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TMI Blog2020 (9) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has not been given an opportunity to offer explanation against the type of penalty to be levied i.e. whether the penalty is to be under Clause (a), (b) or (c) of Section 271AAB. In the instant case defect is much more grave because in the penalty notice under the heading of Section 274 r.w.s. 271AAB of the Act pre printed format of issuing notice u/s 271(1)(c) is appearing which relates to levy of penalty for concealment of particulars of income or furnishing inaccurate particulars of income. In the assessee s case Ld. A.O ought to have mentioned the specific charges provided u/s 271AAB of the Act rather than the charges of Section 271(1)(c) of the Act. CIT(A) reduced the penalty to 10% applying provisions of Section 271AAB(a) of the Act as against penalty levied @30% by the Ld. A.O u/s 271AAB(c) of the Act but to our surprise Ld. CIT(A) has not taken pain to issue a fresh notice before reducing the penalty thus not giving reasonable opportunity of being heard as mandated under the proviso to Section 275. We find that similar issue came up before us in the case of Shri Vivek Chug [ 2019 (4) TMI 1163 - ITAT INDORE] wherein the appeal was decided in favour of the assessee and pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) erred in confirming the penalty to the extent of Rs, 11,14,088/- u/s 271AAB. That on the facts and in the circumstances of the case and in law the penalty levied is wrong an uncalled for and prayed to be deleted. 5.That the Ld. CIT(A) erred in confirming the penalty levied u/s 271AAB by the AO on the additional income of ₹ 1,11,40,876/- offered u/s 132(4) and also offered in the return filed u/s 153A. That on the facts and in the circumstances of the case and in law the penalty levied is uncalled for and bad in law and it is prayed that the penalty very kindly be deleted. 6.That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. Revenue has raised following grounds of appeal; ITA No.879/Ind/2019 Assessment Year 2015-16 1.On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty to extent of ₹ 89,48,172/- levied by the Assessing Officer u/s 271AAB(1)(c) of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case, the Ld. Income-tax Act, 1961,(A) erred in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings through an invalid and defective notice issued u/s 274 r.w.s. 271 AAB in this case is wrong, bad in law and the penalty so levied ought to have been deleted by the Learned CIT(A). 2.That the Ld. CIT(A) erred in not appreciating that the penalty notice issued u/s 274 r.w.s. 271AAB mechanically, mentioning irrelevant and inapplicable charges and not mentioning the charges on which penalty was actually levied, was bad in law and had has led to vitiation of the entire penalty proceedings, therefore, the penalty levied ought to have been deleted in its entirety. 3.That the Learned CIT(A) erred In levying the penalty under clause (c) to section 271AAB(1) @10%, whereas the Learned AO having levied the penalty under clause (a) to section 271AAB(1), clearly indicating that the penalty levied by the AO mechanically and without requisite satisfaction was wrong and uncalled for, ought to have been deleted in full. 4.That the Ld. CIT(A) erred in confirming the penalty to the extent of Rs, 5,24,296/- u/s 271AAB. That on the facts and in the circumstances of the case and in law the penalty levied is wrong an uncalled for and prayed to be deleted. 5.That the Ld. CIT(A) erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing, if necessity so arises. Smt. Neha Mittal, ITA No.856/Ind/2019 Assessment Year 2016-17 1.That on the facts and in the circumstances of the case and in law the very initiation of the penalty proceedings through an invalid and defective notice issued u/s 274 r.w.s. 271 AAB in this case is wrong, bad in law and the penalty so levied ought to have been deleted by the Learned CIT(A). 2.That the Ld. CIT(A) erred in not appreciating that the penalty notice issued u/s 274 r.w.s. 271AAB mechanically, mentioning irrelevant and inapplicable charges and not mentioning the charges on which penalty was actually levied, was bad in law and had has led to vitiation of the entire penalty proceedings, therefore, the penalty levied ought to have been deleted in its entirety. 3.That the Learned CIT(A) erred In levying the penalty under clause (c) to section 271AAB(1) @10%, whereas the Learned AO having levied the penalty under clause (a) to section 271AAB(1), clearly indicating that the penalty levied by the AO mechanically and without requisite satisfaction was wrong and uncalled for, ought to have been deleted in full. 4.That the Ld. CIT(A) erred in confirming the penalty to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is prayed that the penalty very kindly be deleted. 