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TMI Blog2025 (3) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... red in law and in facts by deleting the penalty u/s 271AAB of the I.T. Act, 1961 without appreciating the fact that in the show cause notices issued by the AO for initiation of penalty proceedings u/s 281AAB of the I.T. Act, 1961, it was clearly mentioned by then AO that "there is undisclosed income for the specified previous year as defined in section 271AAB of the IT Act, 1961." 3. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in law and in facts by deleting the penalty u/s 271AAB of the I.T. Act, 1961 without appreciating the fact that the undisclosed income unearthed as a result of search only. Had the search not taken place, the undisclosed income would have escaped taxation. 4. Any other ground that may be raised during the course of appellate proceedings." Submission of ld.DR: 2. The ld.DR for the Revenue relied on the order of Assessing Officer. Ld.DR took us through the assessment order to demonstrate that Assessing Officer(AO) has recorded proper satisfaction in the assessment order for penalty. Therefore, ld.DR submitted that ld.CIT(A) has erred in stating that AO has not recorded satisfaction. Ld.DR took us through the Section 271AAB(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, took place on 21.08.2018. Assessee is a private limited company engaged in the business of developing of housing projects, hotels and sports clubs. During the search under section 132 of the Act, some loose papers and documents were seized as Annexure-A. As per the documents in Annexure-A, it is alleged that Assessee has received on-money of Rs. 1,37,73,000/- from customers. Ld.AR in the paper book has submitted copies of the impugned Annexure-A at page no.42 to 51 of the paper book. We have perused these documents. At page no.45 of the paper book, there is a photo copy of the page which is Numbered as '2'. There is a title 'FLORA PHASE-1'. Then, there are various names of the individuals, against these names 'RH' number is mentioned and two amounts are mentioned. In the statement, recorded under section 132(4) of the Act during the search, the Director of Assessee Company Mr. Jugalkishore Tapadia in reply to Question No.12 submitted as under : "Sir we confirm that the amount of Rs. 1,37,73,000/- has been received by us, over and above the agreement to sale value, for provision of additional amenities in the above mentioned project to the respective customers. The expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961." 4.2 The Assessee has not filed any appeal against the assessment order. Assessing Officer levied penalty under section 271AAB of the Act on 26.03.2022. Aggrieved by the penalty order, assessee filed appeal before the ld.CIT(A). Ld.CIT(A) deleted the penalty on a technical ground. The relevant paragraph of 4.8 of the ld.CIT(A)'s order is as under : "4.8 Having gone through the relevant material on record and the decisions of above judicial authorities relied upon by the appellant, it is seen that the AO in the show cause notice has neither specified the grounds and default on the part of the appellant nor even specified the undisclosed income on which the penalty was proposed to be levied Thus it is bear that both the show cause notices issued by the AO for initiation of penalty proceedings under section 271AAB are very vague and silent about the default of the appellant and further the amount of undisclosed income on which the penalty was proposed to be levied. In view of the above it is held that the penalty proceedings were not correctly initiated by the assessing officer, thereby vitiating the proceedings and accordingly, penalty levied u/s 271AAB(1A) of the Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of search; or (ii) 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 and would not have been found to be so had the search not been conducted." (emphasis supplied) 4.5 It can be seen from the Section 271AAB reproduced above that there are two sub-sections i.e. 271AAB(1) & 271AAB(1A). 4.6 In the case of the assessee, the Assessing Officer has specifically initiated penalty proceedings under section 271AAB(1A) of the Act, as seen from the para 6 of the assessment order which has been reproduced above. Thus, the Assessing Officer has categorically specified the charge of the penalty in the assessment order. Then, in the penalty order the Assessing Officer has again discussed 271AAB(1A) of the Act. Thus, at the time of assessment, the Assessee was made aware that penalty proceedings under section 271AAB(1A) of the Act, has been initiated for undisclosed income. In the assessment order, the AO has specifically mentioned the amount of undisclosed income also. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Hon'ble Apex Court in the case of "Sandeep Chandak v. PCIT" reported in [2018] 93 taxmann.com 406/255 Taxman 367(SC) where in similar facts and circumstance their lordship have dismissed the appeal of the assessee and upheld the order of Hon'ble High Court sustaining the penalty imposed u/s.271AAB of the Act, as under; A search u/s 132 of the Act was carried out in case of assessee, and in the course of search, assessee made a statement admitting certain undisclosed income. Assessing Officer added said amount to assessee's taxable income and thereupon, issued a notice u/s 274 r.w.s. 271 of the Act for initiating penalty proceedings to which assessee submitted written reply. Assessing Officer having rejected assessee's explanation, passed a penalty order u/s 271AAB. Tribunal proceeding on presumption that penalty proceedings had been initiated u/s 271(1)(c), set aside penalty order. High Court took a view that where assessee in course of search admits undisclosed income and the manner in which such income has been derived, then provisions of section 271AAB would automatically be attracted and further the High Court opined that since opportunity of hearing as pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 read with section 271 calling upon the assessee to show cause in writing or in person which fulfill the requirement of Section 274 of the Act. 24. In the present case, the provisions of Section 271AAB are fully applicable as of the conditions sostipulated or attracts as a search has been initiated under Section 132 and during the course of search the statement of the assessee has been recorded under sub section (4) of Section 132, in which the assessees admit undisclosed income and specifies the manner in which such income has been derived. 25. We have gone through the contents of the penalty notice and we find that in the penalty notice, which has been issued under Section 274 read with Section 271, the assessing authority has clearly indicated that the proceedings under Section 271AAB being initiated and the reply to the show cause notice in writing on or before the date so as indicated will be considered before any such order is made under Section 271 AAB. 26. We find the substance in the submission of the learned counsel for the department and we noticed that the orders passed by the CIT (Appeals), affirming the orders of the penalty, are fully justified where the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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