SHRI RAVINDER AGGARWAL, JAMMU V. DEPUTY COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE, JAMMU

ITA 409/ASR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9334 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 26-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M P S INGH LD
• Assessee Lawyers: SURINDER MAHAJAN LD
• Keywords: Business income; Search and seizure; Loose papers; Opportunity of being heard; Period of limitation; Question of law; Reasonable cause; Time period of passing order; Set aside
• Section: 271(1)(c); 143(3); 142(1); 153A; 27; 132; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AM RITSAR BEFORE SH. N.S.SAINI, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NOS.410 & 409(ASR)/2018 ASSESSMENT YEAR:201 4-15 SH. RAVINDER AGGARWAL, 116, JULLAKHA MOHALLA, JAIN BAZAR, JAMMU [PAN:AMXPA 7889C] VS. DY. CIT, CENTRAL CIRCLE, JAMMU (APPELLANT) (RESPONDENT) ITA NOS.406 & 405(ASR)/2018 ASSESSMENT YEAR:20 14-15 SH. RAM AGGARWAL, 116, JULLAKHA MOHALLA, JAIN BAZAR, JAMMU [PAN:AQZPA 9424H] VS. DY. CIT, CENTRAL CIRCLE, JAMMU (APPELLANT) (RESPONDENT) ITA NOS.402 & 401(ASR)/2018 ASSESSMENT YEAR:20 14-15 SMT. MEENAKSHI DEVI, 116, JULLAKHA MOHALLA, JAIN BAZAR, JAMMU [PAN:AASPA 5255H] VS. DY. CIT, CENTRAL CIRCLE, JAMMU (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SURINDER MAHAJAN (LD. CA) RESPONDENT BY: SH. M.P.SIN GH (LD. CIT-DR) DATE OF HEARING: 19.02.2019 DATE OF PRONOUNCEMENT: 04 .04.2019 ORDER ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 2 PER N.K.CHOUDHRY, JM: THE ASSESSEE BY WAY OF ITAS NO. 410, 406 & 402/ASR/2018 CHALLENGED THE ORDERS DATED 20.10.2016 IMPUGNED HEREIN PASSED BY THE LD. CIT(A)-5, LUDHIANA WHEREBY THE LD. CIT(A) AFFIRMED THE PENALT Y IMPOSED U/S 271AAB BY THE ASSESSING OFFICER AND BY WAY OF ITA NOS. 409, 405 & 401/ASR/2018 CHALLENGED THE ORDERS DATED 09.05.2018 IMPUGNED HEREI N PASSED BY THE LD. CIT(A)-5, LUDHIANA WHEREBY THE LD. CIT(A) AFFIRMED THE ASSESSMENT ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CAL LED AS THE ACT). 2. FIRST WE WILL ADJUDICATE THE APPEALS AGAINST THE PENAL TY. AS THE FACTS AND CIRCUMSTANCES OF CASES WHEREIN THE PENALTY ORDERS HAVE BEEN CHALLENGED ARE SIMILAR AND IDENTICAL THEREFORE FOR THE SAKE OF CON VENIENCE AND BREVITY THE FACTS OF ITA NO.410/ASR/2018 HAVE BEEN TAKEN INTO CONSIDERATION FOR ADJUDICATION AND RESULT OF THE SAME SHALL APPLY MUTATIS MUTANDIS TO ITAS NO. 406 & 402/ASR/2018. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE SEARCH AND SEIZ URE OPERATIONS WERE CARRIED OUT ON DATED 03.09.2013 AT THE RESIDENTI AL PREMISES OF THE ASSESSEES AND THEREAFTER SURVEY WAS ALSO CARRIED OUT ON DATE D 04.09.2013, AT THE BUSINESS PREMISES OF 'RAVINDER JEWELLERS' OF WHICH THE ASSESSEE IS A PROPRIETOR. AS PER ASSEEEE, THE ASSESSEES HAVE MADE THE VO LUNTARY DISCLOSURE OF INCOME U/S 132(4) OF THE ACT AND SURRENDERED AN AMOUNT OF RS.10,25,00,000/- VOLUNTARILY QUA F.Y.2013-14 BUT SU BJECT TO NO PENALTY. THEREAFTER ASSESSMENTS IN THE RELEVANT CASES UNDER CONSIDERAT ION HAVE BEEN FRAMED AND PENALTY PROCEEDINGS HAVE ALSO BEEN INITIATE D U/S 271AAB OF THE ACT WHICH RESULTED INTO IMPOSITION OF PENALTY OF RS.1,8 4,50,000/- BEING 30% OF THE UNDISCLOSED INCOME IN THE ASSESSEE'S CASE. THE ASSESSEE P REFERRED THE FIRST APPEAL BEFORE THE LD. CIT(A) CHALLENGING THE PE NALTY ORDER WHO VIDE ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 3 ORDER DATED 14.05.2018 IMPUGNED HEREIN, AFFIRMED TH E LEVY OF PENALTY BY HOLDING AS UNDER: FROM THE ABOVE DISCUSSION, IT IS CLEAR THAT THE CA SE OF THE ASSESSEE FALLS WITHIN THE AMBIT OF SECTION 271AAB A S IT RELATES TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED AND THE ASSESSEE HAS UNDISCLOSED INCOME WHICH IS ACCEPTED AND INCLUDED I N THE TOTAL INCOME BY THE ASSESSEE IN THE RETURN FILED AFTER TH E SEARCH. THE ONLY QUESTION NOW REMAINS TO BE SEEN IS WHETHER THE CASE OF THE ASSESSEE FALLS UNDER CLAUSE (A) OR CLAUSE (B) OR CL AUSE (C) OF SUB- SECTION (1) OF SECTION 271AAB ATTRACTING PENALTY @ 10%, 20 % OR 30% RESPECTIVELY. IN THIS CASE THE UNDISCLOSED INCOME W AS SURRENDERED U/S 132(4) AS PER THE 'VOLUNTARILY DISCLOSURE OF IN COME U/S 132(4) OF THE INCOME TAX ACT, 1961' LETTER ADDRESSED TO DDIT (INV.), JAMMU REPRODUCED ABOVE. THE ASSESSEE HAS DECLARED SUCH IN COME IN THE RETURN FURNISHED FOR A.Y. 2014-15 BUT THE 'TAX TOGE THER WITH INTEREST' IN RESPECT OF THE 'UNDISCLOSED INCOME' WAS NOT BEEN PAID ON OR BEFORE THE 'SPECIFIED DATE'. THE SPECIFIED DATE HAS BEEN D EFINED AS PER CLAUSE (A) OF THE EXPLANATION TO SECTION 271AAB. FO R CLARITY, IT IS REPRODUCED BELOW. (A) SPECIFIED DATE MEANS THE DUE DATE OF FURNISHI NG OF RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 OR T HE DATE ON WHICH THE PERIOD SPECIFIED IN THE NOTICE ISSUED UND ER SECTION 153A FOR FURNISHING OF RETURN OF INCOME EXPIRES, AS THE CASE MAY BE; THE ASSESSEE DID NOT PAY THE TAX TOGETHER WITH INTE REST IN RESPECT OF UNDISCLOSED INCOME BEFORE THE SPECIFIED DATE. THEREFORE THE CASE OF THE ASSESSEE NEITHER FALLS UNDER CLAUSE (A) OR CLAUSE (B) OF SUB-SECTION (1) OF SECTION 271AAB. IN THE RESULT TH E CASE OF THE ASSESSEE FALLS UNDER CLAUSE (C) OF SUBSECTION (1) O F SECTION 271AAB, ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 4 WHICH PROVIDES FOR LEVY OF PENALTY NOT LESS THAN 30 % BUT NOT EXCEEDING 90% OF THE UNDISCLOSED INCOME. THE AO HAS LEVIED PENALTY OF 30% OF THE UNDISCLOSED INCOME. THE AR HAS RAISED A POINT REGARDING ADJUSTMENT OF SEIZED CASH AGAINST THE TAX LIABILITIES FOR WHICH AS PER AR AN APPLICATION U/S 154 WAS FILED BE FORE THE AO. HERE IT IS IMPORTANT TO NOTE THAT AS PER THE REQUIR EMENT OF THE LAW UNDER SECTION 271AAB, THE ASSESSEE WAS REQUIRED TO PAY THE TAX TOGETHER WITH INTEREST AND FURNISH THE RETURN DECLA RING SUCH UNDISCLOSED INCOME THEREIN, ON OR BEFORE THE SPECIF IED DATE (WHICH IN THIS CASE WAS EXTENDED UPTO 31.03.2015). BY ASSESSE E'S OWN ADMISSION, THE TAX AND INTEREST WAS NOT PAID AND AN APPLICATION U/S 154 WAS FILED AFTER PASSING THE ASSESSMENT ORDER (D ATED 09.03.2016) FOR ADJUSTMENT OF SEIZED CASH TOWARDS T AX LIABILITY. HENCE IT IS CLEAR THAT TAX AND INTEREST WERE NOT PA ID ON THE SURRENDERED INCOME WHICH WAS INCLUDED IN THE TOTAL INCOME BY THE ASSESSEE IN THE RETURN FILED ON 20.11.2014. THE APP LICATION OF SEIZED ASSET IS TO BE MADE AS PER PROVISION OF SECTION 132 B WHICH PROVIDES THAT THE ASSETS SEIZED WILL BE ADJUSTED AGAINST THE EXISTING LIABILITY OR THE LIABILITY DETERMINED AFTER THE COMPLETION OF SEARCH RELATED ASSESSMENT. EXISTING LIABILITY WILL INCLUDE THE LIA BILITY FOR WHICH NOTICE OF DEMAND HAS ALREADY BEEN ISSUED BY THE DEP ARTMENT AND THE DEMAND IS ENTERED IN THE RECORDS/REGISTERS OF T HE DEPARTMENT (DEMAND AND COLLECTION REGISTER) BEFORE THE SEARCH. IN VIEW OF THE DISCUSSION ABOVE, THE SUBMISSIONS OF THE AR ARE NOT FOUND ACCEPTABLE. THE CASE LAWS REFERRED/RELIED UPON BY T HE AR RELATES TO PENALTY UNDER SECTION 271(1) (C) OR 271AAB WHICH, A LREADY MENTIONED, ARE NOT APPLICABLE IN THIS CASE AS THE A SSESSEES CASE IS COVERED U/S 271AAB, WHICH HAS ALREADY BEEN INVOKED BY THE AO. THEREFORE, UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 5 VIEW OF THE CLEAR PROVISIONS OF LAW, THE PENALTY OF RS.1,84,50,000/- IMPOSED BY THE AO U/S 271AAB, IN THIS CASE @ 30% OF UNDISCLOSED INCOME, IS FOUND SUSTAINABLE AS PER LAW AND HENCE C ONFIRMED. ACCORDINGLY, THESE GROUNDS OF APPEAL ARE DISMISSED . 4. THE ASSESSEE BY WAY OF INSTANT APPEAL CHALLENGED THE AFF IRMATION ORDER OF PENALTY AND RAISED THE FOLLOWING GROUNDS OF APPEAL . 1. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 5, LUDHIANA [CIT(A)], HAS GROSSLY ERRED IN CONFIRMING THE PENALTY OF RS. 1,84 ,50,000/- U/S 271AAB OF THE INCOME TAX ACT, 1961 (THE ACT). PEN ALTY CONFIRMED IS ILLEGAL AND BAD IN LAW SINCE SPECIFIED PREVIOUS YEA R WAS AY 2013-14 AND NOT AY 2014- 15. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS GROSSLY ERRED IN CONCLUDING THAT YEAR OF SEARCH I.E. A.Y. 2014-15 IS THE SPECIFIED PREVIOUS YEAR AS DEFINED IN EXPLAN ATION (B) TO SECTION 271AAB OF THE ACT AS AGAINST CLAIM OF THE ASSESSEE THAT A.Y. 2013-14 IS SPECIFIED PREVIOUS YEAR. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, PENALTY IMPOSED U/S 271AAB OF THE ACT IS ILLEGAL AND BAD IN LAW SINCE THERE WAS NO UNDISCLOSED INCOME AS RETURNED INCOME AND ASSESSED INCOME WERE SAME. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, PE NALTY IMPOSED AND CONFIRMED U/S 271AAB OF THE ACT IS ILLE GAL AND BAD IN LAW SINCE THERE IS NO SPECIFIC CHARGE IN THE NOTICE ISSUED U/S 271AAB OF THE ACT. NOTICE DOES NOT SPECIFY WHET HER PENALTY HAS BEEN INITIATED U/S 271AAB (L)(A) OR 271AAB (L)( B) OR 271AAB (L)(C) WHICH MAKES THE PENALTY IMPOSED ILLEGAL AND BAD IN LAW. NOTICE U/S 271AAB WITHOUT SPECIFIC CHARGE IS BAD IN LAW. 5. THAT ON FACTS AND CIRCUMSTANCES OF CASES, LD. CI T(A) HAS GROSSLY ERRED IN HOLDING THAT WAY OF PENALTY U/S 27 1AAB OF THE ACT IS AUTOMATIC AND NOT DISCRETIONARY. ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 6 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, PENALTY U/S 271AAB OF THE ACT IS NOT LEVIABLE SINCE INCOME OFFE RED TO TAX DURING SEARCH AND SEIZURE PROCEEDINGS WAS SUBJECT TO NO PE NALTY. 7. THAT WITHOUT PREJUDICE TO OUR GROUNDS OF APPEAL RAISED AT SERIAL NO. 1 TO 6 ABOVE, EVEN OTHERWISE ALSO, UNDER NO CIR CUMSTANCES, PENALTY CAN BE IMPOSED MORE THAN 10% SINCE TAXES ON ALLEGED UNDISCLOSED INCOME STOOD PAID BEFORE DUE DATE OF FI LLING OF RETURN. 8. THAT LEARNED CIT(A) HAS GROSSLY ERRED IN LAW IN CONCLUDING THAT TAX AND INTEREST WERE NOT PAID ON SURRENDER INCOME AT THE TIME OF FILLING OF RETURN. 