HRG Health Care Pvt. Ltd., Kolkata V. A.C.I.T., CC - 2(4), Kolkata, Kolkata

ITA 110/KOL/2023

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The case involves HRG Health Care Pvt. Ltd., which appealed against a penalty of Rs. 30,43,200 imposed by the AO for undisclosed income discovered during a search operation under section 132 of the Income Tax Act. The penalty was confirmed by the Commissioner of Income Tax (Appeals)-20, Kolkata. The appellant contested the validity of the penalty notice, arguing it was issued mechanically without specifying the relevant clause, making it invalid. The Tribunal, referencing several precedents, agreed with the appellant and quashed the penalty.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127344 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-04-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 07-02-2023
• Other Referred Cases: Mahaveer Prasad Agarwal vs. DCIT, Ashok Bhatia vs. DCIT, Rashmi Jalan vs. ACIT, Greenex Chemicals Pvt. Ltd. vs. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Invalid notice
• Section: 132; 143(3)

Judgement Text

आयकर अपील य अ धकरण, कोलकाता पीठ ‘‘‘ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA ी राजेश क ु मार, लेखा सद य एवं ी संजय शमा या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. No. 110/Kol/2023 Assessment Year: 2013-14 HRG Health Care Pvt. Ltd. (PAN: AACCH 6099 R) Vs. ACIT, CC-2(4), Kolkata Appellant / (अपीलाथ ) Respondent / ( !यथ ) Date of Hearing / स ु नवाई क$ त&थ 06.04.2023 Date of Pronouncement/ आदेश उ)घोषणा क$ त&थ 31.05.2023 For the Appellant/ नधा /रती क$ ओर से Shri Manoj Kataruka, Advocate For the Respondent/ राज व क$ ओर से Shri Subhrajyoti Bhattacharjee, CITDR ORDER / आदेश Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Ld. Ld. Commissioner of Income Tax (Appeals)-20, Kolkata (hereinafter referred to as the Ld. CIT(A)”] dated 12.01.2023 for the AY 2013-14. 2. The only issue raised by the assessee is against the confirmation of penalty of Rs. 30,43,200/- by the Ld. CIT(A) thereby upholding the order of AO wherein penalty has been levied u/s 271AAB of the Act. 2 I.T.A. No.110/Kol/2023 Assessment Year: 2013-14 HRG Health Care Pvt. Ltd. 3. Facts in brief are that a search action was conducted u/s 132 of the Act on 11.04.2013 at the office and other business premises belonging to Asian Tea Group of Companies, its directors and associates. During the course of search operation undisclosed income was discovered to the tune of Rs. 304.34 lacs on account of non- disclosed transactions. In the assessment framed u/s 143(3) dated 31.03.2016,a penalty was charged u/s 271AAB of the Act was initiated. The AO finally imposed the penalty @ 10% of said undisclosed income thereby levying penalty of Rs. 30,43,200/- u/s 271AAB(1)(a) of the Act. 4. In the appellate proceedings the Ld. CIT(A) affirmed the said penalty by holding that the assessee has disclosed this income during search operation and therefore penalty u/s 271AAB was rightly imposed. 5. The Ld. Counsel of the assessee at the outset submitted that the penalty imposed by the AO is bad in law, void and nullity by referring to the notice issued u/s 271AAAB of the Act dated 31.03.2016 a copy of which is filed at page 3 of the PB. The Ld. A.R stated that the said notice has been issued in a mechanical manner without mentioning the relevant clause under which penalty was proposed to be levied. The Ld. Counsel for the assessee therefore prayed before the Bench that the said notice is invalid notice and defect is not curable. The Ld. A.R stated that since the defect goes to the root of the matter and therefore penalty order passed by the AO is also invalid and nullity and may kindly be quashed. In defense of argument the Ld. A.R relied on the following decisions: i) Decision of Co-ordinate Bench of Jaipur in the case of Mahaveer Prasad Agarwal vs. DCIT in ITA No. 1218/JP/2019 dated 2.6.2022 ii) Decision of Co-ordinate Bench of Indore in the case of Ashok Bhatia vs. DCIT in ITA No. 869/Ind/2018 dated 5.2.2020 iii) Decision of Co-ordinate Bench of Kolkata in the case of Rashmi Jalan vs. ACIT in ITA No. 326/Kol/2020 dated 30.09.2020 3 I.T.A. No.110/Kol/2023 Assessment Year: 2013-14 HRG Health Care Pvt. Ltd. iv) Decision of Co-ordinate Bench of Kolkata in the case of Greenex Chemicals Pvt. Ltd. vs. ACIT in ITA No. 657/Kol/2022 dated 16.1.2023. The ld. A.R therefore prayed that in view of the aforesaid orders of the Tribunal the penalty order may kindly be quashed. 6. The Ld. D.R on the other hand relied on the order of AO by submitting that penalty order rightly imposed after issuing show cause notice u/s 271AAB of the Act in respect of undisclosed income found during the course of search operation. Had the search operation not conducted on the assesse, the said income would have gone unnoticed. 7. After hearing the rival contentions and perusing the material on record including the notice issued u/s 271AAB dated 31.03.2016, we observe that the show cause given in the form of notice u/s 271AAB of the Act without mentioning the limb/clause under which the penalty is proposed to be levied is defective as it is a mandatory requirement. In our opinion this is a substantive defect which is not curable at all. In our considered view the said infirmity goes to the root of the matter and renders the penalty notice as well as consequent order passed u/s 271AAB of the Act as invalid and nullity. The Case of the assessee finds support from the several decisions of Co-ordinate Bench as mentioned above. We therefore respectfully following the decisions of the Co-ordinate Benches quash the penalty order as invalid. 8. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 31 st May, 2023 Sd/- Sd/- (Sonjoy Sarma /संजय शमा ) (Rajesh Kumar/राजेश क ु मार) Judicial Member/ या यक सद य Accountant Member/लेखा सद य Dated: 31 st May, 2023 SB, Sr. PS 4 I.T.A. No.110/Kol/2023 Assessment Year: 2013-14 HRG Health Care Pvt. Ltd. Copy of the order forwarded to: 1. Appellant- HRG Health Care Pvt. Ltd., 4/1, Middleton Street, Sikkim Commerce House, Kolkata-700001. 2. Respondent – ACIT, Central Circle-2(4), Kolkata 3. Ld. CIT(A)-20, Kolkata (sent through e-mail) 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata