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TMI Blog2022 (12) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... MI 1553 - ITAT CHENNAI] and Ravi Mathur [ 2018 (6) TMI 1128 - ITAT JAIPUR] wherein the matter written in the body of the notice issued u/s 274 of the Act does not refer to the charges of provision of section 271AAB of the Act makes the alleged notice defective and invalid and thus deserves to be quashed. Since the penalty proceeding itself has been quashed the impugned penalty stands deleted. Thus the assessee succeeds on legal ground challenging the validity of notice issued u/s 274 r.w.s. 271AAB of the Act. - Decided in favour of assessee. - ITA No. 2274/Kol/2019 - - - Dated:- 15-12-2022 - SHRI SONJOY SARMA , HON BLE JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL , HON BLE ACCOUNTANT MEMBER Assessee by : Shri Siddarth Agarwal , Advocate Revenue by : Smt. Ranu Biswas, Addl. CIT , DR ORDER PER SONJOY SARMA , JM : This appeal filed by the assessee is against the order of ld. CIT(A), Siliguri dated 23.08.2019 for A.Y. 2016-17. The assessee has taken the following grounds of appeal: i. For that on the facts and circumstances of the case, the ld. CIT(A) was not justified in confirming the penalty of Rs. 23,70,000/- imposed by the AO by wrongly invoking the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not fulfilled the condition for concessional rate of imposition of penalty u/s 271AAB(1)(a) or 271AA(1)|b) of the Act as he has not paid the tax, together with interest in respect of undisclosed income declare. Accordingly, he has levied penalty of Rs. 23,70,000/-. The appellant had submitted and argued that the Ld. AO had imposed a penalty of Rs.23,70,000/- at highest rate of 30% instead of 10% considering the facts of the case of the appellant. Penalty u/s 271AAb is payable at different rates depending upon the fulfillment of certain condition. As per provision of sec. 271AAB(1)(a)(ii) penalty @ 10% of the undisclosed income is payable if the appellant has paid the tax together with interest on or before due date of submission of return. The appellant has made a disclosure of Rs. 79,00,000/- for the A.Y. 2016-17 during the search seizure operation. However, in his return filed he has not paid the tax on the total undisclosed income of Rs. 79,00,000/-. In fact the appellant has declared total income of Rs. 83,02,410/- only in the return filed for the A.Y. 2016-17 and this income includes the normal income of the appellant. Therefore, it cannot be treated as true and ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the assessee was required to be show caused. In absence of the requisite contents of specific charge the initiation of proceedings cannot be sustained being bad in law. Further, reliance is also placed on the judgment in DCIT vs R. Elangovan (Trib. Chennai) (CL 113), where again it was held that since the penalty notice u/s. 271AAB was vague, penalty cannot be levied. Further, ld CIT(A) has referred to the judgment of Pr. CIT vs Sandeep Chandak 405 ITR 648 (All.). This judgment was discussed and distinguished in the case of Ravi Mathur vs DCIT (TS-8004-ITAT-2018(Jaipur)-O) (CL-131-155). 5. Ld. Counsel for the assessee submitted that before levying the penalty u/s 271AAB of the Act, the ld. AO has to issue noticed u/s 274 of the Act as provided in section 271AAB(3) of the Act. In the notice issued to the assessee there is no mention about the various conditions provided u/s 271AAB of the Act relating to levy of penalty @ 10% or 20% or 30% (as the case may be). Nothing is specified in the notice about Clause-a, b c of section 271AAB of the Act as to what percentage the penalty will be levied on the assessee for undisclosed income not surrendered during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,- (a) a sum computed at the rate of ten 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, admits the undisclosed income and specifies the manner in 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be so had the search not been conducted.'. Section 274 of the Act (1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. (2) No order imposing a penalty under this Chapter shall be made- (a) by the Income- tax Officer, where the penalty exceeds ten thousand rupees; (b) by the Assistant Commissioner, where the penalty exceeds twenty thousand rupees, except with the prior approval of the Deputy Commissioner.] (3) An income- tax authority on making an order under this Chapter imposing a penalty, unless he is himself the Assessing Officer, shall forthwith send a copy of such order to the Assessing Officer'] 8. From the perusal of the above proposition, we observe that sub section 3 of section 271AAB of the Act talks about issuing the notice u/s 274 of the Act. So for initiating the penalty proceedings u/s 271AAB of the Act, the first step to be taken by ld. AO issue a valid notice u/s 274 of the Act provides a procedure that No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ish to avail yourself of this opportunity of being heard in person or through authorized representative you may show cause in writing on or before the said date which will be considered before any such order is made under Section 271AAB. Assessing Officer Sd/- (R. Lama) Deputy Commissioner of Income Tax, Circle-2, Siliguri 10. From going through the above notice issued to the assessee on 28.12.2017, we find that there is no mention about various conditions provided u/s 271AAB of the Act. The ld. AO has very casually used the proforma used for issuing notice before levying penalty u/s 271(1)(c) of the Act for the concealment of income or furnishing of inaccurate particulars of income. Except mentioning the section 271AAB of the Act in the notice, it does not talk anything about the provisions of section 271AAB. Therefore, certainly such notice has a fatal error and technically is not a correct notice in the eyes of law because it intends to penalize an assessee without spelling about the charge against the assessee. 11. In the case of DCIT vs R. Elangovan Ltd. (supra), Co-ordinate Bench, Chennai while dealing with the legal ground challenging the vali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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) 359 ITR 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(l)(c) , i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy the requirement of law; The assessee should know the grounds which he has to meet specifically ..... 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