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TMI Blog2019 (7) TMI 1443X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 16-7-2019 - MR J. B. PARDIWALA AND MR A. C. RAO, JJ. For The Appellant (s) : MS VAIBHAVI K PARIKH For The Opponent (s) : MRS MAUNA M BHATT ORAL JUDGMENT ( PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. This Tax Appeal under Section 260A of the Income Tax Act, 1961, is at the instance of an assessee and is directed against the order passed by the Income Tax Appellate Tribunal, Rajkot Bench, Rajkot, dated 13th December 2017 in the ITA No.362/RJT/2016 for the Assessment Year 2013-14. 2. The assessee has proposed the following substantial question of law for the consideration of this Court : Whether in the facts and circumstances of the case, the order passed by the Income Tax Appellate Tribunal is perverse inasmuch as it confirms the penalty of ₹ 30,00,000/- under Section 271AAB of the Act which was levied without issue of notice under Section 274 read with Section 271AAB of the Act ? 3. It appears from the materials on record that the search under Section 132 of the Act was carried out at the prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal. The Tribunal also dismissed the appeal and thereby affirmed the order passed by the CIT(A). 6. In such circumstances referred to above, the appellant is here before this Court with the present Tax Appeal. 7. We take notice of the order passed by a coordinate bench dated 15th October 2018, which reads as follows : 1. Appellant-assessee has challenged the judgement of the Income Tax Appellate Tribunal confirming the penalty imposed by the Assessing Officer under section 271AAB of the Income Tax Act, 1961. Two grounds are raised before us. Firstly, that the Tribunal proceeded on wrong factual assertion that notice under section 271AAB was issued by the Assessing Officer though after the assessment was completed. Counsel for the appellant pointed out that the Assessing Officer had initially issued notice under section 271AAA of the Act along with order of assessment but, later on, issued a corrigendum providing that reference to the section would be read as 271AAB instead of 271AAA. In fact, no separate notice under section 271AAB was ever issued. Second contention of the counsel was that, in any case, sanction, for init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under Section 143(3) of the Act alone. ( c) It is also evident from the Corrigendum issued under Section 143(3) of the Act itself that the Assessing Officer did not intend to issue a fresh show cause notice under Section 274 of the Act. The Corrigendum simply mentions that Accordingly, the penalty notice u/s.274 dated 13.02.2015 also stands modified. ( d) There is no mention of notice dated 03.07.2015 under Section 274 read with Section 271AAB of the Act even in the penalty order dated 16.07.2015 or in the order of the CIT(A) dated 21.07.2016. If such notice were issued, the penalty order would surely have mentioned it. The very first mention of such a notice is in the order of the Income Tax Appellate Tribunal itself. This further cements the fact that no such notice was issued. 10. The further grounds of challenge are that the order of the Income Tax Appellate Tribunal is perverse inasmuch as it : ( a) Confirms the levy of penalty under Section 271AAB of the Act on a factually erroneous basis, i.e., that a show cause notice was issued to the appellant under Section 274 read with Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of penalty. 12. Significantly, the circumstance for imposition of penalty is not in challenge. The circumstance namely existence of undisclosed income and pertaining to specified previous year is conceded and also included in the return of income. Thus, the pre-requisite for application of both s.271AAA s.271AAB are equally met. The search in the instant case was initiated on 23/08/2012 when penalty provision under s.271AAA was brought to naught (w.e.f. 01/07/2012) and replaced by a new section 271AAB. Thus, section 271AAB alone was in vogue at the relevant time of initiation of search. As a corollary, the penalty proceedings could not have been initiated by the AO with the aid of a non-existent section 271AAA of the Act at the relevant time. While the applicability of both s.271AAA as well as 271AAB is founded on identical circumstance, the quantification of penalty could be done only with reference of s.271AAB in force. The AO has attempted to correct this bonafide error in making initial reference to a wrong section by suitable corrigendum issued in this regard. The assessee has impugned this action. At this juncture, we also find from the paper-boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1B) of the Act provides a clue in this regard. It inter-alia enjoins requirement of formation of satisfaction towards existence of circumstances for initiation of penalty proceedings in the course of assessment proceedings with reference to penalty provisions of S.271(1)(c) of the Act. In distinction, the penalty proceedings in the present case concerns section 271AAA or section 271AAB. It is critical here to note that no specific bar is provided in law to form satisfaction with reference to these special provisions prior to the completion of the assessment. Thus, requirement of forming satisfaction in this course of assessment proceedings cannot be read for the purposes of s.271AAA/271AAB. In other words, the satisfaction towards applicability of s.271AAA or 271AAB can be legally derived at the stage later to completion of assessment in contrast to fetters placed in respect of normal penal provisions under s.271(1)(c) of the Act. Subsequent formation or modification in purported satisfaction after completion of assessment is thus not prohibited under s.271(1B) of the Act in so far as s.271AAA/s.271AAB is concerned. The legislative intent and scope for imposition of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions provided under s.271(1)(c) of the Act. The undisputed nature of undisclosed income found and also conceded in the statement recorded under s.132(4) of the Act followed by the return of income does not leave any room for doubt that the remedy for loss of probable revenue detected in the course of search was obtained by following due process of law. 15. Noticeably, the penalty order under s.271AAB was passed with the approval of superior authority i.e. Joint Commissioner of Income tax as provided under s.274(2) of the Act. While facts towards approval of competent authority (JCIT) for issuance of corrigendum/fresh notice is not placed before us, no statutory requirement in this regard was brought to our notice. Hence, issuance of notice under s.271AAB without approval do not in our view vitiate the penalty proceedings. 16. The assessee has placed few judgements in the paperbook which however, were not adverted to in the course of hearing. Having noted that peculiar facts of the case vis-avis totally dissimilar facts existing in the case laws cited, we do not see any necessity to deal with same. Whereas in the present case a corrigendum ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the corrigendum came to be issued stating that Section 271AAA should be read as Section 271AAB of the Act, at that point of time also, a fresh notice ought to have been issued under Section 274 of the Act. 17. According to Mr. Himani, the penalty notice could not have been corrected by way of corrigendum. In short, it appears that the submission of Mr. Himani is that the appellant should have been heard even before the issue of the corrigendum. 18. We are not impressed by the aforesaid submission of Mr. Himani. In fact, 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. 19. We are of the view that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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