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TMI Blog2021 (12) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Ld. Assessing Officer though has levied the penalty u/s 271AAB of the Act but has not calculated the penalty under the provision of section 271AAB - CIT(A) states that the penalty under this section can be levied either @ 10% of the undisclosed income u/s 271AAB(1)(a) of the Act, or 20% of the undisclosed income if the case of the assessee falls u/s 271AAB(1)(b) of the Act or 60% of the undisclosed income if the case of the assessee falls under the provision of section 271AAB(1)(c) of the Act but the alleged penalty amount does not fall in either of the three cases. This in itself shows that the Ld. Assessing Officer was not aware as to on what basis he was levying the penalty. This action of AO in itself makes the penalty proceedings null and void, as assessee was not served with a correct notice u/s 274 of the Act to initiate the penalty proceedings. We, thus, find no infirmity in the finding of Ld. CIT(A) deleting the penalty levied u/s 271AAB of the Act. Accordingly grounds raised by the revenue stands dismissed. - CO No.12/Ind/2020 & ITA No.935/Ind/2019 (Assessment Year: 2015-16) - - - Dated:- 4-10-2021 - HON BLE RAJPAL YADAV, VICE PRESIDENT AND SHRI MANISH BORAD, ACCOU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout specifying the subsection and clause of 271AAB which was applied for arriving at above rate. 5. The Ld. AO has grossly erred on invoking of section 271AAB without proving the requirement of maintenance of books of accounts. 6. Show cause notice of u/s 274 r.w.s. 271AAB of the Income Tax dated.22.11.2017 is defective and no penalty can be levied on base of a defective notice 7. The order passed u/s 27AAB is defective/erroneous not based on the facts and legal provision is liable to be quashed. 8. AO has rejected the cited case law of Volga Dresses, in support of the legal provision without rebutting the error in the case, but simply stating it is from a Bench, other than jurisdictional I.T.A.T. bench, despite of the fact that there is no contradictory case decided in jurisdictional courts. 9. The respondent craves leave to add to or deduct from or otherwise amend the above grounds of Cross objections. First we take up Revenue s appeal in ITANo.935/Ind/2019 2. Brief facts of the case as culled out from the records are the assessee is individual earning income from salary and other sources. A search u/s 132 of the Act was conducted at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crore were accepted by his daughter Ku. Nishita Singhal i.e. the assessee which was utilized for giving loans to different borrowers on interest. Thereafter assessee was served with a notice u/s 153C of the Act. Return of income was filed on 31.08.2015 and income from gifts of ₹ 2 crore was offered to tax. 8. We also observe that ld. CIT(A) decided in favour of the assessee on observing that the provisions of section 271AAB of the Act are applicable on the person who is subjected to search but since the assessee was not subjected to search u/s 132 of the Act, penalty cannot be levied u/s 271AAB of the Act. The finding of Ld. CIT(A) reads as follows:- Ground No.1 4.0 This ground of appeal is with regard to imposing penalty of Re. 65,00,000 u/s 271AAB of the IT Act, 1961. I have carefully gone through the penalty order as well as submission of the appellant in this regard. 4.1 The brief facts of the case are that the appellant had filed her return of income on 31.08.2015 declaring total income of ₹ 2,09,67,530 for the A:Y. 2015-16. The appellant had declared income from salary of ₹ 1,05,000, income from interest at ₹ 9,30,730 and amount of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32, admits 'the undisclosed income and specifies the manner iii Which' such income has been derived; (ii) substantiates the manner in. which the undisclosed income was derived; and (iii) on or before the specified date- (A) pays the tax, together with interest, if any, in respect of the undisclosed income; and (B) furnishes the return of income for the specified previous year declaring such undisclosed income therein; (b) a sum computed at the rate of twenty per cent of the undisclosed income of the specified previous year, if such assessee- (i) in the course of the search, in a statement under sub-section (4) of section 132, does not admit the undisclosed income; and (ii) on or before the specified date- (A) declares such 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 43[computed at the rate of sixty per cent} ofthe undisclosed income of the specified previous year, if it is riot covered by the provisions of clauses (a) and (b). 44 [(1 A) The Assessing Officer may, notwithstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner .. before the date of search; or (it) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded 'in the .books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false' an. Been found to be so had the search not been conducted. 4.4 The language of the said section starts from the word in a case where search has been initiated under section 132 but in the instant case, no search proceeding was initiated. The same plea was taken by the appellant in its written reply. The same view is also supported by the Hon'ble ITAT Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nate Bench Panji in the case of Volga Dresses ITA No 201 202/PAN/2016 which stands uncontroverted by the Ld. DR being unable to place any decision favouring revenue on this issue, we are of the view that since no search was conducted in the case of assessee and since assessment has been made u/s 153C of the Act, penalty proceedings cannot be initiated u/s 271AAB of the Act. Even otherwise in the penalty notice Ld. Assessing Officer though has levied the penalty u/s 271AAB of the Act but has not calculated the penalty under the provision of section 271AAB of the Act. In para 8 of the penalty order Ld. Assessing Officer states that the minimum penalty is leviable is ₹ 60 lakh and maximum penalty is leviable is ₹ 1,80,00,000/- which is normally calculated when applying the provision of section 271(1)(c) of the Act but finally Ld. Assessing Officer levied the penalty of ₹ 65 lakhs. It is also not understandable as to how the penalty amount has been worked out u/s 271AAB of the Act. Provision of section 271AAB of the Act as referred above in the finding of Ld. CIT(A) states that the penalty under this section can be levied either @ 10% of the undisclosed income u/s 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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