6.That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. Smt. Shweta Mittal, ITA No.858/Ind/2019 Assessment Year 2016-17 1.That on the facts and in the circumstances of the case and in law the very initiation of the penalty proceedings through an invalid and defective notice issued u/s 274 r.w.s. 271 AAB in this case is wrong, bad in law and the penalty so levied ought to have been deleted by the Learned CIT(A). 2.That the Ld. CIT(A) erred in not appreciating that the penalty notice issued u/s 274 r.w.s. 271AAB mechanically, mentioning irrelevant and inapplicable charges and not mentioning the charges on which penalty was actually levied, was bad in law and had has led to vitiation of the entire penalty proceedings, therefore, the penalty levied ought to have been deleted in its entirety. 3.That the Learned CIT(A) erred In levying the penalty under clause (c) to section 271AAB(1) @10%, whereas the Learned AO having levied the penalty under clause (a) to section 271AAB(1), clearly indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing amount of penalty sustained by Ld. CIT(A). Name of assessee Assessment Year Penalty in dispute u/s 271AAB Rajrani Mittal 2015-16 1114088 Anshul Mittal 2015-16 844176 Ankit Mittal 2015-16 524296 Neha Mittal 2015-16 364285 Neha Mittal 2016-17 650000 Shweta Mittal 2015-16 457513 Shweta Mittal 2016-17 535000 Total 4489358 5. As regards Revenue is concerned it has challenged the relief of ₹ 8948172/- given by Ld. CIT(A) in the case of assessee namely Smt. Rajrani Mittal through ITA No.879/Ind/2019. 6. The issues and facts raised in all these appeals relates to the same group of cases where search and seizure operation were carried out u/s 132 of the Act on "Mittal Group' on 4.9.15. All these appeals relates to the issues challenging the legality of the penalty proceedings initiated u/s 271AAB pointing out defects in the notice issued u/s 274 r.w.s. 2371AAB of the Act and secondly challenging on merits challenging the penalty sustained u/s 271AAB(A) of the Act as against u/s 271AAB(C) of the Act applied by Ld. A.O. 7. We will first take up the appeals by various assesee(s) through ITA No. 852 to 858/Ind/2019. For the purpose of adjudication we wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/- offered under section 133A and confirmed the penalty to the extent of 10% of ₹ 1114088/- in respect of undisclosed income of ₹ 1,11,40,876/- under section 271AAB(a). 9. Now aggrieved assessee is in appeal challenging the legality of penalty proceedings u/s 271AAB of the Act and penalty confirmed by Ld. CIT(A) and department is in appeal against the relief given by Ld. CIT(A). Since we are firstly dealing with the assessee(s) appeals, the department appeal will be taken up at the later stage. 10. Ld. Counsel for the assessee submitted as under ; 1. PENALTY NOTICE IS VAGUE AND BAD IN LAW AND INITIATION OF PENALTY PROCEEDINGS ON INCORRECT PREMISES IS BAD IN LAW. 1.1. The assessment proceedings in this case was completed by passing a combined assessment order for the AY 2010-11 to AY 2015-16 u/s 143(3) r.w.s. 153A and for AY 2016-17 u/s 143(3) dated 30.11.2017. The Learned AO initiated the penalty proceedings for this year and served a notice u/s 274 r.w.s. 271AAB dated 30.11.2017. 1.2. A copy of the said notice is enclosed in the respective paper book and a perusal of the same will show that the notice issued is vague and not in conformity with law as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under clause (b) @20% and under clause (c) @30% depending upon the default and charge against the assessee. (iii) Existence of 'undisclosed income' is a sine quo non for levying such penalty, which is defined in explanation (c) to section 271AAB. 1.4. It is amply clear from the reading of section 271AAB that the limbs mentioned in the show cause notice issued to the appellant i.e. 'have concealed the particulars of your income or furnished inaccurate particulars of such income' are not in conformity with the charges of the provisions of section 271AAB rather the appellant was show caused on the charges which fall under the scope and ambit of section 271(1)(c). This fact emphatically substantiates that the penalty show cause notice is vague and is bad in law and the charges for initiating the penalty proceedings were not correct. The penalty proceedings were initiated in a casual and mechanical manner without requisite satisfaction and without proper application of mind. 1.5. The penalty notice issued to the appellant did not state that the assessee had any undisclosed income within the meaning of section 271AAB. Further the reading of section 271AAB also shows that there a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DCIT [(2017) 189 TTJ 35where Assessing Officer had intended to initiate penalty proceedings under section 271AAA(1), but assessee had been show caused on charge of furnishing of inaccurate particulars of income, which fell under scope and purview of section271(1)(c), penalty proceedings conducted against assessee under section 271AAAwere held invalid as discussed in Para 19 and 20 of the order.(Copy enclosed at page no. 46 to 73 of common case law paper book PB-B).For a ready reference Para 20 is reproduced hereunder:- "20. A perusal of the above notice shows that though the Assessing officer has intended to initiate penalty proceedings u/s 271AAA(1) of the Act, however, the wording written in the body of the letter does not conform to the charges of the provisions of section 271AAA of the Act, rather, the assessee has been show caused on the charge of furnishing of inaccurate particulars of income, which falls under the scope and purview of section 271(1)(c) of the Act. The assessee, therefore, is not show caused for levy of penalty under the provisions of section 271AAA, rather for doing an act inviting penalty u/s 271(1)(c) of the Act, which otherwise is neither arising out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of Kulwant Singh Bhatia (supra) held that decision was rendered in context of penalty levied under section 271(1)(c) and not under section 271AAB therefore the challenge of the appellant in respect of initiation of penalty proceedings under wrong section is not valid and dismissed the ground. It is submitted that the Learned CIT(A) erred in holding that the appellant has challenged the initiation of penalty proceedings under wrong section whereas the appellant has challenged the initiation of penalty proceedings on account of invalid and defective notice issued u/s 274 and not under the wrong section. Further, it is submitted that though the decision of Hon'ble M.P. High Court was rendered in context of show cause notices issued u/s 274 for the purposes of levying penalty u/s 271(1)(c) however, are equally applicable in respect of the show cause notices issued u/s 274 for the purposes of levying penalty u/s 271AAB as the proposition laid down in these case is that the grounds mentioned in the show cause notice does not satisfy the requirement of law as the notice was not specific, equally applies in the present case. Also, both the sections are peri-materia an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. 2. Renovation/Construction of House 78,40,876 Offered u/s 132(4) and included in the return filed u/s 139(1) as well as u/s 153A. 10. Advances given 33,00,000 Offered u/s 132(4) and included in the return filed u/s 139(1) as well as u/s 153A. TOTAL 3,35,40,876 2.2. At the outset it is submitted that before the search operations conducted on 04.09.2015 a survey operation was carried out under section 133A on the appellant on 01.09.2014. In the said survey proceedings the appellant offered ₹ 2,24,00,000/- as her additional income for the year under consideration which was accepted by the department. The appellant honoured such offer and accordingly paid the advances tax of ₹ 72,40,000/- on 13th and 15th September 2014 on the income surrendered in survey proceedings and also offered the same in the return filed by her u/s 139(1) as well as in the return filed u/s 153A r.w.s 139. 2.3. During the course of search and seizure operations u/s 132 on 04.09.2015, Shri Dinesh Chandra Mittal, husband of the appellant, in addition to the income already offered by the appellant in the survey proceedings of ₹ 2,24,00,000/- offered an additional income of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income was offered on the basis of the application of the same in the hands of various family members. The modus operandi was explained and a systematic date wise cash flow statement was prepared incorporating various notings on all the loose papers and the resultant peak credit along with the application of income was offered as income of the family in the hands of Shri Dinesh Chand Mittal HUF and the respective family members u/s 132(4) by Shri Dinesh Mittal. Estimated profit in respect of trading transactions was also offered. 