9. THAT LEARNED CIT(A) HAS GROSSLY ERRED IN NOT DIS POSING OF FOLLOWING ISSUES RAISED DURING THE APPELLATE PROCEE DINGS, THOUGH THE SAME HAVE BEEN INCORPORATED IN THE BODY OF APPELLAT E ORDER. A) AMOUNT SEIZED DURING THE SEARCH OPERATIONS IS TO BE ADJUSTED AS SELF ASSESSMENT TAX. B) IF CASH SEIZED DURING SEARCH AND SEIZURE PROCEED INGS IS NOT ADJUSTED AGAINST SELF-ASSESSMENT TAX, THEN RETURN B ECOMES DEFECTIVE RETURN U/S 139(9) OF THE ACT AND DEFECTS NOT BEING CURED, RETURN BECOMES INVALID RETURN. ASSESSMENT FRAMED OF NON-EST RETURN AND CONSEQUENT PENALTY IMPOSED IS ILLEGAL AN D BAD IN LAW. 5. FROM THE GROUNDS OF APPEAL, IT REFLECTS THAT THE ASSESSE E IS AGGRIEVED AGAINST THE IMPOSITION AND AFFIRMATION OF PENALTY ON THE LEGAL GROUNDS AS WELL AS ON MERITS AND HAS RAISED VARIOUS ISSUES CONTESTING TH E PENALTY U/S 271AAB. THE GROUNDS NUMBER 4. RELATES TO THE CHALLENGE THE PENALTY ON LEGAL GROUND, WHICH SAYS THAT ON THE FACTS AND CIRCUMSTANCE S OF THE CASE, PENALTY IMPOSED AND CONFIRMED U/S 271AAB OF THE ACT IS ILLEGAL AND BAD IN LAW SINCE THERE IS NO SPECIFIC CHARGE IN THE NOTICE ISSUED U/ S 271AAB OF THE ACT. NOTICE DOES NOT SPECIFY WHETHER PENALTY HAS BEEN INI TIATED U/S 271AAB (1)(A) OR 271AAB(1)(B) OR 271AAB(1)(C) WHICH MAKES THE PENALTY IMPOSED ILLEGAL AND BAD IN LAW. NOTICE U/S 271AAB WITHOUT SPECI FIC CHARGE IS BAD IN LAW. ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 7 6. ON THE CONTRARY THE LD. CIT DR SUPPORTED THE ORDER P ASSED BY THE AUTHORITIES BELOW AND SUBMITTED THAT THE IMPUGNED ORD ER DOES NOT SUFFER FROM ANY INFIRMITY, IMPROPRIETY AND/OR ILLEGALITY A ND THEREFORE NOT LIABLE TO BE INTERFERED. 7. HAVING HEARD THE PARTIES AT LENGTH AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE AO INITIATED THE PE NALTY PROCEEDINGS AND ISSUED THE STATUTORY NOTICE UNDER SECTION 271AAB/274 OF THE ACT WITHOUT SPECIFYING THE LIMB AS PRESCRIBED UNDER SUB SECTION A, B AN D C OF SECTION 271AAB WHICH HAVE SEPARATE LIABILITY/IMPOSITION, THERE FORE WE CONSIDER IT APPROPRIATE TO DECIDE FIRST, THE LEGAL ISSUE INVOLVED I N THE INSTANT CASE, INSTEAD OF GOING INTO MERITS AND ANALYZING THE FACTS A ND DECISIONS RELIED UPON BY THE PARTIES, HOWEVER IF THE LEGAL ISSUE CAN NO T FINALLY ADJUDICATE THE CASE THEN WE WILL PROCEED ON MERIT. 8. HON'BLE APEX COURT IN CASE OF M/S. SSA'S EMERALD MEADOWS, (2016) 73 TAXMANN.COM 248(SC) DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE JUDGMENT RENDERED BY HON'BLE HIGH COURT OF KARNATAKA WHEREBY THE HON'BLE HIGH COURT DIRECTED T HE DELETION OF PENALTY FOR NOT SPECIFYING THE LIMB IN THE NOTICE. O PERATIVE PART OF THE JUDGMENT IN CASE OF M/S. SSA'S EMERALD MEADOWS (SUPRA) [ 2016 ] 73 TAXMANN.COM 241 ( KAR .) DECIDED BY HON'BLE HIGH COURT OF KARNATAKA IS REPRODUCED BELOW:- '2. THIS APPEAL HAS BEEN FILED RAI SING THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLI CITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATE D FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABL E FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYON D ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 8 REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE ? (2 WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFI ED IN LAW IN. HOLDING THAT THE PENALTY NOTICE UNDER SECTI ON 274 R.W.S. 271(1)(C) IS HAD IN LAW AND. INVALID INS PITE THE AMENDMENT OF SECTION 271(1 B) WITH RETROSPECTIV E EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSIN G OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECOR DING THE SATISFACTION FOR THE SAME? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE AP PEALS AGAINST THE REVENUE ON THE BASIS OF NOTICE ISSUED, UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY T HE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)( C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT') TO B E BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD B EEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME .THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED UPON THE DECISION OF THE DIVI SION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OR INCOME T AX - VS - MANJUNATHA C OTTON AND G INNING F ACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY J UDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPI NION, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL F OR DETERMINATION BY THIS COURT, THE APPEAL IS ACCORDIN GLY DISMISSED.' 9. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJ UNATHA COTTON & GINNING FACTORY, 359 ITR 565 (KAR) ALSO OBSERVED THAT THE LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB UNDER WHICH IT IS BEING LEVIED. AS PER HON'BLE ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 9 HIGH COURT, WHERE THE ASSESSING OFFICER PROPOSED TO INVOKE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY M ARKED. THE HON'BLE HIGH COURT HELD THAT THE STANDARD PROFORMA OF NOTICE U NDER SECTION 274 OF THE ACT WITHOUT STRIKING OF THE IRRELEVANT CLAUSES WOUL D LEAD TO AN INFERENCE OF NON-APPLICATION OF MIND BY THE ASSESSING OFFICER. THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF VS. JCIT, 291 ITR 519(SC) HAS ALSO NOTICED THAT WHERE THE ASSESSING OFFICER ISSUES NOTICE UNDER SECTION 274 OF THE ACT IN THE STANDARD PROFORMA AND THE INAPPROPRIAT E WORDS ARE NOT DELETED, THE SAME WOULD POSTULATE THAT THE ASSESSING OFFI CER WAS NOT SURE AS TO WHETHER THE ASSESSEE HAD CONCEALED THE PARTICULARS OF H IS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREFORE IN SUCH A SITUATION, LEVY OF PENALTY SUFFERS FROM NON-APPLICATION OF MIND. 10. THE PENALTY PROVISIONS OF SECTION 271AAB OF THE ACT ARE ATTRACTED WHERE THE ASSESSEE AS PER SUB SECTION (A) OF SECTION 