SHRI DARSHAN PAL SINGH GAREWAL, LUDHIANA V. DEPUTY COMMISSIONER OF INCME TAX CENTRAL CIRCLE-1, JALANDHAR

ITA 389/ASR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1413 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 27-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANPREET SINGH DUGGAL
• Keywords: Principle of natural justice; Set aside
• Section: 132; 271(1)(c); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 389/ASR/2019 (Assessment Year: 2013-14) Sh. Darshan Pal Singh Garewal, 50 – Raja Garden, Barrewal, Near Mangat Resort, Ferozepur Road, Ludhiana PAN: AISPG9530B (Appellant) Vs . Deputy Commissioner of Income tax, Central Circle-II, Jalandhar (Respondent) Appellant by Sh. Ashray Sarna C.A. Respondent by Sh. Manpreet Singh Duggal, Sr DR Date of Hearing 10.05.2022 Date of Pronouncement 30.06.2022 ORDER Per: Anikesh Banerjee, JM: The instant appeal is directed against the order of Ld. Commissioner of Income Tax (Appeal)-5, Ludhiana {in brevity CIT(A)} bearing appeal no. 07/IT/CIT(A)-5/LDH/2018-19, ITA No. 389/Asr/2019 Darshan Pal Singh Garewal v. DCIT order dated 10.4.2019, passed u/s. 250(6) of the Income Tax Act, 1961 (in brevity of the Act) for the Assessment year 2013- 14. The impugned order was originated from the order of Ld. Deputy Commissioner of Income tax, Central Circle-II, Jalandhar (in brevity A.O) passed u/s.271AAB of the Act for the order dated 20.03.2018. 2. Brief fact of the case is that during the search U/s 132 of the Act in the case of assessee was carried on 05/12/2012, the undisclosed income was found amount to Rs.27,72,800/- on which minimum penalty was levied @30% u/s. 271AAB(1)(a) of the Act which is amounted to Rs.8,31,840/-. The ld. AO levied penalty u/s. 271AAB(1)(c) amounts to Rs. 8,31,840/- in this assessment year when the assessee filed an appeal before the CIT(A) and specifically mentioned that the notice issued by the ld. AO had not fulfilled the mandatory provisions of section 271 of the Act. The ld. CIT(A) upheld the order of ld. AO. Aggrieved the assessee filed following grounds which is extracted here: “1. That the order passed by the Hon’ble CIT(A) dated 10.04.2019 is against the law and facts of the case. ITA No. 389/Asr/2019 Darshan Pal Singh Garewal v. DCIT 2. That having regard to the facts and circumstances of the case, the ld. CIT(A) has erred in law and on facts in confirming the action of ld. AO in passing the impugned assessment order u/s. 271AAB and without complying with the mandatory conditions u/s. 271 as envisaged under the Income Tax Act, 1961. 3. That having regard to the facts and circumstances of the case, the ld. CIT(A) has erred in law and on facts in confirming th4e action of ld. AO in passing the impugned assessment order u/s. 271AAB without considering the submissions of the assessee and without observing the principles of natural justice. 4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” ` 3. The ld. Counsel of the assessee challenged only the legal grounds and argued that the penalty is not fulfilling the conditions of section 271 of the Act. He relied of the order of Coordinate Bench in the case of Smt. Sanjna Mittal Vs. DCIT, Central Circle-I, Jalandhar, ITA no. 433/ASR/2019 date of order 20.12.2021. The para no. 12 of the said order is extracted as follows: “12. On perusal of the finding given in the above-mentioned decision and the facts and issues adjudicated therein, we find that the same is squarely ITA No. 389/Asr/2019 Darshan Pal Singh Garewal v. DCIT applicable on the common issue raised in the instant appeals and ld. Departmental Representative failed to controvert by bring any binding proceedings in its favour. We are therefore of the considered view that the penalty levied u/s. 271AAB (1) of the Act in the instant appeal deserve to be deleted as the penalty in question is bad in law since the show cause notice issued by the Assessing Officer does not specify the charges for levy of penalty as required by law. Since we have deleted the impugned penalties allowing the legal ground holding the notice u/s. 274 of the Act as defective and bad in law, remaining grounds becomes merely academic. Thus, all the grounds raised by the assessee(s) in the instant appeal are allowed as per terms indicate above.” 4. The ld. Counsel specifically mentioned that during the formation of belief and issuance of notice u/s. 271AAB, the ld. AO did not specify the charge of which the tax is levied. So, the penalty u/s. 271AAB is invalid and the penalty levied is to be deleted. 5. The ld. Sr-Dr Mr. Duggal weighment argue and relied on the order of CIT(A) in page no. 12, para extracted as follows: “The Hon’ble Accountant Member concurred and allowed the appeal the appeal of the assessee by holding that the penalty can be levied in respect of only the undisclosed income as defined in section 271AAB. In the case of Sh. Ravinder Aggarwal, the Hon’ble Accountant Member held ITA No. 389/Asr/2019 Darshan Pal Singh Garewal v. DCIT that penalty u/s. 271AAB is attracted on undisclosed income but not on any admission made by the assessee u/s. 132(4). It was observed that the Assessing Officer must establish, there is ‘undisclosed income’ on the basis of incriminating material found during the course of search. It was thus held that merely because the assessee has admitted additional income u/s. 132(4) and/or in the return of income, it cannot be said that such additional income was ‘undisclosed income’ within the meaning of section 271AAB of the Income Tax Act, 1961. The facts of the case of the appellant assessee under consideration are however different from the facts in the case of Sh. Ravinder Aggarwal decided by the Hon’ble ITAT, Amritsar Bench, Amritsar as a total cash of Rs. 47,72,800/- was found at the residence of the assessee during the search out of which an amount of Rs. 45,00,000/- was seized. During the assessment, the addition of Rs.27,72,800/- was made by the AO which was reduced by the CIT(Appeal) to Rs. 24,72,800/-by allowing relief of Rs. 3,00,000/-. Thus, the addition of Rs. 27,72,800/- for ‘unaccounted cash’ found during the search represents ‘undisclosed income’ within the meaning of Explanation clause © below sub section (3) to section 271AAB. Therefore, under the facts and the circumstances of the case, the penalty of Rs.8,31,840/- levied by the AO in this case is found sustainable as per law and hence confirmed.” 6. We heard the rival submissions and considered the documents available in the record. Section 271AAB(1)(c) is ITA No. 389/Asr/2019 Darshan Pal Singh Garewal v. DCIT very specific for penalty and the undisclosed income. The range is from 30% minimum to 90% maximum. The assessee was levied the minimum rate of penalty @30%. During the search proceeding the assessee was aware about his ‘undisclosed income’. No new formation of belief from the penalty proceedings on end of revenue. So, the assessee must know the declaration of undisclosed income is also connected with penalty. We respectfully observed order of Hon’able High Court OF Allahabad in the case of Pr. CIT, Kanpur vs. Sandeep Chandak, [2018] 93 taxmann.com 405 (Allahabad); “28. Since admittedly, no proceeding under Section 271(1)(c) are initiated by the assessing authority during the course of the assessment proceeding under Section 143(3), the impugned penalty proceedings under Section 271AAB are fully justified and are initiated in accordance with law. We find that the order of the ITAT cannot sustain, therefore, the same is set aside and the penalty orders under Section 271AAB passed by the assessing authority, confirmed by the CIT (Appeals), are affirmed and are restored. 29. The appeals filed by the Revenue are allowed.” ITA No. 389/Asr/2019 Darshan Pal Singh Garewal v. DCIT Here, in section 271AAB the charges are very specific depending in every action of the assessee. We find that no infirmity in the order of the ld. CIT(A). 7. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 30.06.2022 Sd/- Sd/- (Dr.M.L.Meena) (Anikesh Banerjee) Accountant Member Judicial Member Copy of the order forwarded to: (1) The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order