11. A copy of the statement recorded u/s 132(4) of Dinesh Chand Mittal along with complete working of the additional income offered duly supported by detailed date wise cash flow statement as filed before the Investigation Wing is enclosed at page no. 36 to 63. This methodology was also observed and duly acknowledged and accepted by the Investigation wing, so also the working, before whom, the cash flow statement and other details were filed, which also stand accepted in the assessment proceedings of the group. In the return filed u/s 153A (ii) It is submitted that the said income was offered as business income in the computation of income filed u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant during the course of search and seizure proceedings and also in assessment proceedings. The appellant was not required, at any moment, to explain the manner in which the undisclosed income was derived. The contention of the AO in the penalty order that the assessee was given a chance to explain the said manner is not factually correct and this contention of the appellant is verifiable from the penalty notice, wherein no such issue was raised. This is also evident from the fact that the additional income offered as business income in the return was accepted as such without any objection and without any modification either as to the head of income or to the quantum of income. Therefore, evidently the appellant cannot be held guilty of not specifying the manner of earning additional income, firstly for the reason that the said income was properly explained and substantiated through detailed working before the Investigation Wing and was offered as business income in the return and secondly the AO having satisfied with the same, never required the appellant to further explain / substantiate the same. (vi) Without prejudice to the above, it is submitted that the Learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade out a case that the manner of earning undisclosed income was enquired into post search stage either. The revenue has not pointed out any query which remained un-replied or evaded in the course of search or post search investigation. Therefore looking from any angle, it is difficult to hold in favour of the revenue. Accordingly, we decline to interfere in the order of the CIT(A)." iii. Honourable Delhi High Court in the case of Principal CIT V/s Emirates Technologies Pvt. Ltd. (2017) 399 ITR 0189observed that no specific query was put to the assessee by drawing his attention to section 271AAA and asking him to specify the manner in which the undisclosed income was derived, upheld the deletion of penalty by the Honourable ITAT and dismissed the appeal filed by the department. iv. Hon'ble ITAT, Jaipur in the case of ACIT v. Ajit Singh (2016) 76 taxmann.com 212 where it was held that Where undisclosed income was duly admitted by assessee in statements recorded during search under section 132(4) and income on basis of seized papers was calculated vide a fund flow statement and tax thereon was paid, AO could not levy penalty under section 271AAA on plea that he failed to substant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arning undisclosed income was not specified by the appellant. It is submitted that in view of the above referred decisions, the appellant cannot be roped into the violation of the condition that the method and manner of earning undisclosed income was not specified. Therefore, in the most humble opinion of the assessee, since the penalty has been levied on an altogether incorrect and wrong premises, the same ought to be deleted by the Learned CIT(A) and is prayed to be now deleted. The Learned CIT(A) has rightly held that the appellant has disclosed the manner of earning the additional income in para 4.2.6 of his order.Once the appellant comes out of this barrier, the very premises of the AO on which penalty has been levied cease to exist and the penalty levied on this sole ground ought not have been levied. It is submitted that the additional income offered by the appellant can be broadly categorized in two heads as explained hereunder:- In respect of the income of ₹ 2,24,00,000/- offered during the course of survey u/s 133A is not in the nature of 'undisclosed income'. In respect of the amount of ₹ 2,24,00,000/- offered as additional income, the relevant fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the knowledge of the AO during the penalty proceedings through the written submission vide point no. 2, 8 & 9. Copy of the said submission is enclosed at page no. 30 to 35. It is important to point out that the fact that the said income was already disclosed to the department before the search has not been disputed at any stage. The provision of section 271AAB is applicable only when there is undisclosed income. The term 'undisclosed income' has been defined in Explanations to section 271AAB. The income already disclosed by the appellant prior to the search is not covered within the ambit and scope of undisclosed income. Since the appellant has offered the said amount during the survey, prior to the search, penalty u/s 271AAB cannot be levied. It is submitted that if the advance tax is paid in respect of certain income and the return is not filed till the date of search, the said income cannot be clothed as an undisclosed income, merely for the reason that the return was not filed till the date of search. The advance tax reflects the income admitted by the assessee duly recorded in the books of accounts. The appellant places reliance on the following judicial pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and construction expenses of ₹ 78,40,876/- and also relating to amounts advanced in the market on interest of ₹ 33,00,000/- found noted on various LPS. Complete detail of the same is already on record and is undisputed. It is submitted that the income so offered u/s 132(4) was not only accepted by the Investigation Wing but the said income offered in the return as business income was also accepted during the assessment proceedings. It is also submitted that the requisite satisfaction is not drawn even in the penalty order as while calculating the amount of penalty in Para 9 emphasis has been laid on 'concealed income' which concept is relevant only in the case of penalty u/s 271(1)(c) and not u/s 271AAB. Without prejudice to the above basic contentions that penalty is not at all leviable in this case, it is submitted that the AO has levied penalty u/s 271AAB(1)(c) which is the residuary clause not covered by provisions of clauses (a) and (b) to section 271AAB(1). It is submitted that since the appellant admitted the income u/s 132(4), paid the due taxes along with interest and furnished the return of income declaring such income as business income and also specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Learned CIT(A) under clause (a) to section 271AAB(1), for which no notice was ever issued to the appellant. B. Penalty u/s 271AAB(1)(c) levied by the AO is wrong as (i) The appellant specified the manner of earning income and offered the same as business income, which was accepted by the AO without any objection. (ii) The appellant was never called upon at any stage to further explain and substantiate the said income and it was accepted merely on the basis of offering of the appellant. C. The penalty u/s 271AAB neither mandatory not automatic and is purely discretionary ought not to have been levied considering the overall conduct of the appellant and other facts and circumstances of the case. That the inapplicability of mind while issuing the statutory notice u/s 274 r.w.s. 271AAB clubbed with the vague allegation while levying the penalty that the appellant failed to specify the manner in which income is derived and imposition of penalty on the income offered in the return filed u/s 153A without any queries raised in the search as well as penalty proceedings brings the appellant out of the clutches of the section 271AAB and therefore the order passed and the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is case is bad in law. It is also contended that there are various sub-section and clauses specifying different charges and prescribing different rates of penalty u/s 271AAB, however, no specific sub-section or clause of section 271AAB was mentioned in the notice so as to unable the appellant to meet the specific charge during the penalty proceedings. Thus it is contended that the penalty notice issued u/s 271 AAB was akin to notice u/s 271(1)(c) where the limbs of section 271(1)(c) were mentioned but the limbs of section 271AAB were not mentioned. The appellant, then sought to draw support from various case laws as mentioned in the submission already abstracted above. The appellant also placed heavy reliance on the decision of Honourable MP High Court in the case of Kulwant Singh Bhatia IT - 9 to 14 of 2018 (MP), wherein in context of penalty u/s 271(1)(c), it was held by the Honourable High Court that the grounds mentioned in the show cause notice does not satisfies the requirement of law as the notice was not specific. Drawing support from this decision the appellant contended that the present appeal is squarely covered by the proposition rendered by the jurisdictional High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er examining the fact find that the facts are verbatim similar wherein defective notice was issued u/s 274 r.w.s. 271AAB of the Act, without specifying the charges for which penalty proceedings were initiated. In other words in the notice issued u/s 274 r.w.s. 271AAB of the Act assessee has not been given an opportunity to offer explanation against the type of penalty to be levied i.e. whether the penalty is to be under Clause (a), (b) or (c) of Section 271AAB. The Tribunal has quashed the penalty proceedings for the defective notice issued u/s 274 r.w.s. 271AAB of the Act observing as follows:- 8. We have heard rival contentions and perused the records placed before us. The legal issue before us is that whether the notice issued u/s 274 r.w.s. 271AAB of the Act suffers from fatal error and technical defect thereby not providing an opportunity to the assessee to plead her case. Since the legal ground goes to be root cause of the issue levying penalty u/s 271AAB of the Act, we in view of the ratio held by the Hon'ble Apex Court in the case of National Thermal Power Company Limited (supra) admit the additional legal ground for adjudication. For levying penalty u/s 271AAB of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n,- (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 under sub-section (1) of section 139 for such year has not expired before the date of search and 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; (c) "undisclosed income" means- (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause-c of section 271AAB of the Act, why she should not be visited by penalty @30% of the undisclosed income. Against this charge the assessee should have been given a reasonable opportunity of being heard. 10. Now let us revert back to the fact of the instant case of the assessee and look into as to what is mentioned in the alleged notices issued u/s 274 r.w.s. 271AAB of the Act. Notice is reproduced below; NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB OF THE INCOME TAX ACT, 1961 PAN. ABTPJ0870H OFFICE OF THE Asstt. Commissikoner of Income Tax (Central)-I, Indore Date: 22.03.2016 To Dr. Rajesh Jain, E-63 Saket, Indore-452001 Whereas in the course of proceedings before me for the assessment year 2014-15 it appears to me that you :- *Have without reasonable cause failed to furnish me return of income with you were required to furnish by a notice given under section 22(1)/22(2)/34 of the India Income Tax Act, 1922 or which you were required to furnish under section 193(1) or by a notice given under section 193(2)/148 of the Income Tax Act 1961, No. …. Dated….. or have without reasonable cause failed to furnish it within the allowed and the mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ennai while dealing with the legal ground challenging the validity of notice issued u/s 274 r.w.s. 271AAB of the Act had observed that ; "It is clear from the Sub Section (3) of Section 271 AAB that Sections 274 and Section 275 of the Act shall, so far as may be, apply. Sub Section (1) of Section 274 of the Act mandates that order imposing penalty has to be imposed only after hearing the assessee or giving a assessee opportunity of hearing. Opportunity that is to be given to the assessee should be a meaningful one and not a farce. Notice issued to the assessee reproduced (supra), does not show whether penalty proceedings were initiated for concealment of income or for furnishing inaccurate particulars of income or for having undisclosed income within the meaning of Section 271AAB of the Act. Notice in our opinion was vague. Hon'ble Karnataka High Court in the case of SSA's Emerald Meadows (supra) relying in its own judgment in the case of Manjunatha Cotton and Ginning Factory (supra) had held as under:- "2. This appeal has been filed raising the following substantial questions of law. (1) Whether, omission if assessing officer to explicitly mention that penalty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... know the grounds which he has to meet specifically. Otherwise, the principles of natural justice are offended. On the basis of such proceedings, no penalty could be imposed on the assessee) taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law; penalty proceedings are distinct from the assessment proceedings : though proceedings for imposition of penalty emanate from proceedings of assessment, they are independent and a separate aspect of the proceedings; The findings recorded in the assessment proceedings in so far as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the proceedings on the merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared invalid in the penalty proceedings". View taken by the Hon'ble Karnataka High Court in the above judgment was indirectly affirmed by the Hon'ble Apex Court, when it dismissed an SLP file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . before me. It is seen that the ld A.R is correct in observing that the section of penalty has not been correctly mentioned by the AO in the caption. However, the AO will get the benefit of section 292BB of the Income Tax Act, 1961 because firstly, the assessee