271AAB OF THE ACT, IN THE COURSE OF SEARCH DOES ADMIT THE UNDISCLOSED INCOME OF THE SP ECIFIED PREVIOUS YEAR AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEE N DERIVED AND ON OR BEFORE THE SPECIFIED DATE PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, QUA UNDISCLOSED INCOME AND FURNISHES THE RETURN OF INCOME FOR THE SPECIFIED PREVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN T HEN THE PENALTY @ 10% OF THE UNDISCLOSED INCOME SHALL BE APPLICABLE . AND AS PER SUB SECTION (B) OF SECTION 271AAB OF THE ACT, IF A PERSON IN THE COU RSE OF SEARCH DOES NOT ADMIT THE UNDISCLOSED INCOME FOR THE SPECIFIED PREVIOUS YE AR AND ON OR BEFORE THE SPECIFIED DATE PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, QUA UNDISCLOSED INCOME AND FURNISHES THE RETURN OF INCOME FOR THE SPECIFIED PREVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN T HEN THE PENALTY @ 10% OF THE UNDISCLOSED INCOME SHALL BE APPLICABLE. AND AS PER SUB SECTION (C) OF SECTION 271AAB OF THE ACT, IF THE CASE OF SUCH PERSO N IS NOT COVERED UNDER CLAUSE A OR B OF SECTION 271AAB OF THE ACT, THEN T HE PENALTY @ 30% ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 10 SHALL BE APPLICABLE. IT IS WELL ACCEPTED PROPOSITIONS THAT THE AFORESAID THREE LIMBS OF SECTION 271AAB OF THE ACT CARRY DIFFERENT MEANI NGS AND DIFFERENT PENALTIES. THEREFORE, IT IS IMPERATIVE FOR THE ASSESSING OFFICER TO SPECIFY THE RELEVANT LIMB ON WHICH THE PENALTY IS IMPOSABLE SO AS TO MAKE THE ASSESSEE AWARE AS TO WHAT IS THE CHARGE MADE AGAINST HIM SO THAT HE CAN RESPOND AND DEFEND ACCORDINGLY. NO DOUBT THE PENALTY PROCEEDI NG ARE QUASI CRIMINAL IN NATURE AND REQUIRES STRICT PROOF THEN THE CIVIL LIA BILITY. THE ASSESSING OFFICER WHILE INITIATING THE PENALTY PROCEEDINGS AND I SSUING STATUTORY NOTICE U/S 274 OF THE ACT AND EVEN IMPOSING THE PENALTY, IS UN DER LEGAL OBLIGATION TO SPECIFY THE LIMB OF SECTION 271AAB OF THE ACT WHEREIN PENALTY @ 10% OR 20% OR 30% OF THE UNDISCLOSED INCOME, PRESCRIBED. THE LAW MANDATES AND WELL SETTLED THAT IS IMPERATIVE TO AFFORD THE REASONAB LE AND PROPER OPPORTUNITIES TO THE ASSESSEE TO DEFEND HIS CASE IN PROPER MANNER AND THE STATUTORY NOTICE HAS TO BE VERY MUCH CLEAR AND CANNOT BE A VAGUE AND DOES NOT DEFLECT WITH AMBIGUITY. 10.1 IN THE INSTANT CASE, AT THE TIME OF INITIATING THE PENALTY, THE ASSESSING OFFICER SIMPLY STATED THAT PENALTY PROCEEDINGS U/S 271AAB ARE BEING INITIATED SEPARATELY ON ACCOUNT OF THAT , WITHOUT SPECIFYING THE LIMB SUCH AS CLAUSE A OR B OR C OF SECTION 271AAB OF THE ACT , AND ISSUED THE NOTICE 09-03-2016 BY SIMPLE MENTIONING THAT AS TO WHY AN ORDER IMPOSING PENALTY UPON YOU SHOULD NOT BE MADE UNDER SECTION 271AAB OF THE ACT , WHICH GOES TO SHOW THAT THE ASSESSING OFFICER AT THE TIME OF INITIATING PENALTY AND WHILE ISSUING THE NO TICE UNDER SECTION 271AAB READ WITH SECTION 274 OF THE ACT WAS NOT DECISIVE QUA PEN ALTY TO BE IMPOSABLE. FOR THE SAKE OF BREVITY AND CONVENIENCE THE SHOW-CAUSE DATED 09.03.2016 IS REPRODUCED HEREIN BELOW. ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 11 NOTICE UNDER SECTION 271AAB READ WITH SECTION 274 OF THE ICOME TAX ACT, 1961 PAN: AMXPA7889C OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, JAMMU DATED 09/03/2016 TO, RAVINDER AGGARWAL 116, JULAKHA MOHALLA JAMMU. 1. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2014-15 IT APPEARS TO ME THAT:- 2. SEARCH AND SEIZURE OPERATION U/S 132 WAS CARRIED OU T IN YOUR CASE ON 04.09.2013 AND PREVIOUS YEAR RELEVANT TO ASST. YEAR : 2014-15 IS SPECIFIED PREVIOUS YEAR IN YOUR CASE OF WHICH UND ISCLOSED INCOME HAVE BEEN DETERMINED VIDE ORDER U/S 143(3) OF THE I .T. ACT. 3. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME ON 25/ 03/2016 AT 12:30 P.M . AND SHOW CAUSE AS TO WHY AN ORDER IMPOSING PENALT Y UPON YOU SHOULD NOT BE MADE UNDER SECTION 271AAB OF THE INCOME-TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY' OF BEING HEARD IN PERSON OR THROUGH AUTHORIZED REPRESENTATIV E, YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHY A P ENALTY BE NOT IMPOSED IN YOUR CASE, WHICH WILL BE CONSIDERED BEFO RE ANY SUCH ORDER IS MADE UNDER SECTION 271 AAB . (RAVINDER MITTAL) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, JAMMU 10.2 IT IS NOT THE CASE OF REVENUE THAT THE PROVISIONS OF SECT ION 274 AND 275 OF THE ACT ARE NOT APPLICABLE TO SECTION 271AAB OF THE ACT AND PROVISIONS OF SECTION 274 DOES NOT MANDATE THAT NO PENA LTY ORDER IMPOSING A PENALTY SHALL BE MADE UNLESS THE ASSESSEE HAS BEEN HEA RD, OR HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. THERE FORE IN THE BACKGROUND OF THE AFORESAID LEGAL POSITION AND HAVING REGARD TO THE MANNER IN WHICH THE ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 12 ASSESSING OFFICER HAS ISSUED THE NOTICE DATED 09-03-2016 UND ER SECTION 271AAB R.W.S. 274 OF THE ACT, APPARENTLY GOES TO PROVE THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY ISSUING THE NOTICE U/S 271AAB/274 OF THE ACT WITHOUT SPECIFYING WHETHER THE ASSESSEE'S CASE FALLS UNDER CLAUSE A OR B OR C OF SECTION 271AAB OF THE ACT WH EREIN PENALTY @ 10%, 20% AND 30% IS