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TMI Blog2020 (11) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 and 19.02.2020 passed u/s 250 of the Income Tax Act, 1961 ( the Act for short) for AY 2013-14. 2. As the issue arising in both these appeals are common, they are heard together and disposed off by way of this common order. 3. In both these appeals, the assessees challenged penalty levied on them u/s 271AAB of the Act by the AO and confirmed by the ld. CIT(A). 4. The facts of both these cases are that, search seizure operation u/s 132 of the Act was conducted on 13.12.2012, by the Investigation Wing of the Department, Kolkata at the residence, as well as business premises of the Ramkrishna Group and others and also at the residence of Shri Naresh Jalan at Flat no. 6A Belmont Apartment, 6th Floor, 18/2 Alipore Road, Kolkata-700 027. Notices were issued u/s 142(1) and 143(2) of the Act to the assessees and in response, the assessees filed their return of income; Mr. Naresh Jalan (HUF) declaring total income of ₹3,05,45,610/- for the AY 2013-14. Mr. Naresh Jalan (Individual) similarly filed a return of income declaring total income of ₹4,31,08,610/- for the AY 2013-14. The returned income was accepted by passing assessment order u/s 143(3) of the Act on 31.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been initiated against the assessee u/s 153C of the Act, by following due process of law. This was not done and hence the penalty is bad in law. 7. Reliance was placed on a number of case law, which would be referred by us, if necessary. Specifically it was argued that, in the case of Smt. Rashmi Jalan in ITA No. 326/Kol/2020 for the AY 2013-14 order dated 30.09.2020 in the case of a member of the group of the assessee, the penalty levied under similar facts was cancelled. 8. The ld. D/R, on the other hand relied on the order of the ld. CIT(A) and submitted that, at the time of the filing of return of income which was solely based on the disclosure made during the search u/s 132(4) of the Act, it was clear that the assessee was required to pay penalty at the rate of 10% of undisclosed income. He submitted that penalty at the lowest possible rate under the Act was levied on the assessee and that this is according to the law. He relied on the order of the ld. CIT(A) as well as the AO and submitted that there is no defect in the notice and from the assessment order the charge is clear. He pointed out that the assessee has not pointed out any defects before the lower author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngliya (supra) held as follows:- We further note that in the case in hand, the AO in the show cause notice has neither specified the grounds and default on the part of the assessee nor even specified the undisclosed income on which the penalty was proposed to be levied. For ready reference we reproduce the show cause notices issued by the AO under section 274 read with section 271AAB on 30th March, 2016 and 16th August, 2016 as under:- No. ACIT/CC-l/JPR/2015-16 Dated: 30.03.2016. PENALTY NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB OF THE INCOME TAX ACT, 1961. PAN - ABDPP 7196A To, Sh. Padam Chand Pungalia, 2372, MSB Ka Rasta, Johari Bazar, Jaipur. Whereas in the course of assessment proceedings before me for the A.Y. 2014-15, it appears to me that as per sections 274 and 275 read with section 271AAB of the Income-tax Act you are liable for penalty on assessed undisclosed income. You are hereby requested to appear before me at my office Room No. 103 (NA), N.C.R.B., Jaipur at 11.00 A.M. on 28.04.2016 and show cause why an order imposing penalty on you should not be made u/s 271AAB r.w.s. 274 of the Income tax Act, 1961. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and consequently the order passed under section 271AAB is not sustainable and liable to be quashed. 10. Similarly, the Indore Bench of the ITAT in the case of Shri Ravi Mathur (supra) has held as follows:- 7. As regards the validity of notice under section 274 for want of specifying the ground and default, we find that when the basic condition of the undisclosed income not recorded in the books of accounts does not exists, then the same has to be specified by the AO in the show cause notice and further the AO is required to give a finding while imposing the penalty under section 271AAB. Even if the AO is satisfied and come to the conclusion that the assessee has not recorded the undisclosed income in the books of accounts or in the other documents / record maintained in normal course relating to specified previous year, the show cause notice shall also specify the default committed by the assessee to attract the penalty @ 10% or 20% or 30% of the undisclosed income. There is no dispute that the AO has not specified the default and charge against the assessee which necessitated the levy of penalty under section 271AAB of the Act. Consequently, the assessee was not give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of CIT vs. Manjunatha Cotton and Ginning Factory (2013) 359ITR 565. 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed''. In the earlier case of Manjunatha Cotton and Ginning Factory (supra) their lordship had observed as under:- ''Notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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