has raised no objection before the AO in this regard. Secondly, last line of the notice clearly mentions section 271AAB. Thirdly, the assessee has given reply to said notice which shows that the assessee fully comprehended the implication of the notice that it is for section 271AAB. The assessee has also challenged that the principles of natural justice has not followed by the AO. The detailed submissions of A.R. in this regard has already been reproduced above. The A.R. did not produce any evidence to show that he was not given proper opportunity of hearing. It is clear from the penalty order that the AO has given notice and which was also replied by the assessee. Therefore, in my opinion, principle of natural justice has not been violated. Thus in view of above discussion penalty imposed by AO u/s. 271AAB of the Act is confirmed." Thus it was found by the Hon'ble High Court that the mistake in mentioning the section i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the considered view that this decision of Indore ITAT in the case of Dr. Rajesh Jain (supra) is squarely applicable on the issues raised by the assessee(s) in these appeals. 18. Moving further we observe that in the instant case Ld. CIT(A) reduced the penalty to 10% applying provisions of Section 271AAB(a) of the Act as against penalty levied @30% by the Ld. A.O u/s 271AAB(c) of the Act but to our surprise Ld. CIT(A) has not taken pain to issue a fresh notice before reducing the penalty thus not giving reasonable opportunity of being heard as mandated under the proviso to Section 275. We find that similar issue came up before us in the case of Shri Vivek Chugh V/s ACIT ITA No.636/Ind/2017 order dated 28.03.2019 wherein the appeal was decided in favour of the assessee and penalty proceedings were quashed since Ld. CIT(A) partly deleted the penalty by confirming the penalty @10% as against 20% levied by Ld. A.O u/s 271AAB of the Act without affording reasonable opportunity to the assessee to make necessary submission of the explanation. Since the facts and issues are same we are reproducing below the brief facts and decisions relied and the finding of Coordinate Bench in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I 1591 (ITAT Kal.) 8 DCIT vs. Sanwar Mal Agarwala and Adtam Saran Khemka 2018 (5) TMI 422 (ITAT 9 ACIT vs. M/s. Amrit Hatcheries Pvt. Ltd. 2018 (3) TMI 44 (ITAT 1 DCIT vs. Subhas Chandra Agarwala & Sons (HUF) 2018 (3) TMI 214(ITAT Kol.) 1 Marvel vs. ACIT TMI 946 (ITAT Vishakhapatn To buttress his contention that notice so issued is illegal and therefore, is not sustainable in the eyes of law. 5. On the contrary Ld. DR opposes the submissions and supported the order of the authorities below. Ld. DR submitted that there no ambiguity under the law in case assessee admits amount being in disclosed then it is to be dealt with in the manner prescribed under 271AAB of the Act. In rejoinder Ld. counsel for the assessee submitted that even the Ld. CIT(A) has sustained penalty u/s 271AAB(1)(a) of the Act while the assessing officer had initiated penalty u/s 271AAB(1)(b) of the Act. No notice of initiating penalty u/s 271AAB(1)(a) was given to the assessee. This fact is sufficient to set aside the impugned order. 6. We have heard the rival submissions and perused the material available on records and gone through the orders of the authorities below. We find that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 6,50,000/-(in the case of Neha Mittal), and ₹ 4,57,513/- and ₹ 5,35,000/- (in the case of Shweta Mittal) in ITA No.853, 852, 854 to 858/Ind/2019 stands deleted. 21. Apropos to the grounds raised on merits by the assessee challenging the quantum of penalty sustained by CIT(A) u/s 271AAB(a) of the Act we are of the view that adjudicating these grounds on merits will be merely academic in nature since we have already quashed the penalty proceedings allowing the legal ground in assessee(s) favour therefore all the grounds raised on merits are deemed to be infructuous. 22. In the result all the appeals of the assessee(s) are allowed as per the terms indicated above. 23. Now we take up Revenue Appeal No.879/Ind/2019 for Assessment Year 2015-16. Revenue has challenged the action of Ld. CIT(A) partly deleting the penalty levied by the Ld. A.O u/s 271AAB(c) of the Act. We find that in the case of Smt. Rajrani Mittal while adjudicating the ground raised by the assessee in ITA No.853/Ind/2019 we allowed the legal ground and quashed the penalty proceedings being vague and bad in law since specific charge was not mentioned in the penalty notice issued u/s 274 r.w.s. 271AAB o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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