedings initiated u/s 271AAB of the Act and delete the penalty of ₹ 86,85,000/- levied by the Ld. A.O u/s 271AAB of the Act. Other grounds on merits of the case are merely academic in nature and become infructuous as the penalty proceedings u/s 271AAB of the Act itself been quashed and held to be invalid and bad in law. 19. In the result appeal of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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