IMPOSABLE SO AS TO PROVIDE PROPER AND ADEQUATE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE SHOW CAUSE NOT ICE. RATHER NOTICE IN THIS CASE HAS ALSO BEEN ISSUED IN A STEREOTYPED MANNE R WITHOUT APPLYING MIND WHICH IS BAD IN LAW, HENCE CAN NOT BE CONSIDERED A VALID NOTICE SUFFICIENT TO IMPOSE PENALTY U/S 271AAB OF THE ACT BECAU SE THE MIND OF THE AO, WHILE INITIATING THE PENALTY PROCEEDINGS AND ISSUIN G NOTICE U/S 274 OF THE ACT WAS NOT CLEAR AS TO UNDER WHICH LIMB, THE ASSESSEE HAD TO REPLY AND TO DEFEND ITS CASE. AS THE ACTIONS OF THE AO ARE IN CONTRAVE NTION OF THE PROVISIONS OF SECTIONS 274 AND 271AAB OF THE ACT THEREFO RE WE ARE OF THE CONSIDERED VIEW THAT UNDER THE SAID CIRCUMSTANCES, THE PEN ALTY IS NOT LEVIABLE AS HELD BY THE VARIOUS COURTS INCLUDING THE KARNATAKA HIGH COURT IN THE CASE OF M/S. SSA'S EMERALD MEADOWS (SUPRA) AGAINST WHICH THE APEX COURT DISMISSED THE SLP NO. 11485/2016 FILLED THE R EVENUE DEPARTMENT AND THE CO-ORDINATE BENCHES IN THE CASES OF DY CIT COIMBATOR E VS SH. R. ELANNGOVAN , KARAMRADAI 641(104) {ITA NO. 1119/CHNY/ 2017 & C.O. NO. 75/CHNY/2017} AND IN ANUJ MATHUR VS DY. COMMISSIONER O F INCOME TAX (2018) 53 CCH 0276 JAIPUR TRIBUNAL, WHEREIN , IN THE SIMILAR AND IDENTICAL CIRCUMSTANCES DELETED THE PENALTY IMPOSED U/S 271AAB OF TH E ACT AND THEREFORE ON THE AFORESAID CONSIDERATION, ANALYZATION AND RESPECTFULLY FOLLOWING THE DICTUM OF THE COURTS, WE HAVE NO HESITATI ON TO DELETE THE PENALTY LEVIED BY THE ASSESSING OFFICER AND AFFIRMED BY THE CIT(A) . AS WE HAVE DECIDED THE IMPOSITION OF PENALTY ON LEGAL ASPECT AND ANNULLED THE PENALTY THEREFORE DO NOT CONSIDER IT APPROPRIATE TO D WELL UPON MERITS OF THE ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 13 CASE AS THE SAME WOULD BE FUTILE ACADEMIC EXERCISE ONLY. CO NSEQUENTLY THE ORDER UNDER CHALLENGE IS SET ASIDE BECAUSE THE SAME IS SUFFE RED FROM PERVERSITY, ILLEGALITY AND IMPROPRIETY. 11. IN THE RESULT, THE APPEAL I.E. IAT NO. 410(ASR)/2018 FILED BY THE ASSESSEE STANDS ALLOWED. 12. IN VIEW OF THE JUDGMENT PASSED IN ITA NO. 410(A SR)/2018, ITAS NO. 406(ASR)/2018 AND 402(ASR)/2018 ALSO STANDS ALL OWED. 13. ITA NO.409, 405 AND 401/ASR/2018 RELATES TO THE CHALLENGE OF THE ASSESSMENT ORDER ON QUANT UM. AS THE FACTS AND CIRCUMSTANCES ARE IDENTICAL AND SIMILAR TH EREFORE FOR THE SAKE OF BREVITY AND CONVENIENCE THE FACTS OF ITA NO. 409/ASR/2018 HAVE BEEN TAKEN INTO CONSIDERATION FOR ADJUDICATION AND RESU LT OF THE SAME SHALL APPLY APPLICABLE MUTATIS MUTANDIS TO ITAS NO.405 & 401/ASR/2018. 14. THE DETAILED FACTS ARE ALREADY NARRATED IN PARA NO.3 OF THIS ORDER HENCE FOR THE SAME OF BREVITY AND CONVENIENCE ARE NOT REPEA TED HEREIN AND MAY BE READ AS PART AND PARCEL OF PRESENT ORDER, HOWEVER IN SH ORT RELEVANT FOR THE ADJUDICATION OF THE INSTANT APPEAL ARE AS UNDER. THAT THE ASSESSING OFFICER VIDE ORDER DATED 09.03.2016 P ASSED AN ASSESSMENT ORDER U/S 143(3) OF THE ACT WHICH FOR THE SAKE O F READY REFERENCE IS REPRODUCED HEREIN BELOW. IN THIS CASE SEARCH WAS CONDUCTED U/S 132(1) OF TH E INCOME TAX ACT, 1961 ON 04.09.2013 AND CONSEQUENTLY A NOTI CE UNDER SECTION 142(1) OF THE ACT WAS ISSUED ON 01.12.2014. IN RESP ONSE TO THE ABOVE ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 14 NOTICE, A RETURN OF INCOME DECLARING A NET INCOME O F RS.6,40,89,010/- WAS FILED ON 22.12.2014. NOTICE U/S 143(2) WAS ISSU ED ON 19.08.2015. AFTER THAT STATUTORY NOTICES WERE ISSUE D ALONG WITH QUESTIONNAIRE THE CASE WAS FIXED FOR HEARING FROM T IME TO TIME. THE PROCEEDINGS WERE ATTENDED BY RAJAN GUPTA CA. THE DE TAILS AND INFORMATION CALLED FOR FROM TIME TO TIME WAS FURNIS HED. AFTER DISCUSSION, THE RETURNED INCOME OF RS.6,40,89,010/- IS ACCEPTED. IT IS NOTICED THAT, DURING SEARCH, UNDISCLOSED INC OME WAS NOTICED AND THE ASSESSEE HAS DISCLOSED ADDITIONAL I NCOME U/S 132(4) OF THE I T ACT. THE ABOVE INCOME INCLUDES INCOME SO DISCLOSED ALSO. PENALTY PROCEEDINGS U/S 271AAB ARE BEING INITIATED SEPARATELY ON ACCOUNT OF THAT. THIS ORDER IS BEING PASSED AFTER OBTAINING APPROVA L OF THE ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE, JALANDHA R UNDER SECTION 153D OF THE INCOME TAX ACT 1961 CONVEYED VIDE HIS L ETTER NO. ADDL. CIT/CR/JAL/153D/15-16/1459 DATED 07.03.2016. 15. THE ASSESSMENT ORDER DATED 09.03.2016 WAS RECEIVED BY TH E ASSESSEE ON 22.03.2016 AND DUE DATE FOR FILING THE APPEAL BE FORE THE LD. CIT(A) WAS UPTO 21.04.2016 BUT THE SAME WAS FILED ONLY ON 2.12.2 016 WITH A DELAY OF 225 DAYS. THE LD. CIT(A) NOT ONLY DISMISSED THE APPEAL OF THE ASSESSEE ON LIMITATION PERIOD BUT ALSO ON THE MERIT AS WELL. FOR THE SAKE OF CONVENIENCE AND READY REFERENCE RELEVANT PART OF ORDER PASSED BY T HE LD. CIT(A) IS REPRODUCED HEREIN BELOW. 2.2 AS PER THE AFFIDAVIT, IT IS ACCEPTED THAT THERE WAS DELAY OF 225 DAYS IN FILING THE APPEALS. THE MAIN REASON FOR LATE ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 15 FILING, STATED BY THE ASSESSEE IS THAT THE ASSESSEE WAS ADVISED NOT TO PREFER APPEAL AFTER ASSESSMENT AS NOT ONLY T HE RETURNED INCOME HAS BEEN ACCEPTED THEREIN BUT AN AS SURANCE WAS GIVEN BY THE ASSESSING OFFICER THAT PENALTY FOR MALLY INITIATED U/S 271AAB WOULD BE DROPPED LATER, HOWEVE R, PENALTY HAS BEEN IMPOSED U/S 271AAB VIDE ORDER DATE D 28.09.2016. AS PER THE ASSESSEE, A CAUSE OF ACTION HAS ARISEN TO FILE APPEAL RESULTING IN DELAY OF 225 DAYS. HERE IT IS IMPORTANT TO NOTE THAT THE ASSESSEE HAS NOT FILED A NY DOCUMENT TO SUBSTANTIATE THE CLAIM ABOUT ASSURANCE GIVEN TO DROP THE PENALTY BY THE AO. THE ACTION OF THE ASSES SEE IN FILING THE APPEAL NOW IS APPARENTLY AN AFTERTHOUGHT , SINCE AS PER THE ASSESSMENT ORDER, ALTHOUGH THE RETURNED INC OME WAS ACCEPTED BUT PENALTY PROCEEDINGS U/S 271AAB WERE IN ITIATED ON ACCOUNT OF ADDITIONAL INCOME DISCLOSED U/S 132(4 ). FOR CLARITY, THE ASSESSMENT ORDER IS REPRODUCED BELOW:- . . . 2.3 IT IS DULY MENTIONED IN THE ASSESSMENT ORDER THAT D URING SEARCH, UNDISCLOSED INCOME WAS NOTICED AND ASSESSEE HAS DISCLOSED ADDITIONAL INCOME U/S 132(4) AND PENALTY PROCEEDING S U/S 271AAB ARE BEING INITIATED SEPARATELY ON ACCOUNT OF THAT. THUS, IT IS CLEAR THAT THE FACT ABOUT TREATING THE SURRENDERED/ ADDIT IONAL INCOME AS 'UNDISCLOSED INCOME' BY THE AO BECAME KNOWN TO THE ASSESSEE WHEN THE ASSESSMENT ORDER WAS RECEIVED BY HIM. IT ALSO C AME TO THE KNOWLEDGE OF THE ASSESSEE ON RECEIPT OF ASSESSMENT ORDER (ON 22.03.2016) THAT PENALTY PROCEEDINGS U/S 271AAB HAS BEEN INITIATED SEPARATELY ON THAT ACCOUNT. THEREFORE FIL ING OF APPEAL NOW, AFTER RECEIPT OF PENALTY ORDER DATED 28.09.2016 IS NOT A REASONABLE CAUSE FOR DELAY AND IN FACT IT IS AN AFTERTHOUGHT O N THE PART OF THE ASSESSEE WHO INITIALLY DECIDED NOT TO FILE THE APPE AL INTENTIONALLY. AS PER THE AFFIDAVIT FILED DURING THE APPELLATE PROCEE DINGS, THE ASSESSEE WAS ADVISED NOT TO PREFER APPEAL AT THAT TIME. AS A LREADY ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 16 MENTIONED, THE ASSESSEE HAS NOT FILED ANY DOCUMENT TO SUBSTANTIATE THE ARGUMENT ABOUT ASSURANCE BY THE ASSESSING OFFIC ER THAT PENALTY U/S 271AAB WOULD BE DROPPED LATER ON. IN FACT, NO S UCH ASSURANCE CAN BE GIVEN BY THE AO BECAUSE THE PENALTY PROCEEDI NGS ARE INDEPENDENT OF THE ASSESSMENT PROCEEDINGS AND ARE R EQUIRED TO BE DECIDED SEPARATELY. THEREFORE, THERE IS NO REASONAB LE CAUSE FOR EXPLAINING THE DELAY IN FILING THE APPEAL AND HENCE THE DELAY IS NOT CONDONED AND THE APPLICATION FOR CONDONATION IS REJ ECTED, BEING WITHOUT MERITS. ACCORDINGLY, THE APPEAL IS NOT ADMI TTED FOR ADJUDICATION BEING OUT OF TIME. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IS DISMISSED BEING OUT OF TIME. ... 3.2 THE MAIN ARGUMENT OF THE AR IS THAT THE A0 WAS N OT RIGHT IN TREATING THE ADDITIONAL INCOME DISCLOSED BY THE ASS ESSEE AS 'UNDISCLOSED INCOME'. HERE IT IS RELEVANT TO MENTI ON THAT AS PER THE ASSESSEE ALSO THE ADDITIONAL INCOME WAS CALCULA TED AS PROFIT OUT OF THE DISCREPANCIES FOUND IN THE DIARIES AND THE L OOSE PAPERS. IN THE COMPUTATION OF INCOME, THIS HAS BEEN TAKEN UNDER TH E HEAD 'INCOME FROM OTHER SOURCES' WITH THE NARRATION SURRENDER AMOUNT U/S 132 RS.6,15,00,000/-. FURTHER A LETTER REGARDING 'VOLUNTARILY DISCLOSURE OF INCOME U/S 132(4)' WAS GIVEN BY SH. R AVINDER AGGARWAL (SIGNED BY OTHER FAMILY MEMBERS ALSO) TO T HE DDIT (INV.), JAMMU. . . . . FROM THE VOLUNTARILY DISCLOSURE LETTER, IT IS AMPLY CLEAR THAT THE SURRENDER WAS MADE ON ACCOUNT OF DISCREPANCIES FOUN D DURING THE SEARCH AND PROFIT REGARDING ENTRIES NOT MENTIONED I N THE BOOKS BUT MENTIONED IN THE DIARIES AND LOOSE PAPER IMPOUNDED AT THE TIME OF SEARCH/SURVEY PROCEEDINGS. IN THE RETURN OF INCOME FILED BY THE ASSESSEE THE AMOUNT HAS BEEN SHOWN SEPARATELY UNDER THE HEAD 'INCOME FROM OTHER SOURCES' AND NOT AS A PART OF NO RMAL BUSINESS INCOME. THIS ITSELF MAKES IT CLEAR THAT THE SURREND ERED INCOME DISCLOSED U/S 132(4) WAS NOT RECORDED IN THE REGULA R BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAS NEVER SHO WN SUCH A HIGH FIGURE OF INCOME EXCEPT THE RETURN FILED AFTER THE SEARCH. NORMALLY, ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 17 THE ASSESSEE FILES RETURN WITH USUAL INCOME FROM BU SINESS AND ORDINARY INCOME UNDER OTHER HEADS. HENCE THE APPEAL OF THE ASSESSEE IS DISMISSED ON ME RITS ALSO . 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED BEING TIME BARRED AND ON MERI TS ALSO. 16. THE ASSESSEE CHALLENGED THE ORDER IMPUGNED HEREIN PASSED BY THE LD. CIT(A) BY RAISING FOLLOWING GROUNDS OF APPEAL. 1.A) THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX APPEALS - 5, LUDHIANA [CIT(A)] HAS GROSSLY ERRED IN LAW I N REFUSING TO CONDONE DELAY IN FILING APPEAL. B) THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A) HAS GROSSLY ERRED IN LAW IN CONCLUDING THAT THE ACTION OF THE ASSESSEE IN FILING THE APPEAL NOW IS APPARENTLY AN AFTERTHOUGHT. CONCLUSIO N DRAWN BY THE LEARNED CIT(A) IS ILLEGAL AND BAD IN LAW. C) THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A) HAS GROSSLY ERRED IN LAW IN CONCLUDING THAT THERE IS NO REASONABLE CAUSE FOR EXPLAINING THE DELAY IN FILING THE APPEAL AND HENCE THE DELAY IS NOT CONDONED. CONCLUSION DRAWN IS ILLEGAL AND BAD IN LAW. 2. THAT LEARNED CIT(A) AFTER DISMISSING THE APPEAL BEI NG OUT OF TIME, HAS GROSSLY ERRED IN DISMISSING APPEAL ON MERITS SINCE: - (A) LD. CIT(A) HAS GROSSLY ERRED IN HOLDING THAT THE S URRENDER WAS MADE ON ACCOUNT OF DISCREPANCIES FOUND DURING SEARCH AND SEIZURE OPERA TIONS AND THUS WAS UNDISCLOSED INCOME. LD. CIT(A) HAS NOT TAKEN COGNIZANCE OF THE LETTERS FILED BY THE ASSESSEE WITH THE INVESTIGATION WING AND ASSESSING OFFICER. (B) LD. CIT(A) HAS GROSSLY ERRED IN NOT EXAMINING THAT WHETHER THE ASSESSMENT WAS FRAMED ON THE ' BASIS OF INCRIMINATING MATERIAL FOU ND DURING SEARCH AND SEIZURE OPERATIONS. ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 18 (C) ORDER OF THE LD. CIT(A) IS AGAINST THE PRINCIPLES LAID DOWN IN CBDT CIRCULAR NO. 14(XL-35) DATED 11.04.1955 WHEREIN IT HAS BEEN HELD THAT THE A.O. CANNOT TAKE BENEFIT OF IGNORANCE OF THE ASSESSEE AS TO HIS RIGHTS. (D) LD. CIT(A) HAS GROSSLY ERRED IN NOT ADJUDICATING T HE WITHOUT PREJUDICE SUBMISSIONS OF THE ASSESSEE THAT THE CASH SEIZED DURING SEARCH AND SEIZURE OPERATIONS WAS TO BE ADJUSTED AGAINST SELF ASSESSMENT/ADVANCE TAX PAYABLE BY THE ASSESSEE. IN CASE THE CASH SEIZED IS NOT ADJUSTED AGAINST SELF-ASSESSMENT/ADVANCE TAX LIABIL ITY, THE RETURN FILED BY THE ASSESSE BECOMES DEFECTIVE AND THUS NONEST RETURN. 3. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, W HILE DISMISSING THE APPEAL OF THE ASSESSEE ON MERITS, LEARNED CIT(A) HAS GROSSLY ERRED IN NOT DISPOSING OF FOLLOWING ISSUES RAISED BY THE ASSESSEE IN VARIOUS GROUNDS OF APPEAL TAKEN BEFORE LEARNED CIT(A). GROUND OF APPEAL NO. 2 BEFORE CIT(A) THAT THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME AMOUNTING TO RS.6,15,00,000/- GOT MADE BY THE SEARC H PARTY OUT OF RS.3,10,71,906/- CALCULATED PROFITS OUT OF THE DISCREPANCIES FOUND I N THE DAIRIES AND LOOSE PAPERS SUBJECT TO NO PENAL ACTION TO BUY A PEACE OF MIND B UT THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE JAMMU HA S WRONGLY TREATED AS UNDISCLOSED INCOME WHICH IS FULLY OBJECTED. GROUND OF APPEAL NO. 4 BEFORE CIT1A) THAT THE DEMAND ON ACCOUNT OF TAX AND INTEREST, NOT HAVING BEEN DETERMINED IN THE BODY OF ASSESSMENT ORDER, NOR ANY DIRECTION HAVING BEEN GIVEN IN THE ORDER TO ISSUE DEMAND NOTICE CHARGE INTEREST U/ S 234A, B, C OR D, THE IMPUGNED ORDER IS PER SE ILLEGAL AND INVALID IN THE LIGHT OF JURISDICTIONAL HIGH COURTS DECISION IN THE CASE OF S. MUBARAK SHAH NAQUASHBAND I VS CIT (1977) 110 ITR 217 (J&K). 17. HAVING HEARD THE PARTIES AND PERUSED THE MATERIAL AVA ILABLE ON RECORD. IN NUTSHELL, THE CLAIM OF THE ASSESSEE FOR FILING THE IN STANT APPEAL IS THAT THE ORDER U/S 143(3) OF THE ACT DATED 09.03.2016 WAS PASSED BY THE ASSESSING OFFICER WHICH WAS RECEIVED BY THE ASSESSEE ON 22.03.2016 HO WEVER NO APPEAL WAS PREFERRED WITHIN THE LIMITATION TIME I.E. ON OR BEFORE 21 ST APRIL, 2016 AS THE ASSESSEE CLAIMED THAT HE WAS ADVISED NOT TO PR EFER AN APPEAL IN AS MUCH AS NOT ONLY RETURNED INCOME HAS BEEN ACCEPTED THER EIN BUT EVEN AN ASSURANCE WAS GIVEN BY THE ASSESSING OFFICER THAT PENALTY WI LL NOT BE ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 19 INITIATED AND FORMALLY INITIATED IF ANY U/S 271AAB W OULD BE DROPPED LATER, SINCE SURRENDER OF INCOME WAS SUBJECT TO NO PENAL ACTION, H OWEVER, THE PENALTY U/S 271AAB OF THE ACT VIDE ORDER DATED 28.09. 2016 HAS BEEN IMPOSED THEREFORE, A CAUSE OF ACTION AROSE FOR FILING TH E INSTANT APPEAL AND IN THE MEANTIME DELAY OF 225 DAYS FOR FILING THE APPEAL HAS BEEN OCCURRED AS THE APPEAL WAS FILED ON 02.12.2016. THE SAID APPEAL O F THE ASSESSEE WAS NOT ONLY DISMISSED ON THE LAW OF LIMITATION BUT ALSO ON THE MERIT BY THE LD. CIT(A). AT THE TIME OF ARGUMENT OF THE APPEALS UNDER CONSIDERATION , THE ASSESSEE ALONG WITH HIS COUNSEL WAS PRESENT IN COURT AND THR OUGH ITS COUNSEL SUBMITTED THAT THE ASSESSEE WAS COMPELLED TO FILE THE INS TANT APPEAL BY THE REVENUE DEPARTMENT BECAUSE IF THE PENALTY WOULD NOT B E LEVIED THEN THE ASSESSEE WOULD NOT HAVE FILED THE INSTANT APPEAL. AS THE DEPARTMENT DID NOT ADHERE TO ITS ASSURANCE QUA NOT INITIATING AND/OR DROPP ING THE PENALTY PROCEEDINGS THEREFORE, THE ASSESSEE HAS PREFERRED THE INSTA NT APPEAL. THOUGH THE ASSESSEE HAS SUBMITTED THE AFORESAID FACTS, HOWEV ER DID NOT SPECIFICALLY ARGUE THE APPEAL UNDER CONSIDERATION. FROM THE SURRENDER LETTER UNDATED (PG 28-30 OF PB) N O DOUBT IT IS CLEAR THAT ASSESSEE MADE THE SURRENDER FOR THE FINANCIAL YEAR 2013-14 SUBJECT TO NO PENALTY, BUT THE ASSESSEE HAS FAILED TO PLACE ON RECORD ANY WRITTEN ASSURANCE/UNDERTAKING BY THE REVENUE DEPARTMENT AND EV EN REVENUE DEPARTMENT DO NOT ACCEPT THE SAID CLAIM OF THE ASSESSEE , THEREFORE THE SAID ASSURANCE STILL REMAINED CONTROVERSIAL, HOWEVER AS WE HAVE ALREADY DELETED THE PENALTY THEREFORE IN VIEW OF THE SUBMISSI ONS OF THE ASSESSEE, NO CAUSE OF ACTION SURVIVE AS THE SAME BEING NOT PRESSED UPON , HENCE WE ARE INCLINED TO DISMISS THE APPEAL OF THE ASSESSEE. ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 20 18. IN THE RESULT, ALL THE THREE APPEALS I.E. ITAS NO.409 , 405 & 401/ASR/2018 OF THE ASSESSEES STANDS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 04.04.2019. SD/- (N.K.CHOUDHRY) JU DICIAL MEMBER CONCURRENT ORDER PER N. S. SAINI, ACCOUNTANT MEMBER: I HAVE PERUSED THE PROPOSED ORDER OF MY LEARNED BRO THER IN ITA NOS 409/ASR/2018, 405/ASR/2018 AND 401/ASR/ AND AGREE W ITH THE DECISION AND REASONS GIVEN THEREIN. HOWEVER, AS REGARDS THE PROP OSED ORDER IN ITA NOS 410/ASR/2018, 406/ASR/2018 AND 402/ASR/2018 THOUGH I AGREE WITH THE FINAL CONCLUSION ARRIVED AT IN THE PROPOSED ORDER THAT PE NALTY UNDER SECTION 271AAB IS NOT SUSTAINABLE IN THE INSTANT CASE BUT FOR A DIFFE RENT REASON. THESE REASONING FOR DELETION OF PENALTY WAS DISCUSSED WITH THE LEARNED BROTHER BUT AS I COULD NOT CONVINCE MY LEARNED BROTHER WITH MY REASONING AND A LSO COULD NOT CONVINCE MYSELF WITH THE REASONING GIVEN BY THE LEARNED BROT HER, THEREFORE I AM PASSING THIS CONCURRENT ORDER. 2. A PERUSAL OF PROVISIONS OF SECTION 271AAB SHOWS THAT PENALTY UNDER THIS SECTION CAN BE LEVIED ONLY IN RESPECT OF UNDISCLOS ED INCOME. THE PHRASE UNDISCLOSED INCOME HAS BEEN DEFINED IN CLAUSE (C) OF EXPLANATION TO SECTION 271AAB ITSELF. THEREFORE, NO OTHER MEANING CAN BE A SSIGNED TO THIS PHRASE FOR THE PURPOSES OF SECTION 271AAB. THE SAID EXPLANATION RE ADS AS UNDER: - 271AAB SUB CLAUSE (C) OF THE ACT DEFINES UNDISCLOSE D INCOME AS UNDER: ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 21 (C) 'UNDISCLOSED INCOME' MEANS ( I ) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY 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 I N THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE REL ATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE [PRINCIPAL CHIE F COMMISSIONER OR] CHIEF COMMISSIONER OR [PRINCIPAL COMMISSIONER OR] COMMISS IONER BEFORE THE DATE OF SEARCH; OR ( II ) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENT ED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOK S OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPE CIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED] 3. A PERUSAL OF THE ABOVE MEANING OF UNCLOSED INCO ME SHOWS THAT THE SAME MUST EMANATE OR SPRUNG UP FROM THE INCRIMINATING MA TERIAL FOUND DURING THE COURSE OF SEARCH.THEREFORE, FOR LEVYING PENALTY UND ER SECTION 271AAB ASSESSING OFFICER MUST SHOW THAT THE AMOUNT OF ALLEGED UNDISC LOSED INCOME WAS ARRIVED AT ON THE BASIS INCRIMINATING MATERIAL FOUND DURING THE C OURSE OF SEARCH. THUS, WITHOUT RECORDING SUCH A CLEAR FINDING IN THE PENALTY ORDER THE PENALTY LEVIED IS UNSUSTAINABLE AND BAD IN LAW. 4. IT IS AN ESTABLISHED POSITION OF LAW THAT PENALT Y PROCEEDINGS ARE DISTINCT AND SEPARATE FROM ASSESSMENT PROCEEDING. THE ASSESSMENT ORDER IS THOUGH A RELEVANT MATERIAL BUT IS NOT CONCLUSIVE AS PENALTY PROCEEDIN G IS A SEPARATE PROCEEDING WHICH STARTS WITH ISSUANCE OF NOTICE UNDER SECTION 274 AN D CULMINATES ON PASSING OF RELEVANT PENALTY ORDER.THEREFORE, FOR LEVY OF PENAL TY UNDER SECTION 271AAB A CLEAR FINDING IS TO BE ARRIVED AT BY THE ASSESSING OFFICE R TO SHOW THAT ASSESSEE WAS HAVING UNDISCLOSED INCOMEWITHIN THE MEANING OF SE CTION 271AAB OF THE ACT. ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 22 5. IN THE INSTANT CASE A PERUSAL OF THE IMPUGNED PE NALTY ORDER SHOWS THAT NO UNDISCLOSED INCOME ON THE BASIS OF ANY INCRIMINAT ING MATERIAL FOUND DURING THE COURSE OF THE SEARCH COULD BE SHOWN TO HAVE EXISTED BY THE ASSESSING OFFICER. THE TRIBUNAL IN THE CASE OF ACIT VS MARVEL AND ASSOCIAT ES (2018) 170 ITD 353 (VISHAKHAPATNAM) HAS HELD THAT PENALTY UNDER SECTIO N 271AAB ATTRACTS ON UNDISCLOSED INCOME BUT NOT ON AN ADMISSION MADE B Y THE ASSESSEE UNDER SECTION 132(4). THE ASSESSING OFFICER MUST ESTABLISH THERE IS UNDISCLOSED INCOME ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE CO URSE OF SEARCH. THUS, MERELY BECAUSE THE ASSESSEE HAS ADMITTED ADDITIONAL INCOME UNDER SECTION 132(4) AND/OR IN THE RETURN OF INCOME IT CANNOT BE HELD THAT SUCH AD DITIONAL INCOME WAS UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAB OF THE ACT. 6. IN THE INSTANT CASE IN THE IMPUGNED PENALTY ORDE R APART FROM STATING THAT THE ASSESSEE MADE DECLARATION OF ADDITIONAL INCOME UNDE R SECTION 132(4) AND INCLUDED THE SAID INCOME IN THE RETURN OF INCOME, ABSOLUTELY NO REFERENCE TO ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH HAS BEEN MADE. THEREFORE IN VIEW OF THE DISCUSSIONS MADE HEREIN ABOVE IT IS OBSERVED THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE AMOUNT IN RESPECT OF WHICH PENALTY UNDER SECTION 271AAB(1)(C) WAS LEV IED BY HIM WAS UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAB OF THE ACT. THUS THE PENALTY IMPOSED UNDER SECTION 271AAB OF RS 1,84,50,000/- IN ITA NO 410/ASR/2018 , RS 72,40,770/- IN ITA NO 406/ASR/2018 AND RS 48,27,638 /- IN ITA NO 402/ASR/2018 IS BAD IN LAW AND UNSUSTAINABLE WHICH IS HEREBY DELETED. SD/- (N. S. SAINI) ACCOUNTANT MEMBER THE 1 ST DAY OF APRIL 201 ITAS NO.410, 409, 406, 405, 402 & 401 /ASR/2018 (A.Y. 2014-15) SH. RAVINDER AGGARWAL & ORS VS. DY. CIT 23 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) SH. RAVINDER AGGARWAL & ORS, 116, JULLAKHA MOHALLA, JAIN BAZAR, JAMMU (2) THE DY. CIT, CENTRAL CIRCLE, JAMMU (3) THE CIT(A)-5, LUDHIANA (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER