SMt. Shweta Mittla, Indore V. JCIT OSD (Central)-1, Indore

ITA 858/Ind/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7150 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Indore
• Assessment Year: 2016-2017
• Appeal Filed On: 05-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUNIT KUNAR
• Keywords: Business income; Search and seizure; Loose papers; Opportunity of being heard; Principle of natural justice; Peak credit; Retrospective amendment; Question of law; Initiation of penalty proceedings; Reasonable cause; Block assessment; Set aside
• Section: 132; 271(1)(c); 139; 143(3); 142(1); 133A; 153A; 292BB; 274; 139(1); 43; 48; 73; 72; 13; 22; 20

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE KUL BHARAT, JUDICIAL MEMBER AND HONBLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.853/IND/2019 ASSESSMENT YEAR 2015-16 SMT. RAJRANI MITTAL, INDORE PAN : AGLPM0530E : APPELLANT V/S JCIT OSD (CENTRAL)-1 INDORE : RESPONDENT ITA NO.879/IND/2019 ASSESSMENT YEAR 2015-16 ACIT, CENTRAL-1, INDORE : REVENUE V/S SMT. RAJRANI MITTAL, INDORE PAN : AGLPM0530E : RESPONDENT ITA NO.852/IND/2019 ASSESSMENT YEAR 2015-16 SHRI. ANSHUL MITTAL, INDORE PAN : AFDPM4778H : APPELLANT V/S JCIT OSD (CENTRAL)-1 INDORE : RESPONDENT SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 2 ITA NO.854/IND/2019 ASSESSMENT YEAR 2015-16 SHRI. ANKIT MITTAL, INDORE PAN : AGCPM0468R : APPELLANT V/S JCIT OSD (CENTRAL)-1 INDORE : RESPONDENT ITA NO.855 & 856/IND/2019 ASSESSMENT YEARS 2015-16 & 2016-17 SMT. NEHA MITTAL, INDORE PAN : AJBPM6080G : APPELLANT V/S JCIT OSD (CENTRAL)-1 INDORE : RESPONDENT ITA NO.857 & 858/IND/2019 ASSESSMENT YEARS 2015-16 & 2016-17 SMT. SHWETA MITTAL, INDORE PAN : AACGM6936F : APPELLANT V/S JCIT OSD (CENTRAL)-1 INDORE : RESPONDENT REVENUE BY SHRI PUNIT KUNAR , SR.DR ASSESSEE BY SHRI AJAY TULSIYAN & MS. SHALINI MEHTA, CAS DATE OF HEARING 25.08.2020 DATE OF PRONOUNCEMENT 07. 0 9 . 2020 SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 3 O R D E R PER BENCH THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCES OF THE ASSESSEE(S) PERTAINING TO ASSESSMENT YEAR 2015-16 & 2016-17 AND REVENUE FOR ASSESSMENT YEAR 2015-16 ARE DIRECTED AG AINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- 3 (IN SHORT LD.CIT(A)], BHOPAL EVENLY DATED 14.06.2019 WHICH ARE ARISING OUT OF THE ORDER U/S 271AAB OF THE INCOME TAX ACT 1961( IN SHORT THE ACT) DATED 28.09.2016 FRAMED BY JCIT, OSD(CENTRAL )-1, INDORE. 2. THE ASSESSEE(S) HAS RAISED FOLLOWING GROUNDS OF AP PEAL; SMT. RAJRANI MITTAL, ITA NO.853/IND/2019 ASSESSMENT YEAR 2015-16 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE VERY INITIATION OF THE PENALTY PROCEEDINGS THROUGH AN INVALID AND DEFECTIVE NOTICE ISSUED U/S 274 R.W.S. 271 AAB IN THIS CASE I S WRONG, BAD IN LAW AND THE PENALTY SO LEVIED OUGHT TO HAVE BEEN DELETE D BY THE LEARNED CIT(A). 2. THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271AAB MECHANICALLY, MENTIONI NG IRRELEVANT AND INAPPLICABLE CHARGES AND NOT MENTIONING THE CHARGES ON WHICH PENALTY WAS ACTUALLY LEVIED, WAS BAD IN LAW AND HAD HAS LED TO VITIATION OF THE ENTIRE PENALTY PROCEEDINGS, THEREFORE, THE PENALTY LEVIED OUGHT TO HAVE BEEN DELETED IN ITS ENTIRETY. 3. THAT THE LEARNED CIT(A) ERRED IN LEVYING THE PENALT Y UNDER CLAUSE (C) TO SECTION 271AAB(1) @10%, WHEREAS THE LEARNED AO HAVI NG LEVIED THE PENALTY UNDER CLAUSE (A) TO SECTION 271AAB(1), CLEA RLY INDICATING THAT THE PENALTY LEVIED BY THE AO MECHANICALLY AND WITHOUT R EQUISITE SATISFACTION SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 4 WAS WRONG AND UNCALLED FOR, OUGHT TO HAVE BEEN DELE TED IN FULL. 4. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY TO THE EXTENT OF RS, 11,14,088/- U/S 271AAB. THAT ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LEVIED IS WRONG AN UNCALLED FOR AND PRAYED TO BE DELETED. 5. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED U/S 271AAB BY THE AO ON THE ADDITIONAL INCOME OF RS. 1,11,40,876/ - OFFERED U/S 132(4) AND ALSO OFFERED IN THE RETURN FILED U/S 153A. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LE VIED IS UNCALLED FOR AND BAD IN LAW AND IT IS PRAYED THAT THE PENALTY VERY K INDLY BE DELETED. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, A MEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL; ITA NO.879/IND/2019 ASSESSMENT YEAR 2015-16 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE PENALTY TO EXTENT OF RS.89,48,172/- LE VIED BY THE ASSESSING OFFICER U/S 271AAB(1)(C) OF THE INCOME TAX ACT, 196 1. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. INCOME-TAX ACT, 1961,(A) ERRED IN LAW BY OVERLOOKING THE FACT THAT THE UNDISCLOSED INCOME PERTAINED TO THE SPECIFIC PREVIOUS YEAR WHOS E DATE OF FILING OF THE RETURN HAD NOT EXPIRED BEFORE THE DATE OF SEARCH AN D THAT THE ASSESSEE HAD NOT FILED SUCH RETURN AT THE TIME OF SEARCH NOR SUB STANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED. SHRI ANSHUL MITTAL, ITA NO.852/IND/2019 ASSESSMENT YEAR 2015-16 1.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE VERY INITIATION OF THE PENALTY PROCEEDINGS THROUGH AN INVALID AND DEFECTIVE NOTICE ISSUED U/S 274 R.W.S. 271 AAB IN THIS CASE I S WRONG, BAD IN LAW AND THE PENALTY SO LEVIED OUGHT TO HAVE BEEN DELETE D BY THE LEARNED SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 5 CIT(A). 2.THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THA T THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271AAB MECHANICALLY, MENTIONI NG IRRELEVANT AND INAPPLICABLE CHARGES AND NOT MENTIONING THE CHARGES ON WHICH PENALTY WAS ACTUALLY LEVIED, WAS BAD IN LAW AND HAD HAS LED TO VITIATION OF THE ENTIRE PENALTY PROCEEDINGS, THEREFORE, THE PENALTY LEVIED OUGHT TO HAVE BEEN DELETED IN ITS ENTIRETY. 3.THAT THE LEARNED CIT(A) ERRED IN LEVYING THE PENA LTY UNDER CLAUSE (C) TO SECTION 271AAB(1) @10%, WHEREAS THE LEARNED AO HAVI NG LEVIED THE PENALTY UNDER CLAUSE (A) TO SECTION 271AAB(1), CLEA RLY INDICATING THAT THE PENALTY LEVIED BY THE AO MECHANICALLY AND WITHOUT R EQUISITE SATISFACTION WAS WRONG AND UNCALLED FOR, OUGHT TO HAVE BEEN DELE TED IN FULL. 4.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENAL TY TO THE EXTENT OF RS, 8,44,176/- U/S 271AAB. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LEVIED IS WRONG AN UNCA LLED FOR AND PRAYED TO BE DELETED. 5.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENAL TY LEVIED U/S 271AAB BY THE AO ON THE ADDITIONAL INCOME OF RS. 84,41,755/- OFFERED U/S 132(4) AND ALSO OFFERED IN THE RETURN FILED U/S 153A. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LE VIED IS UNCALLED FOR AND BAD IN LAW AND IT IS PRAYED THAT THE PENALTY VERY K INDLY BE DELETED. 6.THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. SHRI ANKIT MITTAL, ITA NO.854/IND/2019 ASSESSMENT YEAR 2015-16 1.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE VERY INITIATION OF THE PENALTY PROCEEDINGS THROUGH AN INVALID AND DEFECTIVE NOTICE ISSUED U/S 274 R.W.S. 271 AAB IN THIS CASE I S WRONG, BAD IN LAW AND THE PENALTY SO LEVIED OUGHT TO HAVE BEEN DELETE D BY THE LEARNED CIT(A). 2.THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THA T THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271AAB MECHANICALLY, MENTIONI NG IRRELEVANT AND INAPPLICABLE CHARGES AND NOT MENTIONING THE CHARGES ON WHICH PENALTY WAS ACTUALLY LEVIED, WAS BAD IN LAW AND HAD HAS LED TO VITIATION OF THE SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 6 ENTIRE PENALTY PROCEEDINGS, THEREFORE, THE PENALTY LEVIED OUGHT TO HAVE BEEN DELETED IN ITS ENTIRETY. 3.THAT THE LEARNED CIT(A) ERRED IN LEVYING THE PENA LTY UNDER CLAUSE (C) TO SECTION 271AAB(1) @10%, WHEREAS THE LEARNED AO HAVI NG LEVIED THE PENALTY UNDER CLAUSE (A) TO SECTION 271AAB(1), CLEA RLY INDICATING THAT THE PENALTY LEVIED BY THE AO MECHANICALLY AND WITHOUT R EQUISITE SATISFACTION WAS WRONG AND UNCALLED FOR, OUGHT TO HAVE BEEN DELE TED IN FULL. 4.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENAL TY TO THE EXTENT OF RS, 5,24,296/- U/S 271AAB. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LEVIED IS WRONG AN UNCA LLED FOR AND PRAYED TO BE DELETED. 5.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENAL TY LEVIED U/S 271AAB BY THE AO ON THE ADDITIONAL INCOME OF RS. 52,42,960/- OFFERED U/S 132(4) AND ALSO OFFERED IN THE RETURN FILED U/S 153A. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LE VIED IS UNCALLED FOR AND BAD IN LAW AND IT IS PRAYED THAT THE PENALTY VERY K INDLY BE DELETED. 6.THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. SMT. NEHA MITTAL, ITA NO.855/IND/2019 ASSESSMENT YEAR 2015-16 1.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE VERY INITIATION OF THE PENALTY PROCEEDINGS THROUGH AN INVALID AND DEFECTIVE NOTICE ISSUED U/S 274 R.W.S. 271 AAB IN THIS CASE I S WRONG, BAD IN LAW AND THE PENALTY SO LEVIED OUGHT TO HAVE BEEN DELETE D BY THE LEARNED CIT(A). 2.THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THA T THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271AAB MECHANICALLY, MENTIONI NG IRRELEVANT AND INAPPLICABLE CHARGES AND NOT MENTIONING THE CHARGES ON WHICH PENALTY WAS ACTUALLY LEVIED, WAS BAD IN LAW AND HAD HAS LED TO VITIATION OF THE ENTIRE PENALTY PROCEEDINGS, THEREFORE, THE PENALTY LEVIED OUGHT TO HAVE BEEN DELETED IN ITS ENTIRETY. 3.THAT THE LEARNED CIT(A) ERRED IN LEVYING THE PENA LTY UNDER CLAUSE (C) TO SECTION 271AAB(1) @10%, WHEREAS THE LEARNED AO HAVI NG LEVIED THE PENALTY UNDER CLAUSE (A) TO SECTION 271AAB(1), CLEA RLY INDICATING THAT THE SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 7 PENALTY LEVIED BY THE AO MECHANICALLY AND WITHOUT R EQUISITE SATISFACTION WAS WRONG AND UNCALLED FOR, OUGHT TO HAVE BEEN DELE TED IN FULL. 4.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENAL TY TO THE EXTENT OF RS, 3,64,285/- U/S 271AAB. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LEVIED IS WRONG AN UNCA LLED FOR AND PRAYED TO BE DELETED. 5.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENAL TY LEVIED U/S 271AAB BY THE AO ON THE ADDITIONAL INCOME OF RS. 36,42,852/- OFFERED U/S 132(4) AND ALSO OFFERED IN THE RETURN FILED U/S 153A. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LE VIED IS UNCALLED FOR AND BAD IN LAW AND IT IS PRAYED THAT THE PENALTY VERY K INDLY BE DELETED. 6.THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. SMT. NEHA MITTAL, ITA NO.856/IND/2019 ASSESSMENT YEAR 2016-17 1.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE VERY INITIATION OF THE PENALTY PROCEEDINGS THROUGH AN INVALID AND DEFECTIVE NOTICE ISSUED U/S 274 R.W.S. 271 AAB IN THIS CASE I S WRONG, BAD IN LAW AND THE PENALTY SO LEVIED OUGHT TO HAVE BEEN DELETE D BY THE LEARNED CIT(A). 2.THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THA T THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271AAB MECHANICALLY, MENTIONI NG IRRELEVANT AND INAPPLICABLE CHARGES AND NOT MENTIONING THE CHARGES ON WHICH PENALTY WAS ACTUALLY LEVIED, WAS BAD IN LAW AND HAD HAS LED TO VITIATION OF THE ENTIRE PENALTY PROCEEDINGS, THEREFORE, THE PENALTY LEVIED OUGHT TO HAVE BEEN DELETED IN ITS ENTIRETY. 3.THAT THE LEARNED CIT(A) ERRED IN LEVYING THE PENA LTY UNDER CLAUSE (C) TO SECTION 271AAB(1) @10%, WHEREAS THE LEARNED AO HAVI NG LEVIED THE PENALTY UNDER CLAUSE (A) TO SECTION 271AAB(1), CLEA RLY INDICATING THAT THE PENALTY LEVIED BY THE AO MECHANICALLY AND WITHOUT R EQUISITE SATISFACTION WAS WRONG AND UNCALLED FOR, OUGHT TO HAVE BEEN DELE TED IN FULL. 4.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENAL TY TO THE EXTENT OF RS, 6,50,000/- U/S 271AAB. THAT ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LEVIED IS WRONG AN UNCA LLED FOR AND PRAYED TO SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 8 BE DELETED. 5.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENAL TY LEVIED U/S 271AAB BY THE AO ON THE ADDITIONAL INCOME OF RS. 65,00,000/- OFFERED U/S 132(4) AND ALSO OFFERED IN THE RETURN FILED U/S 153A. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LE VIED IS UNCALLED FOR AND BAD IN LAW AND IT IS PRAYED THAT THE PENALTY VERY K INDLY BE DELETED. 6.THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. SMT. SHWETA MITTAL, ITA NO.857/IND/2019 ASSESSMENT YEAR 2015-16 1.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE VERY INITIATION OF THE PENALTY PROCEEDINGS THROUGH AN INVALID AND DEFECTIVE NOTICE ISSUED U/S 274 R.W.S. 271 AAB IN THIS CASE I S WRONG, BAD IN LAW AND THE PENALTY SO LEVIED OUGHT TO HAVE BEEN DELETE D BY THE LEARNED CIT(A). 2.THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THA T THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271AAB MECHANICALLY, MENTIONI NG IRRELEVANT AND INAPPLICABLE CHARGES AND NOT MENTIONING THE CHARGES ON WHICH PENALTY WAS ACTUALLY LEVIED, WAS BAD IN LAW AND HAD HAS LED TO VITIATION OF THE ENTIRE PENALTY PROCEEDINGS, THEREFORE, THE PENALTY LEVIED OUGHT TO HAVE BEEN DELETED IN ITS ENTIRETY. 3.THAT THE LEARNED CIT(A) ERRED IN LEVYING THE PENA LTY UNDER CLAUSE (C) TO SECTION 271AAB(1) @10%, WHEREAS THE LEARNED AO HAVI NG LEVIED THE PENALTY UNDER CLAUSE (A) TO SECTION 271AAB(1), CLEA RLY INDICATING THAT THE PENALTY LEVIED BY THE AO MECHANICALLY AND WITHOUT R EQUISITE SATISFACTION WAS WRONG AND UNCALLED FOR, OUGHT TO HAVE BEEN DELE TED IN FULL. 4.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENAL TY TO THE EXTENT OF RS, 4,57,513/- U/S 271AAB. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LEVIED IS WRONG AN UNCA LLED FOR AND PRAYED TO BE DELETED. 5.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENAL TY LEVIED U/S 271AAB BY THE AO ON THE ADDITIONAL INCOME OF RS. 45,75,143/- OFFERED U/S 132(4) AND ALSO OFFERED IN THE RETURN FILED U/S 153A. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LE VIED IS UNCALLED FOR AND SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 9 BAD IN LAW AND IT IS PRAYED THAT THE PENALTY VERY K INDLY BE DELETED. 6.THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. SMT. SHWETA MITTAL, ITA NO.858/IND/2019 ASSESSMENT YEAR 2016-17 1.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE VERY INITIATION OF THE PENALTY PROCEEDINGS THROUGH AN INVALID AND DEFECTIVE NOTICE ISSUED U/S 274 R.W.S. 271 AAB IN THIS CASE I S WRONG, BAD IN LAW AND THE PENALTY SO LEVIED OUGHT TO HAVE BEEN DELETE D BY THE LEARNED CIT(A). 2.THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THA T THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271AAB MECHANICALLY, MENTIONI NG IRRELEVANT AND INAPPLICABLE CHARGES AND NOT MENTIONING THE CHARGES ON WHICH PENALTY WAS ACTUALLY LEVIED, WAS BAD IN LAW AND HAD HAS LED TO VITIATION OF THE ENTIRE PENALTY PROCEEDINGS, THEREFORE, THE PENALTY LEVIED OUGHT TO HAVE BEEN DELETED IN ITS ENTIRETY. 3.THAT THE LEARNED CIT(A) ERRED IN LEVYING THE PENA LTY UNDER CLAUSE (C) TO SECTION 271AAB(1) @10%, WHEREAS THE LEARNED AO HAVI NG LEVIED THE PENALTY UNDER CLAUSE (A) TO SECTION 271AAB(1), CLEA RLY INDICATING THAT THE PENALTY LEVIED BY THE AO MECHANICALLY AND WITHOUT R EQUISITE SATISFACTION WAS WRONG AND UNCALLED FOR, OUGHT TO HAVE BEEN DELE TED IN FULL. 4.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENAL TY TO THE EXTENT OF RS, 5,35,000/- U/S 271AAB. THAT ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LEVIED IS WRONG AN UNCA LLED FOR AND PRAYED TO BE DELETED. 5.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENAL TY LEVIED U/S 271AAB BY THE AO ON THE ADDITIONAL INCOME OF RS. 53,50,000/- OFFERED U/S 132(4) AND ALSO OFFERED IN THE RETURN FILED U/S 153A. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE PENALTY LE VIED IS UNCALLED FOR AND BAD IN LAW AND IT IS PRAYED THAT THE PENALTY VERY K INDLY BE DELETED. 6.THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 10 3. AS THE ISSUES RAISED IN ALL THESE APPEALS ARE CO MMON AND ALL THE ASSESSEE(S) ARE RELATED TO THE SAME GROUP, THER EFORE THE APPEALS BY THE ASSESSEE(S) AND THAT BY THE REVENUE ARE BEIN G TAKEN TOGETHER FOR THE SAKE OF CONVENIENCE AND BREVITY. WE OBSERVE THAT THERE ARE SEVEN APPEALS BY VARIOUS ASSESSEE(S) THROUGH ITA NO .852 TO 858/IND/2019 AND IN ONE CASE NAMELY SMT. RAJRANI MI TTAL VIDE ITA NO.879/IND/2019, REVENUE HAS CHALLENGED THE RELIEF GIVEN BY LD. CIT(A) SUSTAINING THE PENALTY U/S 271AAB OF THE ACT @10% AS AGAINST 30% LEVIED BY LD. A.O. WE HAVE SUMMARISED THE RELEVANT DETAILS OF ALL THE ASSESSE(S) APPEAL IN THE FOLLOWI NG MANNER; NAME OF ASSESSEE ASSESSMENT YEAR DATE OF FILING OF RETURN OF INCOME UNDISCLOSED INCOME ADOPTED BY A.O FOR LEVYING PENALTY PENALTY U/S 271AAB(B) @ 30% UNDISCLOSED INCOME CONFIRMED BY CIT(A) FOR LEVYING PENALTY U/S 271AAB(A) PENALTY U/S 271AAB(1) SUSTAINED BY CIT @10% RAJRANI MITTAL 2015-16 31.10.15 33540876 10062260 11140876 1114088 ANSHUL MITTAL 2015-16 31.10.15 8441755 2532530 8441755 844176 ANKIT MITTAL 2015-16 7.9.15 5242960 1572888 5242960 524296 NEHA MITTAL 2015-16 31.10.15 3642852 1092856 3642852 364285 NEHA MITTAL 2016-17 14.9.16 6500000 1950000 6500000 650000 SHWETA MITTAL 2015-16 31.10.15 4575133 1372540 4575133 457513 SHWETA MITTAL 2016-17 22.9.16 5350000 1605000 5350000 535000 TOTAL 4489358 4. ASSESSEE(S) HAVE CHALLENGED THE FOLLOWING AMOUNT OF PENALTY SUSTAINED BY LD. CIT(A). SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 11 NAME OF ASSESSEE ASSESSMENT YEAR PENALTY IN DISPUTE U/S 271AAB RAJRANI MITTAL 2015 - 16 1114088 ANSHUL MITTAL 2015 - 16 844176 ANKIT MITTAL 2015 - 16 524296 NEHA MITTAL 2015 - 16 364285 NEHA MITTAL 2016 - 17 650000 SHWETA MITTAL 2015 - 16 457513 SHWETA MITTAL 2016 - 17 535000 TOTAL 4489358 5. AS REGARDS REVENUE IS CONCERNED IT HAS CHALLENGE D THE RELIEF OF RS. 8948172/- GIVEN BY LD. CIT(A) IN THE CASE OF AS SESSEE NAMELY SMT. RAJRANI MITTAL THROUGH ITA NO.879/IND/2019. 6. THE ISSUES AND FACTS RAISED IN ALL THESE APPEALS RELATES TO THE SAME GROUP OF CASES WHERE SEARCH AND SEIZURE OPERAT ION WERE CARRIED OUT U/S 132 OF THE ACT ON MITTAL GROUP ON 4.9.15. ALL THESE APPEALS RELATES TO THE ISSUES CHALLENGING THE LEGAL ITY OF THE PENALTY PROCEEDINGS INITIATED U/S 271AAB POINTING OUT DEFEC TS IN THE NOTICE ISSUED U/S 274 R.W.S. 2371AAB OF THE ACT AND SECOND LY CHALLENGING ON MERITS CHALLENGING THE PENALTY SUSTAINED U/S 271 AAB(A) OF THE ACT AS AGAINST U/S 271AAB(C) OF THE ACT APPLIED BY LD. A.O. 7. WE WILL FIRST TAKE UP THE APPEALS BY VARIOUS ASS ESEE(S) THROUGH ITA NO. 852 TO 858/IND/2019. FOR THE PURPOSE OF AD JUDICATION WE WILL TAKE UP THE FACTS OF THE ASSESSEE NAMELY SMT. RAJRANI MITTAL, ITA NO.853/IND/2019. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 12 8. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT THE ASSESSEE IS AN INDIVIDUAL BELONGING TO THE MITTAL GROUP OF INDORE . THE RETURN OF INCOME FOR THIS YEAR WAS FILED U/S 139 ON 31.10.201 5 DECLARING A TOTAL INCOME OF RS. 3,47,20,240/-. SEARCH AND SEIZU RE OPERATIONS U/S 132 WERE CARRIED ON THE MITTAL GROUP OF INDOR E ON 04.09.2015 WHERE IN THE APPELLANT WAS ALSO COVERED. THE CASE O F THE APPELLANT WAS CENTRALIZED WITH OFFICE OF THE LEARNED AO VIDE ORDER U/S 127 OF THE ACT DATED 18.02.2016. IN PURSUANCE TO SEARCH PR OCEEDINGS, NOTICES UNDER SECTION 153A WERE ISSUED TO THE APPEL LANT FOR AY 2010-2011 TO AY 2015-2016, WHICH WERE DULY COMPLIED BY THE APPELLANT AND RETURN FOR THE YEAR UNDER CONSIDERATI ON WAS FILED U/S 153A R.W.S. 139 ON 06.06.2016 DECLARING A TOTAL INC OME AT RS. 3,47,20,240/- INCLUDING THE ADDITIONAL INCOME OF RS . 3,35,40,876/- OFFERED AS BUSINESS INCOME WHICH WAS OFFERED U/S 13 2(4), WHICH ALSO INCLUDED RS. 2,24,00,000/- OFFERED DURING THE COURS E OF SURVEY CONDUCTED U/S 133A ON 01.09.2014. IT IS ALSO PERTIN ENT TO MENTION THAT THE SAME INCOME WHICH WAS DECLARED IN THE RETU RN FILED U/S 139(1) WAS REITERATED IN THE RETURN FILED U/S 153(A ) R.W.S 139. THE ASSESSMENT PROCEEDINGS WERE COMPLETED BY PASSING A COMBINED ASSESSMENT ORDER FOR ALL THESE YEARS UNDER SECTION 153A R.W.S. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 13 143(3) DATED 30.11.2017. THE INCOME FOR THIS YEAR WAS ASSESSED AT RS. 3,47,55,240/- BY MAKING ANOMINAL ADJUSTMENT OF RS. 35,000/- TO THE RETURNED INCOME. THE ADDITIONAL INCOME OFFER ED OF RS. 3,35,40,876/- WAS OFFERED AS BUSINESS INCOME AND WA S ALSO ASSESSED AS SUCH. COMING BACK TO THE PRESENT APPEAL , A NOTICE WAS SERVED ON THE APPELLANT REQUIRING TO SHOW CAUSE AS TO WHY PENALTY U/S 271AAB BE NOT IMPOSED ON THE APPELLANT. IN RESP ONSE TO THE SAME THE APPELLANT HAS FILED A REPLY DATED 23.05.20 18 PROVIDING DETAILED EXPLANATIONS AS TO WHY PENALTY IS NOT LEVI ABLE U/S 271AAB IN THE APPELLANTS CASE. HOWEVER PENALTY ORDER WAS PASSED BY THE LEARNED AO IMPOSING A PENALTY OF RS. 1,00,62,260/- U/S 271AAB(1)(C) FOR THIS YEAR. BEING AGGRIEVED, THE AP PELLANT HAS PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO VIDE ORDE R DATED 14.06.2019 IN APPEAL NO. CIT(A)-3/BPL/IT-10189/2018 -19/394 PARTLY ALLOWED THE APPEAL. THE LD. CIT(A) DELETED T HE PENALTY LEVIED IN RESPECT OF INCOME OF RS. 2,24,00,000/- OFFERED U NDER SECTION 133A AND CONFIRMED THE PENALTY TO THE EXTENT OF 10% OF R S.1114088/- IN RESPECT OF UNDISCLOSED INCOME OF RS. 1,11,40,876/- UNDER SECTION 271AAB(A). SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 14 9. NOW AGGRIEVED ASSESSEE IS IN APPEAL CHALLEN GING THE LEGALITY OF PENALTY PROCEEDINGS U/S 271AAB OF THE ACT AND PENAL TY CONFIRMED BY LD. CIT(A) AND DEPARTMENT IS IN APPEAL AGAINST T HE RELIEF GIVEN BY LD. CIT(A). SINCE WE ARE FIRSTLY DEALING WITH THE ASSESSEE(S) APPEALS, THE DEPARTMENT APPEAL WILL BE TAKEN UP AT THE LATER STAGE. 10. LD. COUNSEL FOR THE ASSESSEE SUBMITTED AS UNDER ; 1. PENALTY NOTICE IS VAGUE AND BAD IN LAW AND INITIATI ON OF PENALTY PROCEEDINGS ON INCORRECT PREMISES IS BAD IN LAW. 1.1. THE ASSESSMENT PROCEEDINGS IN THIS CASE WAS COMPLET ED BY PASSING A COMBINED ASSESSMENT ORDER FOR THE AY 2010-11 TO A Y 2015-16 U/S 143(3) R.W.S. 153A AND FOR AY 2016-17 U/S 143(3) DA TED 30.11.2017. THE LEARNED AO INITIATED THE PENALTY PROCEEDINGS FOR TH IS YEAR AND SERVED A NOTICE U/S 274 R.W.S. 271AAB DATED 30.11.2017. 1.2. A COPY OF THE SAID NOTICE IS ENCLOSED IN THE RESPEC TIVE PAPER BOOK AND A PERUSAL OF THE SAME WILL SHOW THAT THE NOTICE ISSUED IS VAGUE AND NOT IN CONFORMITY WITH LAW AS THE SAME IS ISSUED ON THE CHARGES APPLICABLE FOR LEVY OF PENALTY UNDER SECTION 271(1) (C) AS THE LEARNED AO IN THE PENALTY NOTICE HAS FACTUALLY STATED THAT IT APPEARS TO ME THAT YOU:- HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FU RNISHED INACCURATE PARTICULARS OF SUCH INCOME. 1.3. FURTHER SECTION 271AAB OF THE INCOME TAX ACT.1961 I S AS UNDER: SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 15 (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYT HING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CAS E WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JULY, 2012 BUT BEFORE THE DATE ON WHICH THE TAXATION LAWS (SECOND AMENDME NT) BILL, 2016 RECEIVES THE ASSENT OF THE PRESIDENT], 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 U NDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCL OSED 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 SPECIFI ED 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 ASSE SSEE (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT U NDER SUB-SECTION (4) OF SECTION 132, DOES NOT ADMIT THE UNDISCLOSED INCOME; AND SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 16 (II) ON OR BEFORE THE SPECIFIED DATE (A) DECLARES SUCH INCOME IN THE RETURN OF INCOME F URNISHED FOR THE SPECIFIED PREVIOUS YEAR; AND (B) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME; (C) A SUM WHICH SHALL NOT BE LESS THAN THIRTY PERC ENT BUT WHICH SHALL NOT EXCEED NINETY PERCENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF IT IS NOT COVERED BY THE PROVISIONS OF CLA USES (A) AND (B). 1. THE ABOVE READING OF SECTION 271AAB BRINGS OUT THE FOLLOWING IMPORTANT ISSUES. (I) THE PENALTY U/S 271AAB IS DISCRETIONARY AND IS NEIT HER AUTOMATIC NOR MANDATORY AS IT USES THE WORDS AO MAY DIRECT. (II) THE DISCRETIONARY PENALTY U/S 271AAB(1) CAN BE LEVI ED UNDER CLAUSE (A) @ 10%, UNDER CLAUSE (B) @20% AND UNDER C LAUSE (C) @30% DEPENDING UPON THE DEFAULT AND CHARGE AGAINST THE A SSESSEE. (III) EXISTENCE OF UNDISCLOSED INCOME IS A SINE QUO NON FOR LEVYING SUCH PENALTY, WHICH IS DEFINED IN EXPLANATION (C) T O SECTION 271AAB. 1.4. IT IS AMPLY CLEAR FROM THE READING OF SECTION 271AA B THAT THE LIMBS MENTIONED IN THE SHOW CAUSE NOTICE ISSUED TO THE AP PELLANT I.E. HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISH ED INACCURATE PARTICULARS OF SUCH INCOME ARE NOT IN CONFORMITY WITH THE CHARGES OF THE PROVISIONS OF SECTION 271AAB RATHER THE APPELLANT W AS SHOW CAUSED ON THE CHARGES WHICH FALL UNDER THE SCOPE AND AMBIT OF SECTION 271(1)(C). THIS FACT EMPHATICALLY SUBSTANTIATES THAT THE PENAL TY SHOW CAUSE NOTICE IS VAGUE AND IS BAD IN LAW AND THE CHARGES FOR INIT IATING THE PENALTY PROCEEDINGS WERE NOT CORRECT. THE PENALTY PROCEEDIN GS WERE INITIATED IN A SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 17 CASUAL AND MECHANICAL MANNER WITHOUT REQUISITE SATI SFACTION AND WITHOUT PROPER APPLICATION OF MIND. 1.5. THE PENALTY NOTICE ISSUED TO THE APPELLANT DID NOT STATE THAT THE ASSESSEE HAD ANY UNDISCLOSED INCOME WITHIN THE MEAN ING OF SECTION 271AAB. FURTHER THE READING OF SECTION 271AAB ALSO SHOWS THAT THERE ARE VARIOUS SUB-SECTIONS AND CLAUSES SPECIFYING DIF FERENT CHARGES AND PRESCRIBING DIFFERENT RATES OF PENALTY, HOWEVER, NO SPECIFIC SUB-SECTION/ CLAUSE OF SECTION 271AAB WAS MENTIONED IN THE NOTIC E, SO AS TO ENABLE THE APPELLANT TO MEET THE SPECIFIC CHARGE AGAINST H ER DURING THE PENALTY PROCEEDINGS. 1.6. A PERUSAL OF PARA 8 OF THE PENALTY ORDER WILL SHOW THAT THE LEARNED AO HAS STATED THAT, I AM SATISFIED THAT THE ASSESSEE IS LIABLE TO PENAL TY UNDER SECTION 271AAB(1)(C) OF THE INCOME TAX ACT AS THE ADDITION PERTAINS TO SPECIFIED PREVIOUS YEAR AND THE ASSESSEE COULD NOT SPECIFY AND SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED IN COME HAS BEEN DERIVED. PENALTY U/S 271AAB COULD HAVE BEEN LEVIED EITHER UN DER CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) OF SUB-SECTION (1). THE SPECIFIC CLAUSE (C) UNDER WHICH THE PENALTY HAS BEEN LEVIED AND ALSO TH E OBSERVATION OF THE LEARNED AO THAT THE MANNER OF EARNING INCOME WA S NOT SPECIFIED AND SUBSTANTIATED WERE NEVER COMMUNICATED TO THE APPELLANT THROUGH THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271AAB. 1.7. THUS THE SHOW CAUSE NOTICE ISSUED U/S 274 IS WITHOU T DRAWING REQUISITE SATISFACTION FOR LEVY OF PENALTY U/S 271A AB AND WAS AKIN TO A NOTICE WHICH IS ISSUED U/S 271(1)(C), WHERE THE LIM BS OF SECTION 271(1)(C) WERE MENTIONED AND THE LIMBS OF SECTION 271AAB WERE NOT MENTIONED. SUCH NOTICE HAVING BEEN ISSUED IN MECHANICAL MANNER , WITHOUT PROPER APPLICATION OF MIND AND WITHOUT AFFORDING PROPER OP PORTUNITY TO THE SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 18 APPELLANT TO REBUT THE CHARGES IS BAD IN LAW VITIAT ING THE VERY INITIATION OF THE PENALTY PROCEEDINGS. 2. CASE LAWS ON DEFECTIVE SHOW CAUSE NOTICE U/S 274 R. W.S. 271AAB: (I) HONBLE ITAT, INDORE IN THE CASE OF DR. RAJESH JAIN VS. DCIT ITA NO. 905/IND/2018 DATED 19.02.2020 (II) HONBLE ITAT, INDORE IN THE CASE OF SHRI VIVEK CHUG H VS. ACIT ITA NO. 636/IND/2017 DATED 28.03.2019 (III) HONBLE INCOME TAX APPELLATE TRIBUNAL, A BENCH, CHENNAI IN CASE OF DCIT CORPORATE CIRCLE-1, COIMBAT ORE V/S SHRI. R. ELANGOVAN (1199/CHNY/2017) DATED 05.04.2018. (IV ) SURESH CHAND MITTAL V/S DCIT CENTRAL 2 JAIPUR (IT AT JAIPUR) ITA NO. 931/JP/2017 AY 2014-15, DATED 02.07.2018. ( V) SHRI RAVI MATHUR V/S DCIT CENTRAL JAIPUR (JAIPUR ITAT) ITA NO. 969/JP/2017 DATED 13.06.2018 FOR AY 2015-1 6. 1.8. FURTHER, THE APPELLANT PLACES RELIANCE ON THE DECIS ION OF CHANDIGARHTRIBUNAL IN THE CASE OF GILLCO DEVELOPERS & BUILDERS (P.) LTD. V. DCIT [(2017) 189 TTJ 35 WHERE ASSESSING OFFICER HAD INTENDED TO INITIATE PENALTY PROCEEDINGS UNDER SECTION 271AA A(1), BUT ASSESSEE HAD BEEN SHOW CAUSED ON CHARGE OF FURNISHING OF INA CCURATE PARTICULARS OF INCOME, WHICH FELL UNDER SCOPE AND PURVIEW OF SE CTION271(1)(C), PENALTY PROCEEDINGS CONDUCTED AGAINST ASSESSEE UNDE R SECTION 271AAAWERE HELD INVALID AS DISCUSSED IN PARA 19 AND 20 OF THE SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 19 ORDER.( COPY ENCLOSED AT PAGE NO. 46 TO 73 OF COMMON CASE L AW PAPER BOOK PB-B ).FOR A READY REFERENCE PARA 20 IS REPRODUCED HEREU NDER:- 20. A PERUSAL OF THE ABOVE NOTICE SHOWS THAT THOUG H THE ASSESSING OFFICER HAS INTENDED TO INITIATE PENALTY PROCEEDING S U/S 271AAA(1) OF THE ACT, HOWEVER, THE WORDING WRITTEN IN THE BODY O F THE LETTER DOES NOT CONFORM TO THE CHARGES OF THE PROVISIONS OF SEC TION 271AAA OF THE ACT, RATHER, THE ASSESSEE HAS BEEN SHOW CAUSED ON T HE CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, WHI CH FALLS UNDER THE SCOPE AND PURVIEW OF SECTION 271(1)(C) OF THE ACT. THE ASSESSEE, THEREFORE, IS NOT SHOW CAUSED FOR LEVY OF PENALTY U NDER THE PROVISIONS OF SECTION 271AAA, RATHER FOR DOING AN A CT INVITING PENALTY U/S 271(1)(C) OF THE ACT, WHICH OTHERWISE IS NEITHE R ARISING OUT OF THE FACTS OF THE CASE NOR ESTABLISHED AGAINST THE ASSES SEE. THUS, THE PENALTY PROCEEDINGS CONDUCTED AGAINST THE ASSESSEE U/S 271AAA OF THE ACT WERE INVALID AT ITS VERY INCEPTION BECAUSE OF THE DEFECTIVE AND INVALID SHOW CAUSE NOTICE, RENDERING THE ENTIRE PENALTY PROCEEDINGS VOID ABNITIO. THE PENALTY LEVIED AGAINS T THE ASSESSEE IS THUS NOT SUSTAINABLE ON THIS SCORE ALSO. THOUGH THIS DECISION IS IN CONTEXT OF SECTION 271AA A BUT SQUARELY APPLIES IN CONTEXT OF SECTION 271AAB SINCE BOTH THE SECTION S ARE PARI-MATERIA AND OPERATE UNDER SIMILAR CIRCUMSTANCES. 1.9. THE APPELLANT ALSO WISH TO DRAW SUPPORT FROM THE VA RIOUS DECISIONS RENDERED IN THE CONTEXT OF SECTION 271(1)(C), WHERE IN THE PENALTY PROCEEDINGS HAVE BEEN HELD TO BE NOT VALIDLY INITIA TED AS THE SHOW CAUSE NOTICE ISSUED U/S 274 WAS DEFECTIVE AS IT DID NOT S PELLED OUT THE GROUND / CHARGE ON WHICH THE PENALTY IS SOUGHT TO BE IMPOSED , SUCH AS SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 20 (I) CIT V/S MANJUNATH COTTON GINNING FACTORY (2013) 359 ITR 0565 (KARNATAKA). (II) CIT V/S SSAS EMERALD MEADOWS, (2016) 73 TAXMANN.CO M 248 (SC). (III) PR. CIT V/S KULWANT SINGH BHATIA IT NO. 9 TO 14 OF 2018 (MP) 1.10. THE APPELLANT FURTHER WISH TO FURTHER ADD THAT IN T HE CASE OF KULWANT SINGH BHATIA (SUPRA), THE HONOURABLE HIGH C OURT OF MADHYA PRADESH IN ITS LATEST DECISION DATED 09.05.2018 DIS MISSING THE APPEALS FILED BY THE REVENUE HELD IN PARA 11 OF THE ORDER ON DUE CONSIDERATION OF THE ARGUMENTS OF THE LEARNED COUNSEL OF THE APPELLA NT, SO ALSO CONSIDERING THE FACT THAT THE GROUND MENTIONED IN SHOW CAUSE NO TICE WOULD NOT SATISFY THE REQUIREMENT OF LAW, AS NOTICE WAS NOT SPECIFIC, WE ARE OF THE VIEW THAT THE LEARNED TRIBUNAL HAS RIGHTLY RELYING ON THE DEC ISION OF CIT V/S MANJUNATH COTTON GINNING FACTORY (SUPRA) AND CIT V/ S SSAS EMERALDS MEADOWS (SUPRA) RIGHTLY ALLOWED THE APPEAL OF THE A SSESSEE AND SET ASIDE THE ORDER OF PENALTY IMPOSED BY THE AUTHORITIES. (COPY ENCLOSED AT PAGE NO. 74 TO 77 OF THE COMMON CASE LAW PAPER BOOK PB-B ). THE CASE OF THE APPELLANT IS SQUARELY COVERED BY TH E PROPOSITION RENDERED BY THE JURISDICTIONAL HIGH COURT, WHICH HAS A BINDI NG PRECEDENT, SINCE IN THE INSTANT CASE ALSO THE GROUNDS / CHARGES MENTION ED IN THE SHOW CAUSE NOTICE DOES NOT SATISFY THE REQUIREMENT OF LAW AND THE SHOW CAUSE NOTICE WAS NOT SPECIFIC RATHER WAS ISSUED ON ALTOGETHER IN CORRECT PREMISES. THE LEARNED CIT(A) BY RELYING ON THE DECISION OF HO NBLE M.P HIGH COURT IN THE CASE OF KULWANT SINGH BHATIA (SUPRA) HELD TH AT DECISION WAS RENDERED IN CONTEXT OF PENALTY LEVIED UNDER SECTION 271(1)(C) AND NOT UNDER SECTION 271AAB THEREFORE THE CHALLENGE OF THE APPELLANT IN RESPECT OF INITIATION OF PENALTY PROCEEDINGS UNDER WRONG SE CTION IS NOT VALID AND DISMISSED THE GROUND. IT IS SUBMITTED THAT THE LEAR NED CIT(A) ERRED IN HOLDING THAT THE APPELLANT HAS CHALLENGED THE INITI ATION OF PENALTY SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 21 PROCEEDINGS UNDER WRONG SECTION WHEREAS THE APPELLA NT HAS CHALLENGED THE INITIATION OF PENALTY PROCEEDINGS ON ACCOUNT OF INVALID AND DEFECTIVE NOTICE ISSUED U/S 274 AND NOT UNDER THE WRONG SECTI ON. FURTHER, IT IS SUBMITTED THAT THOUGH THE DECISION OF HONBLE M.P. HIGH COURT WAS RENDERED IN CONTEXT OF SHOW CAUSE NOTICES ISSUED U/ S 274 FOR THE PURPOSES OF LEVYING PENALTY U/S 271(1)(C) HOWEVER, ARE EQUALLY APPLICABLE IN RESPECT OF THE SHOW CAUSE NOTICES ISSUED U/S 274 FOR THE PURPOSES OF LEVYING PENALTY U/S 271AAB AS THE PROPOSITION LAID DOWN IN THESE CASE IS THAT THE GROUNDS MENTIONED IN THE SHOW CAUSE NOTICE DOES NOT SATISFY THE REQUIREMENT OF LAW AS THE NOTICE WAS NOT SPECIFIC, EQUALLY APPLIES IN THE PRESENT CASE. ALSO, BOTH THE SECTIONS ARE PERI-MATE RIA AND OPERATE UNDER THE SIMILAR CIRCUMSTANCES. THE APPELLANT PLACES HEAVY RELIANCE ON THE DECISION OF HONBLE ITAT, INDORE IN THE CASE OF SHRI VIVEK CHUGH (SUPRA) WHER E THE LEARNED CIT(A) REDUCED THE PENALTY BY APPLYING THE PROVISIONS OF S ECTION 271AAB(1)(A) AND THE HONBLE ITAT QUASHED THE PENALTY ORDER ON T HE GROUND THAT THE NOTICE INITIATING THE PENALTY IS NOT IN ACCORDANCE WITH LAW AS NO SPECIFIC CHARGE IS MENTION IN THE NOTICE. THEREFORE, THE CO NTENTION OF THE LEARNED CIT(A) IS NOT TENABLE. FURTHER, IT IS SUBMITTED THAT SOME CASE LAWS RELIED UPON BY THE APPELLANT THOUGH RENDERED IN CONTEXT OF PENALTIES LEVIED U/S 271(1)(C) OR U/S 271AAA ARE EQUALLY APPLICABLE IN RESPECT OF PENALTI ES LEVIED U/S 271AAB SINCE THE SHOW CAUSE NOTICE IN ALL THESE PENALTIES ARE ISSUED U/S 274. ON A PERUSAL OF THE SHOW CAUSE NOTICE U/S 274R.W.S. 271AAB ISSUED TO THE APPELLANT IT IS AMPLY EVIDENT THAT THE LEARN ED AO HAS ISSUED THE NOTICE IN A MECHANICAL MANNER WITHOUT APPLICATI ON OF MIND MENTIONING IRRELEVANT AND INAPPLICABLE CHARGES. NO PENALTY HAS BEEN LEVIED ON THE CHARGES MENTIONED IN THE SHOW CAUSE N OTICE AND THE CHARGE ON WHICH PENALTY HAS BEEN ACTUALLY LEVIED WA S NOT MENTIONED IN THE NOTICE. THUS THE VERY INITIATION OF THE PRES ENT PENALTY PROCEEDINGS IS NOT IN ACCORDANCE WITH THE LAW AND H AS LED TO SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 22 VITIATION OF ENTIRE PENALTY PROCEEDINGS. IT IS THER EFORE MOST HUMBLY PRAYED THAT THE PENALTY PROCEEDINGS OUGHT TO BE QUA SHED AND THE CONSEQUENT PENALTY LEVIED BE DELETED. 2. IMPOSITION OF PENALTY ON INCOME OFFERED IN THE RETURN OF INCOME FILED U/S 153A AS BUSINESS INCOME IS BAD IN LAW. WITHOUT PREJUDICE TO THE ABOVE BASIC CONTENTION OF THE APPELLANT THAT THE PENALTY LEVIED IS WITHOUT JURISDICTION SINCE THE PE NALTY NOTICE ISSUED WAS BAD IN LAW, IT IS SUBMITTED THAT THE PENALTY HAS AL SO BEEN LEVIED ON INCORRECT PREMISES WHICH IS DISCUSSED HERE UNDER:- 2.1. THE APPELLANT FOR THE YEAR UNDER CONSIDERATION FILE D HER RETURN OF INCOME U/S 139(1) AND AGAIN U/S 153A OFFERING THE S AME AMOUNT OF INCOME WHICH INCLUDED VARIOUS ITEMS TABULATED AS UN DER: S. NO. PARTICULARS OF ADDITIONAL INCOME AMOUNT (RS.) REMARKS 1. ADVANCES GIVEN 2,24,00,000 INCOME INITIALLY OFFERED IN SURVEY CONDUCTED U/S 133A ON 01.09.2014 ON THE BASIS OF DIARY AND OFFERED IN THE RETURN FILED U/S 139(1). THIS WAS ALSO INCLUDED IN THE INCOME OFFERED AT THE TIME OF SEARCH AND ALSO IN THE RETURN FILED U/S 153A. 2. RENOVATION/CONSTRUC TION OF HOUSE 78,40,876 OFFERED U/S 132(4) AND INCLUDED IN THE RETURN FILED U/S 139(1) AS WELL AS U/S 153A. 10 . ADVANCES GIVEN 33,00,000 OFF ERED U/S 132(4) AND INCLUDED IN THE RETURN FILED U/S 139(1) AS WELL AS U/S 153A. TOTAL 3,35,40,876 SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 23 2.2. AT THE OUTSET IT IS SUBMITTED THAT BEFORE THE SEARC H OPERATIONS CONDUCTED ON 04.09.2015 A SURVEY OPERATION WAS CARR IED OUT UNDER SECTION 133A ON THE APPELLANT ON 01.09.2014. IN THE SAID SURVEY PROCEEDINGS THE APPELLANT OFFERED RS.2,24,00,000/- AS HER ADDITIONAL INCOME FOR THE YEAR UNDER CONSIDERATION WHICH WAS A CCEPTED BY THE DEPARTMENT. THE APPELLANT HONOURED SUCH OFFER AND A CCORDINGLY PAID THE ADVANCES TAX OF RS. 72,40,000/- ON 13 TH AND 15 TH SEPTEMBER 2014 ON THE INCOME SURRENDERED IN SURVEY PROCEEDINGS AND ALSO O FFERED THE SAME IN THE RETURN FILED BY HER U/S 139(1) AS WELL AS IN TH E RETURN FILED U/S 153A R.W.S 139. 2.3. DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS U/S 132 ON 04.09.2015, SHRI DINESH CHANDRA MITTAL, HUSBAND OF THE APPELLANT, IN ADDITION TO THE INCOME ALREADY OFFERED BY THE APPEL LANT IN THE SURVEY PROCEEDINGS OF RS. 2,24,00,000/- OFFERED AN ADDITIO NAL INCOME OF RS. 1,11,40,876/- (78,40,876+33,00,000) IN THE HANDS O F THE APPELLANT FOR AY 2015-16. THEREBY A TOTAL ADDITIONAL INCOME OF RS . 3,35,40,876/- (2,24,00,000+78,40,876+33,00,000) WAS OFFERED FOR T HIS YEAR AS BUSINESS INCOME IN THE RETURN OF INCOME FILED U/S 153A. COMING TO THE PENALTY PROCEEDINGS: 2.4. IT IS SUBMITTED THAT THE PENALTY PROCEEDINGS ARE UN WARRANTED ON THE OVERALL FACTS OF THE CASE AS THE PENALTY PROCEE DINGS WERE INITIATED MERELY ON THE BASIS OF INCOME OFFERED BY THE APPELL ANT, WITHOUT BRINGING ANYTHING ADVERSE ON RECORD. THERE IS NO OBJECTION A S TO THE FILING OF RETURN OFFERING ADDITIONAL INCOME, MOREOVER THE INC OME OFFERED AS BUSINESS INCOME WAS ACCEPTED AS SUCH. NEITHER THE I NVESTIGATION WING NOR THE LEARNED AO POINTED OUT ANY DISCREPANCIES OR DEFECT IN THE OFFERING AND WORKING OF THE APPELLANT. THE ADDITION AL INCOME WAS OFFERED TO AVOID PENAL PROCEEDINGS AND TO BUY PEACE OF MIND . SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 24 2.5. A PERUSAL OF THE PENALTY ORDER WILL SHOW THAT THE O NLY REASON FOR WHICH THE PENALTY HAS BEEN LEVIED IS THE OBSERVATIO N OF THE LD. AO THAT THE ASSESSEE COULD NOT SPECIFY AND SUBSTANTIATE THE MANNER IN WHICH THE SAID UNDISCLOSED INCOME WAS DERIVED.(PARA 4 OF THE PENALTY ORDER). FURTHER IN PARA 6 IT IS STATED THAT THE ASSESSEE WA S GIVEN A CHANCE TO EXPLAIN THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED DURING THE ASSESSMENT PROCEEDINGS AND IT IS ALSO STATED TH AT THE ASSESSEE COULD NOT EXPLAIN THE MANNER EVEN DURING THE PENALTY PROC EEDINGS. FROM PERUSAL OF PARA 7 & 8 OF THE PENALTY ORDER IT IS EV IDENT THAT THE SOLE BASIS FOR LEVYING THE PENALTY UNDER SECTION 271AAB(1)(C) IS THE OBSERVATION OF THE AO THAT THE ASSESSEE COULD NOT EXPLAIN THE MANN ER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. 2.6. IT IS SUBMITTED THAT THE ABOVE OBSERVATION OF THE L EARNED AO ARE DEVOID OF MERITS AND ALSO FACTUALLY INCORRECT AS DI SCUSSED HERE UNDER. DURING SEARCH PROCEEDINGS (I) IT WAS EXPLAINED DURING THE SEARCH THAT VARIOUS FAM ILY MEMBERS WERE CARRYING OUT CERTAIN TRADING TRANSACTIONS, AS EVIDENT FROM THE VARIOUS SEIZED MATERIAL AND NOTINGS FOUND FROM THE RESIDENCE OF THE APPELLANT AND ALSO FROM THE RESIDENCE OF THE ACCOUN TANT OF THE GROUP. PROPER RECORDS OF THE SAME COULD NOT BE MAINTAINED BY THE ACCOUNTANT OF THE GROUP, WHO RECORDED ALL THE TRANSACTIONS IN A W HOLESOME MANNER. CONSIDERING THE PRACTICAL DIFFICULTY OF IDENTIFYING THE ENTITY OF THE FAMILY MEMBER, THE INCOME WAS OFFERED ON THE BASIS OF THE APPLICATION OF THE SAME IN THE HANDS OF VARIOUS FAMILY MEMBERS. THE MO DUS OPERANDI WAS EXPLAINED AND A SYSTEMATIC DATE WISE CASH FLOW STAT EMENT WAS PREPARED INCORPORATING VARIOUS NOTINGS ON ALL THE LOOSE PAPE RS AND THE RESULTANT PEAK CREDIT ALONG WITH THE APPLICATION OF INCOME WA S OFFERED AS INCOME OF THE FAMILY IN THE HANDS OF SHRI DINESH CHAND MITTAL HUF AND THE RESPECTIVE FAMILY MEMBERS U/S 132(4) BY SHRI DINESH MITTAL. ESTIMATED PROFIT IN RESPECT OF TRADING TRANSACTIONS WAS ALSO OFFERED. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 25 11. A COPY OF THE STATEMENT RECORDED U/S 132(4) OF DINE SH CHAND MITTAL ALONG WITH COMPLETE WORKING OF THE ADDITIONA L INCOME OFFERED DULY SUPPORTED BY DETAILED DATE WISE CASH FLOW STATEMENT AS FILED BEFORE THE INVESTIGATION WING IS ENCLOSED AT PAGE NO. 36 TO 63 . THIS METHODOLOGY WAS ALSO OBSERVED AND DULY ACKNOWLEDGED AND ACCEPTE D BY THE INVESTIGATION WING, SO ALSO THE WORKING, BEFORE WHO M, THE CASH FLOW STATEMENT AND OTHER DETAILS WERE FILED, WHICH ALSO STAND ACCEPTED IN THE ASSESSMENT PROCEEDINGS OF THE GROUP. IN THE RETURN FILED U/S 153A (II) IT IS SUBMITTED THAT THE SAID INCOME WAS OFFERED AS BUSINESS INCOME IN THE COMPUTATION OF INCOME FILED U/S 153A REFLECTING THE SAID INCOME AS BUSINESS INCOME, COPY OF WHICH IS ENCLOSE D AT PAGE NO. 02 TO 08 OF PB. THE FACT THAT THE SAID INCOME WAS OFFERED A S BUSINESS INCOME AND THE SAME ALSO STAND ASSESSED AS BUSINESS INCOME BY THE AO IS UNDISPUTED. DURING ASSESSMENT PROCEEDINGS (III) THE LEARNED AO HAS STATED IN PARA 6 OF THE PENALTY ORDER THAT THE APPELLANT WAS GIVEN A CHANCE TO EXPLAIN THE MANNER DURING THE ASSESSMENT PROCEEDINGS. THE APPELLANT WISHES TO DRA W YOUR HONOURS KIND ATTENTION TO THE QUESTIONNAIRE ISSUED U/S 142( 1), WHICH IS ENCLOSED AT PAGE NO. 09 TO 16 OF THE PB.A PERUSAL OF ITEM NO. A-2 OF PART A OF T HIS QUESTIONNAIRE WILL SHOW THAT THE APPELLANT WAS ONLY REQUIRED TO STATE THAT WHETHER ANY VOLUNTARY DISCLOSURE OF INCOME WAS MADE U/S 132(4) THAT TOO IN A PRESCRIBED FORMAT. SIMILARLY THROUGH ITEM NO. B-1 TO B-5 OF PART B THE APPELLANT WAS REQUIRED TO EXPLAIN CASH, JEWEL LERY ETC. THESE FACTS SUBSTANTIATE THE CONTENTION OF THE APPELLANT THAT T HE APPELLANT WAS NEVER CALLED UPON TO EXPLAIN THE MANNER OF DERIVING SUCH INCOME DURING THE ASSESSMENT PROCEEDINGS AND THE OBSERVATIONS MADE BY THE LEARNED AO TO THIS EFFECT IN THE PENALTY ORDER IN PARA 6 IS FA CTUALLY INCORRECT. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 26 DURING PENALTY PROCEEDINGS (IV) THE ALLEGATION IN THE PENALTY ORDER THAT THE APPELL ANT DID NOT EXPLAINED THE MANNER EVEN DURING THE COURSE OF PENA LTY PROCEEDINGS IS ALSO FACTUALLY WRONG AS THE APPELLANT CATEGORICALLY MENTIONED IN THE REPLY FILED DURING THE COURSE OF PENALTY PROCEEDINGS THAT THE INCOME WAS OFFERED AS BUSINESS INCOME AND ALSO EXPLAINED THE M ETHODOLOGY OF EARNING AND OFFERING THE SAID INCOME. COPY OF THE R EPLY DATED 24.05.2018 IS ENCLOSED AT PAGE NO. 30 TO 35 OF PB. IT IS FURTHER SUBMITTED THAT THE INCOME EARNED AND OFFERED FOR THE YEAR UNDER CONSIDERATION WAS PROPERLY DISCLOSED AND SUBS TANTIATED DURING THE ENTIRE PROCEEDINGS, RIGHT FROM THE SEARCH PROCEEDIN GS AND THERE WAS NO ADVERSE FINDING IN THIS REGARD IN THE ORDER PASSED UNDER SECTION 153A. THE ASSESSMENT WAS COMPLETED BY ACCEPTING THE INCOM E RETURNED UNDER SECTION 139(1) AS WELL AS IN 153A R.W.S. 139(1) BY MAKING A NOMINAL ADDITION OF RS. 35,000/- UNDER SECTION 57(III). (V) MOREOVER NO FURTHER QUERIES REGARDING THE ADDITIONA L INCOME OFFERED WERE RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND APPELLANT WAS OF A BONA-FIDE VIEW THAT THE LEARNED AO WAS SATISFIED WITH THE EXPLANATION PROVIDED BY THE APPELLANT DURING TH E COURSE OF SEARCH AND SEIZURE PROCEEDINGS AND ALSO IN ASSESSMENT PROC EEDINGS. THE APPELLANT WAS NOT REQUIRED, AT ANY MOMENT, TO EXPLA IN THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. THE CONTE NTION OF THE AO IN THE PENALTY ORDER THAT THE ASSESSEE WAS GIVEN A CHA NCE TO EXPLAIN THE SAID MANNER IS NOT FACTUALLY CORRECT AND THIS CONTE NTION OF THE APPELLANT IS VERIFIABLE FROM THE PENALTY NOTICE, WHEREIN NO S UCH ISSUE WAS RAISED. THIS IS ALSO EVIDENT FROM THE FACT THAT THE ADDITIO NAL INCOME OFFERED AS BUSINESS INCOME IN THE RETURN WAS ACCEPTED AS SUCH WITHOUT ANY OBJECTION AND WITHOUT ANY MODIFICATION EITHER AS TO THE HEAD OF INCOME OR TO THE QUANTUM OF INCOME. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 27 THEREFORE, EVIDENTLY THE APPELLANT CANNOT BE HELD G UILTY OF NOT SPECIFYING THE MANNER OF EARNING ADDITIONAL INCOME, FIRSTLY FOR THE REASON THAT THE SAID INCOME WAS PROPERLY EXPLAINED AND SUBSTANTIATED THROUGH DETAILED WORKING BEFORE THE I NVESTIGATION WING AND WAS OFFERED AS BUSINESS INCOME IN THE RETU RN AND SECONDLY THE AO HAVING SATISFIED WITH THE SAME, NEVER REQUIR ED THE APPELLANT TO FURTHER EXPLAIN / SUBSTANTIATE THE SAME. (VI) WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THA T THE LEARNED AO HAS ALSO FAILED TO RECORD PROPER SATISFACTION WH ILE PASSING THE PENALTY ORDER, IMPOSING VAGUE ALLEGATIONS THAT THE APPELLAN T HAS FAILED TO SUBSTANTIATE THE MANNER IN WHICH SUCH INCOME WAS DE RIVED. THE INVESTIGATION WING WAS ALSO SATISFIED WITH THE EXPL ANATION PROVIDED BY THE APPELLANT AND NO OBJECTIONS WERE RAISED AND NO FURTHER QUERIES WERE PUT DURING THE SEARCH PROCEEDINGS AS WELL AS DURING THE ASSESSMENT PROCEEDINGS, AS EVIDENT FROM THE ASSESSMENT ORDER. FURTHER THERE WERE NO QUERIES ASKED AT ANY STAGE TO EXPLAIN THE MANNER OF EARNING OF THE INCOME. FOR THE ABOVE PROPOSITION THE APPELLANT PLACES RELI ANCE ON THE FOLLOWING DECISIONS WHICH SUPPORT THE CONTENTION OF APPELLANT . I. HONBLE GUJARAT HIGH COURT IN CASE OF PRINCIPAL CIT V/S. SHAHLON SILK MILLS PVT. LTD DATED 05.02.2018 WHEREIN ALSO NO QUESTION WAS RAISED BY REVENUE AUTHORITIES WHILE R ECORDING THE STATEMENT ABOUT THE DISCLOSURE OF MANNER IN WHICH INCOME WAS EARNED, RELYING ON THE DECISIONS OF THE HONOURABLE GUJARAT HIGH COURT IN THE CASE OF CIT V/S MAHENDRA SINGH SHAH ( 2008) 299 ITR 305, THE PENALTY LEVIED U/S 271AAA WAS DELETED. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 28 II. HONBLE ITAT, AHMEDABAD IN THE CASE OF ACIT V. SHRE ENARAYAN SITARAM MUNDRA [(2017) 166 ITD 47 WHERE IT WAS HELD THAT WHERE NO QUESTION WAS ASKED DURING STATEMENT RECORDED UN DER SECTION 132(4), IN RESPECT OF EARNING OF INCOME DECLARED, REVENUE LATER COULD NOT PLEAD DEFICIENCY ON PART OF ASSESSEE FOR SATISFYING MANNER OF EARNING SAID INCOME AND, THUS, PENALTY U NDER SECTION 271AAA COULD NOT BE LEVIED. THE CONCLUDING OBSERVATION OF THE HONOURABLE ITAT A RE IN PARA 9.3 AND THE OPERATIVE PART SO FAR AS APPLICABLE TO THE PRES ENT CASE BEFORE YOUR HONOUR IS ABSTRACTED HERE UNDER:- NOTWITHSTANDING, WE FURTHER NOTE THAT THE ASSESSE E HAS REPLIED TO THE QUERY RAISED WHILE RECORDING THE STATEMENT AS CALLED FOR. THE REVENUE DOES NOT APPEAR TO HAVE QUIZZED THE ASSESS EE FOR SATISFYING THE MANNER IN WHICH THE PURPORTED UNDISCLOSED INCO ME HAS BEEN DERIVED. THE INCOME CONSIDERED AS AN UNDISCLOSED I NCOME IN THE STATEMENT UNDER S.132(4) HAS BEEN DULY INCORPORATE D IN THE RETURN FILED PURSUANT TO SEARCH. THEREFORE, THE REVENUE I N OUR VIEW NOW CANNOT PLEAD DEFICIENCY ON THE PART OF THE ASSESSE E TO SPECIFY THE MANNER WHICH HAS NOT BEEN CALLED INTO QUESTION AT THE TIME OF SEARCH. WE SIMULTANEOUSLY NOTE THAT NOWHERE IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER, THE REVENUE HAS MAD E OUT A CASE THAT THE MANNER OF EARNING UNDISCLOSED INCOME WAS ENQUI RED INTO POST SEARCH STAGE EITHER. THE REVENUE HAS NOT POINTED O UT ANY QUERY WHICH REMAINED UN-REPLIED OR EVADED IN THE COURSE OF SEARCH OR POST SEARCH INVESTIGATION. THEREFORE LOOKING FROM ANY A NGLE, IT IS DIFFICULT TO HOLD IN FAVOUR OF THE REVENUE. ACCORDINGLY, WE DECLINE TO INTERFERE IN THE ORDER OF THE CIT(A). SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 29 III. HONOURABLE DELHI HIGH COURT IN THE CASE OF PRINCIPA L CIT V/S EMIRATES TECHNOLOGIES PVT. LTD. (2017) 399 ITR 018 9 OBSERVED THAT NO SPECIFIC QUERY WAS PUT TO THE ASSESSEE BY DRAWING HIS ATTENTION TO SECTION 271AAA AND ASKING HIM TO SPEC IFY THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED, UPHEL D THE DELETION OF PENALTY BY THE HONOURABLE ITAT AND DISMISSED TH E APPEAL FILED BY THE DEPARTMENT. IV. HONBLE ITAT, JAIPUR IN THE CASE OF ACIT V. AJIT SI NGH (2016) 76 TAXMANN.COM 212 WHERE IT WAS HELD THAT WHERE UNDISCLOSED INCOME WAS DULY ADMITTED BY ASSESSEE IN STATEMENTS RECORDED DURING SEARCH UNDER SECTION 132(4) AND INCOME ON B ASIS OF SEIZED PAPERS WAS CALCULATED VIDE A FUND FLOW STATEMENT A ND TAX THEREON WAS PAID, AO COULD NOT LEVY PENALTY UNDER SECTION 271AAA ON PLEA THAT HE FAILED TO SUBSTANTIATE OR DESCRIBE MANNER OF EARNING UNDISCLOSED INCOME. V. HONOURABLE ITAT INDORE BENCH IN THE CASE OF SHRI TI KAMCHAND GARG AND OTHERS WHILE DECIDING THE ISSUE OF LEVY OF PENALTY U/S 271AAA WHEREIN SUCH PENALTY WAS LEVIED SOLELY ON T HE ISSUE THAT THE ASSESSEES HAVE NOT DISCLOSED THE MANNER OR MET HOD OF EARNING SUCH INCOME, DISCUSSED THE ISSUE ELABORATELY WHERE IN THE OBSERVATIONS AND THE OPERATING PART IS IN PARA 7 T O 7.6, DELETED THE PENALTIES AFTER DISCUSSING THE DECISIONS OF VARIOU S HIGH COURTS AND ITATS CONCLUDED IN PARA 7.6 THAT: IN VIEW OF THE ABOVE FACTS OF THE PRESENT CASE WHER E FROM IT IS EVIDENT THAT DURING THE COURSE OF SEARCH PROCEEDIN GS THE AUTHORIZED OFFICER OF THE DEPARTMENT HAS NOT RAISED ANY SPECI FIC QUERY REGARDING MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DE RIVED AND ON SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 30 THE CONTRARY THE ASSESSEE HAS EXPLAINED THAT UNDIS CLOSED INCOME IS BEING SURRENDERED IN THE BASIS OF LOOSE PAPERS, DI SCREPANCIES FOUND IN SEIZED MATERIALS AND VALUABLES FOUND DURING SEA RCH. WE THUS RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF HONO URABLE ALLAHABAD HIGH COURT AND HONOURABLE GUJARAT HIGH COURT AND C OORDINATE BENCH OF VARIOUS TRIBUNAL AS DISCUSSED ABOVE HOLD THAT IN ABSENCE OF QUERY RAISED BY THE AUTHORIZED OFFICER DURING THE COURSE OF SEARCH RECORDING THE STATEMENT U/S 132(4) ABOUT THE MANNE R IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED AND ABOUT ITS SUBSTANTIATION, THE AO WAS NOT JUSTIFIED IN IMPOSING PENALTY U/S 2 71AAA OF THE ACT SPECIFICALLY WHEN THE SURRENDERED UNDISCLOSED INCO ME HAS BEEN ACCEPTED AND DUE TAXES HAS BEEN PAID BY THE ASSESS EE. HENCE, WE HEREBY SET ASIDE THE IMPUGNED ORDER OF THE AUTHORI TIES BELOW AND CANCELLED THE PENALTY LEVIED U/S 271AAA OF THE IT ACT IT IS SUBMITTED THAT THOUGH THE ABOVE DECISIONS ARE IN CONTEXT OF PENALTY LEVIED SECTION 271AAA BUT THE PROPOSITION LAID DOWN THEREIN IS SQUARELY APPLICABLE EVEN IN THE CONTEXT OF SECTION 271AAB SI NCE BOTH THE SECTIONS ARE PERI MATERIA IN SO FAR AS THE QUESTION OF LEVY OF PENALTY FOR W ANT OF SPECIFYING THE METHOD AND MANNER OF EARNING UNDISCL OSED INCOME IS CONCERNED. THE ONLY DIFFERENCE IS THAT U/S 271AAA T HERE WAS A COMPLETE IMMUNITY FROM PENALTY WHEREAS U/S 271AAB PENALTY IS LEVIABLE @ 10% OF THE UNDISCLOSED INCOME ON THE SAME SET OF CIRCUMSTA NCES. IN THE PRESENT CASE PENALTY U/S 271AAB HAS BEEN LEV IED SOLELY ON THE PREMISES THAT THE METHOD AND MANNER OF EARNING UNDISCLOSED INCOME WAS NOT SPECIFIED BY THE APPELLANT. IT IS SU BMITTED THAT IN VIEW OF THE ABOVE REFERRED DECISIONS, THE APPELLANT CANNOT BE ROPED INTO THE VIOLATION OF THE CONDITION THAT THE METHOD AND MANNER OF EARNING UNDISCLOSED INCOME WAS NOT SPECIFIED. THERE FORE, IN THE MOST HUMBLE OPINION OF THE ASSESSEE, SINCE THE PENA LTY HAS BEEN SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 31 LEVIED ON AN ALTOGETHER INCORRECT AND WRONG PREMISE S, THE SAME OUGHT TO BE DELETED BY THE LEARNED CIT(A) AND IS PR AYED TO BE NOW DELETED. THE LEARNED CIT(A) HAS RIGHTLY HELD THAT THE APPELL ANT HAS DISCLOSED THE MANNER OF EARNING THE ADDITIONAL INCOME IN PARA 4.2 .6 OF HIS ORDER.ONCE THE APPELLANT COMES OUT OF THIS BARRIER, THE VERY P REMISES OF THE AO ON WHICH PENALTY HAS BEEN LEVIED CEASE TO EXIST AND TH E PENALTY LEVIED ON THIS SOLE GROUND OUGHT NOT HAVE BEEN LEVIED. IT IS SUBMITTED THAT THE ADDITIONAL INCOME OFFERED BY THE APPELLANT CAN BE BROADLY CATEGORIZED IN TWO HEADS AS EXPLAINED HEREU NDER:- IN RESPECT OF THE INCOME OF RS. 2,24,00,000/- OFFER ED DURING THE COURSE OF SURVEY U/S 133A IS NOT IN THE NATURE OF UNDISCLOSED INCOME'. IN RESPECT OF THE AMOUNT OF RS. 2,24,00,000/- OFFER ED AS ADDITIONAL INCOME, THE RELEVANT FACTS ARE AS UNDER:- (I) IT IS REITERATED THAT THE AMOUNT OF RS. 2,24,00,000 /- WAS OFFERED IN THE COURSE OF SURVEY PROCEEDINGS U/S 133A CARRIED O UT ON 01.09.2014 PRIOR TO THE DATE OF SEARCH ON 04.09.2015. (II) THE SAID INCOME WAS ALREADY RECORDED IN THE BOOKS O F ACCOUNTS OF THE APPELLANT FOR THE YEAR ENDED ON 31.03.2015 PRIO R TO THE DATE OF SEARCH ON 04.09.2015. (III) THE SAID INCOME WAS ALSO IN THE KNOWLEDGE OF THE DE PARTMENT AS THE SAME WAS ALREADY OFFERED IN THE SURVEY BEFORE T HE DATE OF SEARCH. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 32 (IV) IN RESPECT OF THIS INCOME DUE ADVANCE TAX OF RS. 72 ,40,000/- WAS ALREADY PAID BY THE ASSESSEE ON 13TH AND 15TH SEPTE MBER 2014, MUCH PRIOR TO THE DATE OF SEARCH ON 04.09.2015. (V) THE SAID INCOME WAS ALSO DEPOSITED IN THE BANK ACCO UNT OF THE APPELLANT BEFORE 31ST MARCH 2015 I.E. WELL BEFORE T HE DATE OF SEARCH ON 04.09.2015. THE DOCUMENTS SUBSTANTIATING THE ABOVE FACTS SUCH A S THE COPY OF DIARY WHICH WAS IMPOUNDED DURING THE SURVEY U/S 133A ON 0 1.09.2014 AND ON THE BASIS OF WHICH INCOME WAS OFFERED, COPY OF T HE STATEMENT OF SHRI DINESH CHAND MITTAL RECORDED ON 01.09.2014, COPY OF CLARIFICATION FILED AFTER THE SURVEY, COPIES OF CHALLANS OF ADVANCE TAX PAID BY THE APPELLANT ETC ARE AT PAGE NO. 77 OF THE PAPER BOOK. THEREFORE THE SAID INCOME OF RS. 2,24,00,000/- NEVE RTHELESS ALSO OFFERED U/S 132(4) CANNOT BE ROPED INTO THE AMBIT OF UNDIS CLOSED INCOME AND IS OUT OF THE CLUTCHES OF THE PENAL PROVISIONS OF SECT ION 271AAB. 2.7. THE FACT THAT THIS INCOME WAS OFFERED IN THE SURVEY CONDUCTED U/S 133A ON 01.09.2014, THE RELEVANT ADVANCE TAX WAS DE POSITED IMMEDIATELY AFTER THE SURVEY AND MUCH PRIOR TO THE DATE OF SEARCH, THE RECORDING OF THE SAID INCOME IN THE BOOKS OF ACCOUN TS AND ALSO DEPOSITION THEREOF IN THE REGULAR BANK ACCOUNT OF THE APPELLAN T BEFORE 31.03.2015 MUCH AHEAD OF THE DATE OF SEARCH I.E. 04.09.2015 WE RE CATEGORICALLY BROUGHT TO THE KNOWLEDGE OF THE AO THROUGH THE NOTE S FORMING PART OF THE RETURN FILED U/S 153A ALONG WITH THE COPY OF COMPUT ATION FILED FOR THIS YEAR THROUGH FIRST SUBMISSION DATED 12.07.2017 (THE NOTES WITH THE RETURN ARE ENCLOSED AT PAGE NO. 8 OF THE PAPER BOOK). THESE FACTS WERE REITERATED DURING THE ASSESSMENT PROCEEDINGS IN REP LY TO QUESTIONNAIRE ISSUED U/S 142(1) THROUGH POINT NO. 2. COPY OF THE SAID SUBMISSION IS ENCLOSED AT PAGE NO. 17 TO 21 , SPECIFIC REFERENCE TO PAGE NO. 19 . SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 33 THESE FACTS WERE ALSO BROUGHT TO THE KNOWLEDGE OF T HE AO DURING THE PENALTY PROCEEDINGS THROUGH THE WRITTEN SUBMISSION VIDE POINT NO. 2, 8 & 9. COPY OF THE SAID SUBMISSION IS ENCLOSED AT PAGE NO. 30 TO 35 . IT IS IMPORTANT TO POINT OUT THAT THE FACT THAT THE SAID INCOME WAS ALREADY DISCLOSED TO THE DEPARTMENT BEFORE THE SEARCH HAS N OT BEEN DISPUTED AT ANY STAGE. THE PROVISION OF SECTION 271AAB IS APPLICABLE ONLY WHEN THERE IS UNDISCLOSED INCOME. THE TERM 'UNDISCLOSED INCOME' H AS BEEN DEFINED IN EXPLANATIONS TO SECTION 271AAB. THE INCOME ALREADY DISCLOSED BY THE APPELLANT PRIOR TO THE SEARCH IS NOT COVERED WITHIN THE AMBIT AND SCOPE OF UNDISCLOSED INCOME. SINCE THE APPELLANT HAS OFFERED THE SAID AMOUNT DURING THE SURVEY, PRIOR TO THE SEARCH, PENALTY U/S 271AAB CANNOT BE LEVIED. IT IS SUBMITTED THAT IF THE ADVANCE TAX IS PAID IN RESPECT OF CERTAIN INCOME AND THE RETURN IS NOT FILED TILL THE DATE OF SEARCH , THE SAID INCOME CANNOT BE CLOTHED AS AN UNDISCLOSED INCOME, MERELY FOR THE REASON THAT THE RETURN WAS NOT FILED TILL THE DATE OF SEARCH. THE A DVANCE TAX REFLECTS THE INCOME ADMITTED BY THE ASSESSEE DULY RECORDED IN TH E BOOKS OF ACCOUNTS. THE APPELLANT PLACES RELIANCE ON THE FOLLOWING JUDI CIAL PRONOUNCEMENTS FOR THIS PROPOSITION: I. HONBLE HIGH COURT OF MADRAS IN THE CASE OF ASSTT. CIT V. A R ENTERPRISES (2005) 274 ITR 110 WHERE IT WAS HELD THAT ASSESSEE HAVING PAID ADVANCE TAX, INCOME OF RELEVANT ASSESS MENT YEAR COULD NOT BE TREATED AS UNDISCLOSED INCOME IN BLOCK ASSE SSMENT EVEN THOUGH NO RETURN WAS FILED TILL THE DATE OF SEARCH . II. HONBLE HIGH COURT OF GAUHATI IN THE CASE OF DR. (M RS.) ALAKA GOSWAMI V. CIT (2004) 138 TAXMAN 212/ 268 ITR 178 WHERE IT SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 34 WAS HELD THAT THE INCOME DISCLOSED ON ACCOUNT OF P AYMENT OF THE ADVANCE TAX CANNOT BE HELD TO BE UNDISCLOSED INCOM E FOR THE PURPOSES OF BLOCK ASSESSMENT. THE APPEALS OF THE A SSESSEES ARE ALLOWED TO THAT EXTENT AND THE ASSESSMENT ORDERS W OULD BE MODIFIED TAKING THE INCOME ON PAYMENT OF ADVANCE T AX AS DISCLOSED INCOME AND NOT AS THE UNDISCLOSED INCOME. III. HONBLE HIGH COURT OF MADRAS IN THE CASE OFCIT V. K ERALA ROADWAYS LTD. [(2010) 322 ITR 609 WHERE IT WAS HELD THAT WHERE THE RETURN IS FILED THOUGH AFTER SEARCH SHOWING IN COME IN RESPECT OF WHICH ADVANCE TAX AND SELF- ASSESSMENT TAX HAS BEE N PAID AND TAX HAD BEEN DEDUCTED AT SOURCE, SUCH INCOME COULD NOT BE TREATED AS UNDISCLOSED INCOME. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE LEAR NED AO ERRED IN LEVYING THE PENALTY U/S 271AAB ON INCOME OF RS. 224 LACS, W HICH STOOD ALREADY OFFERED IN THE SURVEY U/S 133A, MUCH BEFORE THE DAT E OF SEARCH U/S 132 ON WHICH NOT ONLY ADVANCE TAX WAS ALSO PAID, BUT TH E SAID INCOME WAS DULY RECORDED IN THE BOOKS OF ACCOUNTS AND WAS DEPO SITED IN THE REGULAR BANK ACCOUNT OF THE APPELLANT AND WAS ALSO SHOWN IN THE RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE ACT CANNOT , UNDER ANY CIRCUMSTANCES, BE ROPED INTO THE CLUTCHES OF UNDISC LOSED INCOME, AS DEFINED IN THE EXPLANATION (C) TO SECTION 271AAB. THE LEARNED CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED ON INCOME OF RS. 224 LACS WHICH WAS OFFERED UNDER SECTION 133A O N THE GROUND THAT IT DOES NOT ATTRACT ANY PENALTY U/S 271AAB IN VIEW OF THE DEFINITION OF UNDISCLOSED INCOME GIVEN IN EXPLANATION (C) OF SECT ION 271AAB. THE APPELLANT PLACES HEAVY RELIANCE ON THE ORDER OF LEA RNED CIT(A) AND PRAYS THAT THE SAME BE UPHELD AND THE DEPARTMENTAL APPEAL BE DISMISSED. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 35 WITH REGARD TO THE ADDITIONAL INCOME OF RS. 1,11,40 ,876/- (78,40,876+33,00,000) THE ABOVE INCOMES IN THE HANDS OF THE APPELLANT FOR THIS YEAR WERE OFFERED RELATING TO THE HOUSE RENOVATION AND CONSTR UCTION EXPENSES OF RS. 78,40,876/- AND ALSO RELATING TO AMOUNTS ADVANCED I N THE MARKET ON INTEREST OF RS. 33,00,000/- FOUND NOTED ON VARIOUS LPS. COMPLETE DETAIL OF THE SAME IS ALREADY ON RECORD AND IS UNDISPUTED. IT IS SUBMITTED THAT THE INCOME SO OFFERED U/S 132(4) WAS NOT ONLY ACCEP TED BY THE INVESTIGATION WING BUT THE SAID INCOME OFFERED IN T HE RETURN AS BUSINESS INCOME WAS ALSO ACCEPTED DURING THE ASSESSMENT PROC EEDINGS. IT IS ALSO SUBMITTED THAT THE REQUISITE SATISFACTIO N IS NOT DRAWN EVEN IN THE PENALTY ORDER AS WHILE CALCULATING THE AMOUNT O F PENALTY IN PARA 9 EMPHASIS HAS BEEN LAID ON CONCEALED INCOME WHICH CONCEPT IS RELEVANT ONLY IN THE CASE OF PENALTY U/S 271(1)(C) AND NOT U /S 271AAB. WITHOUT PREJUDICE TO THE ABOVE BASIC CONTENTIONS TH AT PENALTY IS NOT AT ALL LEVIABLE IN THIS CASE, IT IS SUBMITTED THAT THE AO HAS LEVIED PENALTY U/S 271AAB(1)(C) WHICH IS THE RESIDUARY CLAUSE NOT COVE RED BY PROVISIONS OF CLAUSES (A) AND (B) TO SECTION 271AAB(1). IT IS SUB MITTED THAT SINCE THE APPELLANT ADMITTED THE INCOME U/S 132(4), PAID THE DUE TAXES ALONG WITH INTEREST AND FURNISHED THE RETURN OF INCOME DECLARI NG SUCH INCOME AS BUSINESS INCOME AND ALSO SPECIFIED THE MANNER IN WH ICH SUCH INCOME WAS DERIVED, IN ANY CASE CANNOT BE ROPED INTO THE C LUTCHES OF SECTION 271AAB(1)(C) WHICH PRESCRIBES THE MAXIMUM PENALTY L EVIABLE. FOR THIS REASON ALSO THE PENALTY LEVIED BY THE AO U PON THE APPELLANT UNDER CLAUSE (C) TO SECTION 271AAB(1) IS WRONG AND UNCALLED FOR AND PRAYED TO BE DELETED. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 36 FURTHER, THE LEARNED CIT(A) ERRED IN CONFIRMING THE PENALTY TO THE EXTENT OF 10% WHEREAS THE LEARNED AO LEVIED THE PENALTY UN DER CLAUSE (C) OF SECTION 271AAB(1) WHICH ITSELF INDICATE THAT THE LE ARNED AO LEVIED THE PENALTY IN A MECHANICAL MANNER AND WITHOUT REQUISIT E SATISFACTION. THEREFORE, THE PENALTY LEVIED BY THE AO IS UNCALLED FOR AND PRAYED TO BE DELETED. THE PENALTY U/S 271AAB IS NEITHER AUTOMATIC NOR MAN DATORY AND IS PURELY DISCRETIONARY. CONSIDERING THE OVERALL CONDU CT OF THE APPELLANT OF HONOURING THE OFFER OF ADDITIONAL INCOME IN LETTER AND SPIRIT AND TIMELY PAYMENT OF TAXES AND ALSO CONSIDERING THE COOPERATI ON EXTENDED DURING THE SEARCH PROCEEDINGS AND ALSO DURING THE ASSESSME NT PROCEEDINGS, THE DISCRETIONARY PENALTY OUGHT NOT TO HAVE BEEN LEVIED . FOR THE PROPOSITION THAT PENALTY U/S 271AAB IS DISC RETIONARY AND NOT MANDATORY, THE APPELLANT PLACES RELIANCE ON THE FOL LOWING: (I) ACIT V/S MARVEL ASSOCIATES (ITAT VIZAG) ITA NO. 147 /VIZAG/2017 DATED 16.03.2018. (PARA 7) (II) SHRI RAVI MATHUR V/S DCIT CENTRAL JAIPUR (JAIPUR IT AT) ITA NO. 969/JP/2017 DATED 13.06.2018 FOR AY 2015-16. (PARA 4,5 & 6) (III) SURESH CHAND MITTAL V/S DCIT CENTRAL 2 JAIPUR (ITAT JAIPUR) ITA NO. 931/JP/2017 AY 2014-15, DATED 02.07.2018. (PAR A 6) IN VIEW OF THE ABOVE THE APPELLANT SUBMITS THAT THE PENALTY LEVIED IS UNCALLED FOR AND PRAYS THE SAME TO BE DELETED. THE APPELLANT WISHES TO SUMMARIES ITS SUBMISSION AS UNDER: A. THE NOTICE ISSUED U/S 274 WAS NOT VALID AS SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 37 (I) IT SPECIFIED THE WRONG CHARGES OF CONCEALMENT OF I NCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WH ICH CHARGES ARE NOT AT ALL APPLICABLE FOR THE PURPOSES OF SECTION 271AAB. (II) IT DID NOT SPECIFIED THE FACT OF UNDISCLOSED INCOM E (III) IT DID NOT MENTIONED THE SPECIFIC CLAUSE OF SECTION 271AAB OUT OF THE THREE CLAUSES (A) OR (B) OR (C) PRESCRIBING DIF FERENT RATES OF PENALTY (IV) THE PENALTY U/S 271AAB WAS LEVIED BY THE AO UNDER C LAUSE (C ) TO SECTION 271AAB(1), WHICH IS NOT MENTIONED IN THE SH OW CAUSE. (V) THE PENALTY U/S 271AAB HAS BEEN CONFIRMED BY THE LE ARNED CIT(A) UNDER CLAUSE (A) TO SECTION 271AAB(1), FOR WHICH NO NOTICE WAS EVER ISSUED TO THE APPELLANT. B. PENALTY U/S 271AAB(1)(C) LEVIED BY THE AO IS WRONG AS (I) THE APPELLANT SPECIFIED THE MANNER OF EARNING INCOM E AND OFFERED THE SAME AS BUSINESS INCOME, WHICH WAS ACCEPTED BY THE AO WITHOUT ANY OBJECTION. (II) THE APPELLANT WAS NEVER CALLED UPON AT ANY STAGE TO FURTHER EXPLAIN AND SUBSTANTIATE THE SAID INCOME AND IT WAS ACCEPTE D MERELY ON THE BASIS OF OFFERING OF THE APPELLANT. C. THE PENALTY U/S 271AAB NEITHER MANDATORY NOT AUTOMA TIC AND IS PURELY DISCRETIONARY OUGHT NOT TO HAVE BEEN LEVIED CONSIDERING THE OVERALL CONDUCT OF THE APPELLANT AND OTHER FACTS AND CIRCUM STANCES OF THE CASE. THAT THE INAPPLICABILITY OF MIND WHILE ISSUING THE STATUTORY NOTICE U/S 274 R.W.S. 271AAB CLUBBED WITH THE VAGUE ALLEGATION WHILE LEVYING THE PENALTY THAT THE APPELLANT FAILED TO SPECIFY THE MA NNER IN WHICH INCOME IS DERIVED AND IMPOSITION OF PENALTY ON THE INCOME OFFERED IN THE RETURN FILED U/S 153A WITHOUT ANY QUERIES RAISED IN THE SE ARCH AS WELL AS PENALTY PROCEEDINGS BRINGS THE APPELLANT OUT OF THE CLUTCHES OF THE SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 38 SECTION 271AAB AND THEREFORE THE ORDER PASSED AND T HE PENALTY IMPOSED IS WRONG, UNCALLED FOR AND PRAYED TO BE DELETED. 11. LD. DEPARTMENTAL REPRESENTATIVE OPPOSED THE SUBMISS IONS AND SUBMITTED THAT THE ASSESSEE HAS NOT RAISED ANY OBJE CTION BEFORE THE AUTHORITIES BELOW. HE FURTHER CONTENDED THAT MERELY A DEFECTIVE NOTICE SHOULD NOT BE THE REASON OF QUASHING THE PEN ALTY PROCEEDINGS WHEN THE ASSESSEE HIMSELF HAS PARTICIPA TED INTO THE PROCEEDINGS. IN SUPPORT LD. DR RELIED UPON THE JUD GMENT OF HONBLE MADRAS HIGH COURT RENDERED IN THE CASE OF SUNDARAM FINANCE LTD V/S ACIT. 12. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE JUD GMENTS RELIED BY BOTH THE PARTIES. IN THIS BUNCH OF SEVEN APPEALS F ILED BY VARIOUS ASSESSEE(S) COMMON TWO ISSUES HAVE BEEN RAISED. FI RSTLY LEGAL ISSUE CHALLENGING THE VALIDITY OF PENALTY PROCEEDINGS INI TIATED U/S 271AAB OF THE ACT BEING BAD IN LAW SINCE THE NOTICE ISSUED U/S 274 R.W.S 271AAB OF THE ACT DO NOT FULFILL THE REQUIREMENT OF LAW. SECOND COMMON ISSUE IS ON MERITS CHALLENGING THE ACTION OF LD. CIT(A) SUSTAINING THE PENALTY U/S 271AAB(A) @10% OF THE UN DISCLOSED SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 39 INCOME SURRENDERED DURING THE COURSE OF SEARCH COND UCTED U/S 132 OF THE ACT ON 4.9.15. 13. WE WILL FIRST TAKE UP THE LEGAL ISSUE CHALLENGI NG THE LEGALITY OF PENALTY PROCEEDINGS INITIATED BY ISSUING NOTICE U/S 274 R.W.S. 271AAB OF THE ACT. AT THE FIRST APPELLATE STAGE TH E ASSESSEE WAS NOT ABLE TO SUCCEED ON THE LEGAL GROUND AS LD. CIT(A) D ECIDED AGAINST THE ASSESSEES OBSERVING AS FOLLOWS:- 4.1 GROUND NO. 1 :_ THROUGH THIS GROUND OF APPEAL, THE APPELLANT HAS CHALLENGED THE INITIATION OF THE PENALTY PROCEEDING S AND IT HAS BEEN POINTED OUT THAT THE PENALTY NOTICE ISSUED IS VAGUE AND IS NOT M CONFORMITY WITH LAW AS THE SAME IS ISSUED ON THE CH ARGES FOR LEVY OF PENALTY U/S 271(1)(C). A COPY OF THE PENALTY NOTICE ISSUED IS PLACED ON PAGE 29 OF THE PAPER BOOK, REFERRING TO WHICH IT WA S POINTED OUT THAT THE NOTICE IN THIS CASE WAS ISSUED U/S 274 R.W.S. 271AA B, HOWEVER, IT WAS MENTIONED THAT THE ASSESSEE HAS CONCEALED THE PARTI CULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS CONTENDED THAT THE CHARGES 'CONCEALMENT OF PARTICULARS OF INCOME' OR ' FURNISHING INACCURATE PARTICULARS OF INCOME' ARE APPLICABLE ONLY FOR PENA LTIES INITIATED U/S 271(1)(C) AND NOT FOR PENALTIES INITIATED U/S 271AA B AND THEREFORE, THE PENALTY SHOW CAUSE NOTICE ISSUED IN THIS CASE IS BA D IN LAW. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 40 IT IS ALSO CONTENDED THAT THERE ARE VARIOUS SUB-SEC TION AND CLAUSES SPECIFYING DIFFERENT CHARGES AND PRESCRIBING DIFFER ENT RATES OF PENALTY U/S 271AAB, HOWEVER, NO SPECIFIC SUB-SECTION OR CLAUSE OF SECTION 271AAB WAS MENTIONED IN THE NOTICE SO AS TO UNABLE THE APP ELLANT TO MEET THE SPECIFIC CHARGE DURING THE PENALTY PROCEEDINGS. THUS IT IS CONTENDED THAT THE PENALTY NOTICE ISSUED U/S 271 AAB WAS AKIN TO NOTICE U/S 271(1)(C) WHERE THE LIMBS OF SECTION 271(1)(C) WERE MENTIONED BUT THE LIMBS OF SECTION 271AAB WERE NOT MENTIONED. THE APPELLANT, THEN SOUGHT TO DRAW SUPPORT FROM VARIOUS CASE LAWS AS ME NTIONED IN THE SUBMISSION ALREADY ABSTRACTED ABOVE. THE APPELLANT ALSO PLACED HEAVY RELIANCE ON THE DECISION OF HONOURABLE MP HIGH COUR T IN THE CASE OF KULWANT SINGH BHATIA IT - 9 TO 14 OF 2018 (MP), WHE REIN IN CONTEXT OF PENALTY U/S 271(1)(C), IT WAS HELD BY THE HONOURABL E HIGH COURT THAT THE GROUNDS MENTIONED IN THE SHOW CAUSE NOTICE DOES NOT SATISFIES THE REQUIREMENT OF LAW AS THE NOTICE WAS NOT SPECIFIC. DRAWING SUPPORT FROM THIS DECISION THE APPELLANT CONTENDED THAT THE PRES ENT APPEAL IS SQUARELY COVERED BY THE PROPOSITION RENDERED BY THE JURISDIC TIONAL HIGH COURT. AFTER DUE CONSIDERATION OF THE VARIOUS CONTENTIONS RAISED BY THE APPELLANT, I FIND THAT THE APPELLANT DOES NOT GET SUPPORT FROM THE RATIO DECIDED BY THE HONOURABLE MP HIGH COURT AS THE SAME WAS RENDERED I N THE CONTEXT OF PENALTY LEVIED U/S 271(1)(C) AND NOT U/S 27 1AAB, AS IN THE INSTANT CASE. I ALSO FIND THAT THE AO HAS ISSUED NOTICE U/S 274 R.W .S. 271AAB AND THEREFORE, THE CHALLENGE OF THE APPELLANT IN RESPEC T OF THE INITIATION OF THE PENALTY PROCEEDINGS UNDER WRONG SECTION IS NOT VALI D. ACCORDINGLY THIS GROUND OF APPEAL IS DISMISSED . SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 41 14. FOR ADJUDICATING THE LEGAL ISSUE IN DETAIL, WE FIRST NEED TO LOOK INTO THE PENALTY NOTICES ISSUED TO THE ASSESSEE(S). IT IS ACCEPTED BY BOTH THE PARTIES THAT SIMILAR TYPE OF NOTICES HAS B EEN ISSUED U/S 274 R.2.S. 271AAB IN ALL THESE CASES. WE ARE THERE FORE REPRODUCING BELOW THE NOTICE ISSUED IN THE CASE OF SMT. RAJRANI MITTAL FOR ASSESSMENT YEAR 2015-16:- OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL)-I, IND ORE PAN. AGLPM0530E DATE: 30/11/2017 TO SMT. RAJRANI MITTAL, 15A/22, MANAK, Y.N. ROAD INDORE-452001 NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB O F THE INCOME TAX ACT, 1961 WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2015-16 IT APPEARS TO ME THAT YOU :- HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME ON 29. 12.2017 AT 11.00 AM AND SHOW CAUSE WHY AN ORDER IMPOSING A PEN ALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271AAB OF THE INCO ME TAX ACT 1961 IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNI TY OF BEARING HEARD IN PERSON OR THROUGH AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SIDE DATE WHICH WILL BE CO NSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271AAB. SD/- ((P.K. SINGI) DY. COMMISSIO NER OF INCOME TAX (CENTRAL)-1 INDORE SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 42 15. DURING THE COURSE OF HEARING LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE LEGAL ISSUE RAISED IN THESE BUNC H OF APPEALS IS SQUARELY COVERED BY TWO LATEST DECISION OF THE I.T. A.T. INDORE BENCH IN THE CASE OF DR. RAJESH JAIN (SUPRA) AND VIVEK CHUGH (SUPRA) WHEREIN THE TRIBUNAL HAS CONSIDERED VARIOUS JUDGMEN TS RENDERED BY HON'BLE JURISDICTIONAL HIGH COURT AND DECISIONS OF OTHER TRIBUNALS. 16. WE HAVE GONE THROUGH THE DECISION OF THE TRIBUN AL IN THE CASE OF DR. RAJESH JAIN (SUPRA) AND AFTER EXAMINING THE FACT FIND THAT THE FACTS ARE VERBATIM SIMILAR WHEREIN DEFECTIVE NOTICE WAS ISSUED U/S 274 R.W.S. 271AAB OF THE ACT, WITHOUT SPECIFYING T HE CHARGES FOR WHICH PENALTY PROCEEDINGS WERE INITIATED. IN OTHER WORDS IN THE NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT ASSE SSEE HAS NOT BEEN GIVEN AN OPPORTUNITY TO OFFER EXPLANATION AGAI NST THE TYPE OF PENALTY TO BE LEVIED I.E. WHETHER THE PENALTY IS TO BE UNDER CLAUSE (A), (B) OR (C) OF SECTION 271AAB. THE TRIBUNAL HAS QUASHED THE PENALTY PROCEEDINGS FOR THE DEFECTIVE NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT OBSERVING AS FOLLOWS:- 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RE CORDS PLACED BEFORE US. THE LEGAL ISSUE BEFORE US IS THAT WHETHE R THE NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT SUFFERS FROM FATAL ERR OR AND TECHNICAL DEFECT SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 43 THEREBY NOT PROVIDING AN OPPORTUNITY TO THE ASSESSE E TO PLEAD HER CASE. SINCE THE LEGAL GROUND GOES TO BE ROOT CAUSE OF THE ISSUE LEVYING PENALTY U/S 271AAB OF THE ACT, WE IN VIEW OF THE RATIO HELD BY THE HON'BLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER COMPANY LIMITED (SUPRA) ADMIT THE ADDITIONAL LEGAL GROUND FOR ADJUDICATION. FOR LEVYING PENALTY U/S 271AAB OF THE ACT THE LD. A.O NEEDS TO PRIMARIL Y ISSUE NOTICE U/S 274 OF THE ACT SO FOR INITIATING PROCEEDINGS U/S 271AAB OF THE ACT THE LD. A.O HAS TO FIRST PASS THROUGH THE HURDLE OF SECTION 274 OF THE ACT. FOR BETTER UNDERSTANDING WE REPRODUCE THE PROVISIONS OF SECTIO N 271AAB AND 274 OF THE ACT WHICH READS AS FOLLOWS:- SECTION 271AAB. '271AAB. PENALTY WHERE SEARCH HAS BEEN INITIATED.( 1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS B EEN 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, PAYA BLE 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 UN DER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCL OSED 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 SPECIFI ED 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 ASSE SSEE SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 44 (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UN DER SUB-SECTION (4) OF SECTION 132, DOES NOT ADMIT THE UNDISCLOSED INCOME; AND (II) ON OR BEFORE THE SPECIFIED DATE (A) DECLARES SUCH INCOME IN THE RETURN OF INCOME F URNISHED FOR THE SPECIFIED PREVIOUS YEAR; AND (B) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME; (C) A SUM WHICH SHALL NOT BE LESS THAN THIRTY PER CENT BUT WHICH SHALL NOT EXCEED NINETY PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF IT IS NOT COVERED BY THE PROVISIONS OF CLA USES (A) AND (B). (2) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT O F THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (3) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, A S FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECT ION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) 'SPECIFIED DATE' MEANS THE DUE DATE OF FURNISH ING OF RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 OR THE DATE ON WHICH THE PERIOD SPECIFIED IN THE NOTICE ISSUED UNDER SECTION 153A F OR FURNISHING OF RETURN OF INCOME EXPIRES, AS THE CASE MAY BE; (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS Y EAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTI ON 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSES SEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE T HE DATE OF SEARCH; OR (II) IN WHICH SEARCH WAS CONDUCTED; (C) 'UNDISCLOSED INCOME' MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER V ALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT S OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 45 (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEAR CH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMM ISSIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECOR DED 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 CONDUCT ED.'. SECTION 274 (1) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHA LL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD, OR HAS BEEN GIVEN A RE ASONABLE OPPORTUNITY OF BEING HEARD. (2) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHA LL BE MADE- (A) BY THE INCOME- TAX OFFICER, WHERE THE PENALTY EXCE EDS TEN THOUSAND RUPEES; (B) BY THE ASSISTANT COMMISSIONER, WHERE THE PENALTY E XCEEDS 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 ASSESS ING OFFICER, SHALL FORTHWITH SEND A COPY OF SUCH ORDER TO THE ASSESSIN G OFFICER'] 9. FROM PERUSAL OF THE ABOVE PROVISION WE OBSERVE THA T SUB SECTION 3 OF SECTION 271AAB OF THE ACT TALKS ABOUT ISSUING THE N OTICE 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. A.O IS TO ISSUE A VA LID NOTICE U/S 274 OF THE ACT. SUB-SECTION (1) TO SECTION 274 OF THE ACT PROV IDES A PROCEDURE THAT NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHALL B E MADE UNLESS THE SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 46 ASSESSEE HAS BEEN HEARD, OR HAS BEEN GIVEN A REASON ABLE OPPORTUNITY OF BEING HEARD. TO COMPLY WITH THIS REQUIREMENT THE N OTICE U/S 274 SHOULD BE CLEAR ENOUGH TO CONVEY THE ASSESSEE ABOUT THE CH ARGE WHICH IS TO BE LEVELED AGAINST HIM/HER/IT FOR LEVYING THE PENALTY FOR THE CONTRAVENTION OF THE RELATED PROVISIONS OF THE ACT WHICH IN THE INST ANT CASE RELATES TO NOT SURRENDERING OF UNDISCLOSED AMOUNT DURING THE COURS E OF SEARCH WHICH IS SUBSEQUENTLY ADMITTED DURING THE COURSE OF ASSESSME NT AND NOT CHALLENGED BEFORE THE LD. CIT(A). SO IT WAS INCUMBE NT FOR LD. A.O THAT IN THE NOTICE ISSUED U/S 274 OF THE ACT HE SHOULD HAVE MENTIONED THAT PENALTY U/S 271AAB OF THE ACT MAY BE LEVIED @10/20/ 30% SINCE THE ASSESSEE FALLS IN CLAUSES (A)/(B)/(C) OF SECTION 27 1AAB OF THE ACT. HE SHOULD HAVE FURTHER MENTIONED THAT AS THE ASSESSEES CASE FALLS UNDER CLAUSE-C OF SECTION 271AAB OF THE ACT, WHY SHE SHOU LD NOT BE VISITED BY PENALTY @30% OF THE UNDISCLOSED INCOME. AGAINST TH IS CHARGE THE ASSESSEE SHOULD HAVE BEEN GIVEN A REASONABLE OPPORT UNITY OF BEING HEARD. 10. NOW LET US REVERT BACK TO THE FACT OF THE INSTANT CASE OF THE ASSESSEE AND LOOK INTO AS TO WHAT IS MENTIONED IN THE ALLEGE D NOTICES ISSUED U/S 274 R.W.S. 271AAB OF THE ACT. NOTICE IS REPRODUCED BELOW; NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB O F THE INCOME TAX ACT, 1961 PAN. ABTPJ0870H OFFICE OF THE ASSTT. COMMISSIKONER OF INCOME TAX (CENTRAL)-I, IND ORE DATE: 22.03.2016 TO DR. RAJESH JAIN, E-63 SAKET, INDORE-452001 WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2014-15 IT APPEARS TO ME THAT YOU :- SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 47 *HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WITH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVEN UNDE R SECTION 22(1)/22(2)/34 OF THE INDIA INCOME TAX ACT, 1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 193(1) OR BY A NO TICE GIVEN UNDER SECTION 193(2)/148 OF THE INCOME TAX ACT 1961, NO. . DATED .. OR HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH IT WITHIN THE AL LOWED AND THE MANNER REQUIRED BY THE SIDE SECTION 139(1) OR BY SUCH NOTI CE. *HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WIT H A NOTICE UNDER SECTION 22(4)/23(2) OF THE INDIA INCOME TAX ACT, 19 22 OR UNDER SECTION 142(1)/143(2) OF THE INCOME TAX ACT 1961, NO. DATED HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME ON 21. 04.2016 AT 04.00 PM AND SHOW CAUSE WHY AN ORDER IMPOSING A PEN ALTY ON 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 B EARING HEARD IN PERSON OR THROUGH AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUS E IN WRITING ON OR BEFORE THE SIDE DATE WHICH WILL BE CONSIDERED BEFOR E ANY SUCH ORDER IS MADE UNDER SECTION 271AAB. SD/- (AMIT KUMAR SONI) ASSTT. COMMIS SIONER OF INCOME TAX (CENTRAL)-1 INDORE 11. FROM GOING THROUGH THE ABOVE NOTICE ISSUED TO THE ASSESSEE, WE FIND THAT THERE IS NO MENTION ABOUT VARIOUS CONDITIONS P ROVIDED U/S 271 AAB OF SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 48 THE ACT. IN THE NOTICE DATED 22.03.2016 THE LD. A.O 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. IT DOES NOT TALK ANYTHING A BOUT VARIOUS CLAUSES OF SECTION 271AAB OF THE ACT FOR LEVYING PENALTY @10%/ 20%/30%. CERTAINLY SUCH NOTICE HAS A FATAL ERROR AND TECHNICALLY IS NO T A CORRECT NOTICE IN THE EYES OF LAW BECAUSE IT INTENDS TO PENALIZE AN ASSES SEE WITHOUT SPELLING ABOUT THE SPECIFIC CHARGE AGAINST THE ASSESSEE. 12. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF P CIT V/S KULWANT SINGH BHATIA (SUPRA) DEALT THE ISSUE OF DEFECTIVE N OTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT AND HON'BLE COURT AFTER RELYING JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT V/S MANJUN ATHA COTTON GINNING FACTORY AND CIT V/S SSAS EMERALD MEADOWS (SUPRA) H ELD THAT SUCH SHOW CAUSE NOTICES WOULD NOT SATISFY THE REQUIREMENT OF LAW AS NOTICE WAS NOT SPECIFIC. MERELY ISSUING NOTICE IN GENERAL PROFORM A WILL NEGATE THE VERY PURPOSE OF NATURAL JUSTICE. HON'BLE APEX COURT IN THE CASE OF DILIP N SHRAF 161 TAXMANN 218 HELD THAT THE QUASI CRIMINAL PROCE EDINGS U/S 271(1)(C) OF THE ACT OUGHT TO COMPLY WITH THE PRINCIPLES OF N ATURAL JUSTICE. 13. IN THE CASE OF DCIT V/S R. ELANGOVAN LTD (SUPRA) , CO-ORDINATE BENCH, CHENNAI WHILE DEALING WITH THE LEGAL GROUND CHALLENGING THE VALIDITY OF NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT HAD OBSERVED THAT ; IT IS CLEAR FROM THE SUB SECTION (3) OF SECTION 27 1 AAB THAT SECTIONS 274 AND SECTION 275 OF THE ACT SHALL, SO FAR AS MAY BE, APPLY. SUB SECTION (1) OF SECTION 274 OF THE ACT MANDATES THAT ORDER IMPOS ING PENALTY HAS TO BE IMPOSED ONLY AFTER HEARING THE ASSESSEE OR GIVING A ASSESSEE OPPORTUNITY OF HEARING. OPPORTUNITY THAT IS TO BE GIVEN TO THE ASSESSEE SHOULD BE A MEANINGFUL ONE AND NOT A FARCE. NOTICE ISSUED TO TH E ASSESSEE REPRODUCED (SUPRA), DOES NOT SHOW WHETHER PENALTY PROCEEDINGS WERE INITIATED FOR SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 49 CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR HAVING UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAB OF THE ACT. NOTICE IN OUR OPINION WAS VAGUE. HON'BLE K ARNATAKA HIGH COURT IN THE CASE OF SSA'S EMERALD MEADOWS (SUPRA) RELYING I N ITS OWN JUDGMENT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY ( SUPRA) HAD HELD AS UNDER:- '2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWING SU BSTANTIAL QUESTIONS OF LAW. (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITL Y MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF I NACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY OR DER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND RE ASONABLE 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 JUSTIFIED IN LAW IN HOLDING THAT THE PENALTY NO TICE UNDER SECTION 274 R.W.S. 271(1)(C) IS BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 271 (1 B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECORDING 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 APPEALS AGAINST THE R EVENUE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPE CIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 50 271 (1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT ' THE ACT,) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271 (1 )(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELI ED 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 JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBS TANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COU RT. THE APPEAL IS ACCORDINGLY DISMISSED'. IN THE EARLIER CASE OF MANJUNATHA COTTON AND GINNIN G 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 INCORREC T 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 T O MEET SPECIFICALLY. OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE ARE OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENA LTY COULD BE IMPOSED ON THE ASSESSEE) TAKING UP OF PENALTY PROCE EDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIM B IS BAD IN LAW; PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMEN T PROCEEDINGS : THOUGH PROCEEDINGS FOR IMPOSITION OF PENALTY EMANAT E FROM PROCEEDINGS OF ASSESSMENT, THEY ARE INDEPENDENT AND A SEPARATE ASPECT OF THE PROCEEDINGS; SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 51 THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORREC T PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PR OCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE PROCEEDINGS ON THE MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESS MENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSM ENT CANNOT BE DECLARED INVALID IN THE PENALTY PROCEEDINGS'. VIEW TAKEN BY THE HON'BLE KARNATAKA HIGH COURT IN T HE ABOVE JUDGMENT WAS INDIRECTLY AFFIRMED BY THE HON'BLE APEX COURT, WHEN IT DISMISSED AN SLP FILED BY THE REVENUE AGAINST THE JUDGMENT IN TH E CASE OF SSA'S EMERALD MEADOWS (SUPRA), SPECIFICALLY OBSERVING THA T THERE WAS NO MERITS IN THE PETITION FILED BY THE REVENUE. CONSIDERING T HE ABOVE CITED JUDGMENTS, WE HOLD THAT THE NOTICE ISSUED UJS.274 R .W.S. 271AAB OF THE ACT, REPRODUCED BY US AT PARA 5 ABOVE WAS NOT VALID . EX-CONSEQUENTI, THE PENALTY ORDER IS SET ASIDE. 14. THE VIEW TAKEN BY THE CO-ORDINATE BENCH OF CHENNAI IN THE CASE OF DCIT V/S R. ELANGOVAN 1199/CHNY/2017 ORDER DATED 05 .04.2018 HAS BEEN SUBSEQUENTLY FOLLOWED BY THE CO-ORDINATE BENCH OF JAIPUR IN THE CASE OF RAVI MATHUR VS. DCIT, ITA NO.969/JP/2017 HO LDING THAT SUCH SHOW CAUSE NOTICE ISSUED U/S 274 R.W.S. 271AAB OF T HE ACT ARE NOT SUSTAINABLE IN LAW. 15. AS REGARDS TO JUDGMENT OF HON'BLE ALLAHABAD HIGH C OURT IN THE CASE OF PR. CIT VS SANDEEP CHANDAK (SUPRA) WHICH HAS BEE N RELIED BY THE DEPARTMENTAL REPRESENTATIVE IS CONCERNED, WE FIND T HAT IN THE DECISION RENDERED BY THE CO-ORDINATE BENCH OF JAIPUR IN THE CASE OF RAVI MATHUR VS DCIT (SUPRA) WHEREIN ALSO SIMILAR ISSUE OF DEFECTIV E NOTICE U/S 274 R.W.S. 271AAB WAS ADJUDICATED, THE JUDGMENT OF HON'BLE ALL AHABAD HIGH COURT IN THE CASE OF PR. CIT VS SANDEEP CHANDAK (SUPRA) H AS BEEN DISCUSSED SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 52 AND DISTINGUISHED OBSERVING AS FOLLOWS:- IT IS FURTHER SUBMITTED THAT IN PARA 5 OF THIS JUDG MENT (RAVI MATHUR), THE CASE QUOTED BY LD CIT(A) PR. CIT VS SANDEEP CHANDAK (ALL.) WAS DISTINGUISHED AS UNDER: 5. BEFORE WE PROCEED FURTHER, THE DECISIONS RELIED UPON BY THE LD D/R ARE TO BE CONSIDERED. IN THE CASE OF PRINCIPAL CIT VS S ANDEEP CHANDAK & OTHERS [TS-6389-HC-2017(ALLAHABAD)-O] (SUPRA) THE I SSUE BEFORE THE HONBLE HIGH COURT WAS THE DEFECT IN THE NOTICE ISS UED UNDER SECTION 271AAB ON ACCOUNT MENTIONING WRONG PROVISION OF THE ACT BEING 271(1)(C) OF THE ACT. THE HONBLE HIGH COURT AFTER CONSIDERIN G THE FACT THAT THE SHOW CAUSE NOTICE ISSUED BY THE AO THOUGH MENTIONS SECTI ON 271(1) IN THE CAPTION OF THE SAID NOTICE, HOWEVER, THE BODY OF TH E SHOW CAUSE NOTICE CLEARLY MENTIONS SECTION 271AAB, WHICH WAS FULLY CO MPREHENDED BY THE ASSESSEE AS REVEALS IN THE REPLY FILED BY THE ASSES SEE AGAINST THE SAID SHOW CAUSE NOTICE. HENCE THE HONBLE HIGH COURT HAS HELD AS UNDER: - THE LD A.RS HAVE ALSO CHALLENGED THAT THE CAPTION OF THE NOTICE MENTIONED ONLY SECTION 271 AND NOT 271AAB. IN THIS RESPECT, T HE COPY OF NOTICE HAS BEEN PRODUCED BY THE LD. A.R. BEFORE ME. IT IS SEEN THAT THE LD A.R IS CORRECT IN OBSERVING THAT THE SECTION OF PENALTY HAS NOT BE EN CORRECTLY MENTIONED BY THE AO IN THE CAPTION. HOWEVER, THE AO WILL GET THE BENEFIT OF SECTION 292BB OF THE INCOME TAX ACT, 1961 BECAUSE FIRSTLY, THE ASSESSEE HAS RAISED NO OBJECTION BEFORE THE AO IN THIS REGARD. S ECONDLY, LAST LINE OF THE NOTICE CLEARLY MENTIONS SECTION 271AAB. THIRDLY, TH E ASSESSEE HAS GIVEN REPLY TO SAID NOTICE WHICH SHOWS THAT THE ASSESSEE FULLY COMPREHENDED THE IMPLICATION OF THE NOTICE THAT IT IS FOR SECTION 27 1AAB. THE ASSESSEE HAS ALSO CHALLENGED THAT THE PRINCIPLE S OF NATURAL JUSTICE HAS NOT FOLLOWED BY THE AO. THE DETAILED SUBMISSIONS OF A.R. IN THIS REGARD HAS ALREADY BEEN REPRODUCED ABOVE. THE A.R. DID NOT PRODUCE ANY EVIDENCE TO SHOW THAT HE WAS NOT GIVEN PROPER OPPOR TUNITY OF HEARING. IT IS CLEAR FROM THE PENALTY ORDER THAT THE AO HAS GIVEN NOTICE AND WHICH WAS ALSO REPLIED BY THE ASSESSEE. THEREFORE, IN MY OPIN ION, PRINCIPLE OF NATURAL SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 53 JUSTICE HAS NOT BEEN VIOLATED. THUS IN VIEW OF ABOV E DISCUSSION PENALTY IMPOSED BY AO U/S. 271AAB OF THE ACT IS CONFIRMED. THUS IT WAS FOUND BY THE HONBLE HIGH COURT THAT TH E MISTAKE IN MENTIONING THE SECTION IN THE SHOW CAUSE NOTICE IS COVERED UNDER SECTION 292BB AND THE AO WILL GET THE BENEFIT OF THE SAME. THE SAID DECISION WILL NOT HELP THE CASE OF THE REVENUE SO FAR AS THE ISSU E INVOLVES THE MERITS OF LEVY OF PENALTY UNDER SECTION 271AAB. AS REGARDS TH E DECISION OF KOLKATA BENCHES OF THE TRIBUNAL IN THE CASE OF DCIT VS AMIT AGRAWAL (TS-7675- ITAT-2017(KOLKATA)-O) (SUPRA), WE FIND THAT THE SAI D DECISION WAS SUBSEQUENTLY RECALLED BY THE TRIBUNAL AND A FRESH O RDER DATED 14 TH MARCH, 2018 WAS PASSED BY THE TRIBUNAL IN FAVOUR OF THE AS SESSEE. THEREFORE, THE DECISION RELIED UPON BY THE LD D/R IS NO MORE IN EX ISTENCE. 16. WE, THEREFORE RESPECTFULLY FOLLOWING THE JUDGMENT/ DECISION REFERRED ABOVE AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF T HE CASE 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 DESER VES TO BE QUASHED. SINCE THE PENALTY PROCEEDINGS ITSELF HAS BEEN QUASH ED THE IMPUGNED PENALTY OF RS. 2,04,900/- STANDS DELETED. WE ACCOR DINGLY ALLOW THE LEGAL GROUND RAISED BY THE ASSESSEE CHALLENGING THE VALID ITY OF NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT AND QUASH THE PENALTY PROCEEDING AS VOID AB INTIO. IN THE RESULT APPEALS OF THE ASSESSEE(S) FOR ASSESSMENT YEARS 2014- 15 IS ALLOWED ON LEGAL GROUND. 17. SINCE THE PENALTY U/S 271AAB HAS ALREADY BEEN DEA LT ON LEGAL GROUND AND DELETED ON THE PRELIMINARY LEGAL POINTS , OTHER GROUNDS AND ARGUMENTS OF THE ASSESSEE DEALING WITH THE MERITS O F THE LEVY OF PENALTY ARE NOT BEEN DEALT WITH, AS THE SAME ARE RENDERED A CADEMIC IN NATURE. THUS GROUNDS RAISED ON MERITS ARE DISMISSED AS INFR UCTUOUS. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED O N LEGAL GROUND. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 54 17. FROM PERUSAL OF THE ABOVE FINDING AND EXAMINATI ON OF THE INSTANT APPEAL WE OBSERVE THAT IN THE INSTANT CASE DEFECT IS MUCH MORE GRAVE BECAUSE IN THE PENALTY NOTICE UNDER THE HEADING OF SECTION 274 R.W.S. 271AAB OF THE ACT PRE PRINTED FO RMAT OF ISSUING NOTICE U/S 271(1)(C) OF THE ACT IS APPEARING WHICH RELATES TO LEVY OF PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE ASSESSEE S CASE LD. A.O OUGHT TO HAVE MENTIONED THE SPECIFIC CHARGES PROVID ED U/S 271AAB OF THE ACT RATHER THAN THE CHARGES OF SECTION 271(1 )(C) OF THE ACT. WE THEREFORE ARE OF THE CONSIDERED VIEW THAT THIS D ECISION OF INDORE ITAT IN THE CASE OF DR. RAJESH JAIN (SUPRA) IS SQUARELY APPLICABLE ON THE ISSUES RAISED BY THE ASSESSEE(S) IN THESE APPEA LS. 18. MOVING FURTHER WE OBSERVE THAT IN THE INSTANT C ASE LD. CIT(A) REDUCED THE PENALTY TO 10% APPLYING PROVISIONS OF S ECTION 271AAB(A) OF THE ACT AS AGAINST PENALTY LEVIED @30 % BY THE LD. A.O U/S 271AAB(C) OF THE ACT BUT TO OUR SURPRISE LD. CI T(A) HAS NOT TAKEN PAIN TO ISSUE A FRESH NOTICE BEFORE REDUCING THE PENALTY THUS NOT GIVING REASONABLE OPPORTUNITY OF BEING HEARD AS MANDATED UNDER THE PROVISO TO SECTION 275. WE FIND THAT SIMI LAR ISSUE CAME UP BEFORE US IN THE CASE OF SHRI VIVEK CHUGH V/S AC IT ITA SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 55 NO.636/IND/2017 ORDER DATED 28.03.2019 WHEREIN THE APPEAL WAS DECIDED IN FAVOUR OF THE ASSESSEE AND PENALTY PROCE EDINGS WERE QUASHED SINCE LD. CIT(A) PARTLY DELETED THE PENALTY BY CONFIRMING THE PENALTY @10% AS AGAINST 20% LEVIED BY LD. A.O U /S 271AAB OF THE ACT WITHOUT AFFORDING REASONABLE OPPORTUNITY TO THE ASSESSEE TO MAKE NECESSARY SUBMISSION OF THE EXPLANATION. SINCE THE FACTS AND ISSUES ARE SAME WE ARE REPRODUCING BELOW THE BRIEF FACTS AND DECISIONS RELIED AND THE FINDING OF COORDINATE BENC H IN THE CASE OF SHRI VIVEK CHUGH (SUPRA) ; 2. BRIEFLY STATED FACTS ARE THAT A SEARCH AND SEIZU RE OPERATION /S 132 WAS CARRIED OUT ON THE BUSINESS AS WELL AS RESIDEN TIAL PREMISES OF THE CHUGH GROUP OF INDORE INCLUDING THE ASSESSEE. THER EAFTER, A NOTICE U/S 153A WAS ISSUED, IN RESPONSE THERETO, THE ASSESSEE FILED HIS RETURN OF INCOME ON 22.12.2014 INCLUDING ADDITIONAL INCOME O F RS.35,00,000/- DECLARED DURING THE SEARCH. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD NOT SPECIFY AND SUBSTANTIATE THE M ANNER IN WHICH THE SAID UNDISCLOSED INCOME HAS BEEN DERIVED HENCE PEN ALTY PROCEEDINGS U/S 271AAB WAS INITIATED. SUBSEQUENTLY, THE ASSESS ING OFFICER IMPOSED A PENALTY OF RS.7,00,000/- @ 20% OF THE CO NCEALED INCOME. 4. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APP EAL BEFORE THE LD. CIT(A) WHO HOWEVER REDUCED THE PENALTY AND RESTRIC TED THE SAME @10% OF THE UNDISCLOSED INCOME I.E. AMOUNTING TO RS.3,50,0 00/-. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 56 THE ASSESSEE IS IN PRESENT APPEAL AGAINST THE ORDER OF THE LD. CIT(A). AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT INITIATION OF PENALTY U/S 271AAB OF THE IS EX FACIE BAD IN LAW. HE DREW O UR ATTENTION TOWARDS THE NOTICE DATED 05.08.2015 AND ENCLOSED AT PAGE NO .25 OF THE PAPER BOOK. HE SUBMITTED THAT THE AO INITIATED PENALTY PROCEEDI NGS IN A CASUAL MECHANICAL MANNER. THAT GOES TO DEMONSTRATE THAT AS SESSING OFFICER HAS NOT MADE A SPECIFIC CHARGE. FURTHER LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE VARIOUS CASE LAWS MORE PARTICULARLY IN THE CASE OF SANDEEP CHANDAK, VS. ACIT IN ITANOS.416,417 AND 418/LKW/201 6 DATED 30.01.2017. FURTHER RELIANCE HAS MADE ON THE DECISI ON OF THE HON'BLE SUPREME COURT RENDERED IN THE CASE OF CIT VS. M/S. SSAS EMERALD MEADOWS (2016) 8 TMI 1145(SC), JUDGMENT OF THE KARN ATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FAC TORY (2012) 83 CCH 282 (KAR. HC). LD. COUNSEL HAS ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS OF THE TRIBUNAL RENDERED IN THE CASES OF: S.NO . CITATION 1 SANDEEPCHANDAK & ORS. VS. ACIT (2017) 55 I TR 209 (LUCK. TRIB.) 2 SHRIANUJMATHUR VS. DCIT 2018 (6) TMI 1311 ITAT JAIPUR) 3 SHRI RAVI MATHUR VS. DCIT 2018 (6) TMI 1128 ITAT JAIPUR) 4 SHRI SURESH CHAND MITTAL VS. DCIT 2018 (7) TMI 220 (ITAT JAIPUR) 5 DCITVS. MANISH AGARWALA 2018 (2) TMI 972 (ITAT KOL.) 6 DCITVS. SUBHAS CHANDRA AGARWALA 2018 (5) TMI 1602 (ITAT KAL.) SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 57 TO BUTTRESS HIS CONTENTION THAT NOTICE SO ISSUED IS ILLEGAL AND THEREFORE, IS NOT SUSTAINABLE IN THE EYES OF LAW. 5. ON THE CONTRARY LD. DR OPPOSES THE SUBMISSIONS A ND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. LD. DR SUBMITTED TH AT THERE NO AMBIGUITY UNDER THE LAW IN CASE ASSESSEE ADMITS AMOUNT BEING IN DISCLOSED THEN IT IS TO BE DEALT WITH IN THE MANNER PRESCRIBED UNDER 271 AAB OF THE ACT. IN REJOINDER LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT EVEN THE LD. CIT(A) HAS SUSTAINED PENALTY U/S 271AAB(1)(A) OF THE ACT W HILE THE ASSESSING OFFICER HAD INITIATED PENALTY U/S 271AAB(1)(B) OF T HE ACT. NO NOTICE OF INITIATING PENALTY U/S 271AAB(1)(A) WAS GIVEN TO TH E ASSESSEE. THIS FACT IS SUFFICIENT TO SET ASIDE THE IMPUGNED ORDER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSING OFFICER HAD GIVEN A NOTI CE WHICH ENCLOSED IN THE PAPER BOOK AT PAGE 25 FOR THE SAKE OF CLARITY NOTIC E IS REPRODUCED AS UNDER: 7 PANKAJJALAN VS. DCIT2018 (5) TMI 1591 (I TAT KAL.) 8 DCIT VS. SANWAR MAL AGARWALA AND ADTAM SARAN KHEMKA 2018 (5) TMI 422 (I TAT 9 ACIT VS. M/S. AMRIT HATCHERIES PVT. LTD. 2018 (3) TMI 44 (ITAT 1 DCIT VS. SUBHAS CHANDRA AGARWALA & SONS (HUF) 2018 (3) TMI 214(ITAT KOL.) 1 MARVEL VS. ACIT TMI 946 (ITAT VISHAKHAPATN SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 58 SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 59 7. A BARE READING OF THE ABOVE NOTICE SUGGESTS THAT THE NOTICE HAS BEEN ISSUED IN A CASUAL FASHION. THE ASSESSING OFFICER H AS NOT APPLIED HIS MIND AND NO SPECIFIC CHARGE IS MENTIONED FOR WHICH THE A SSESSEE WAS REQUIRED TO BE SHOW CAUSED. IN ABSENCE OF THE REQUISITE CONT ENTS OF SPECIFIC CHARGE THE INITIATION OF PROCEEDINGS CANNOT BE SUSTAINED B EING BAD IN LAW. ADMITTEDLY, LD. CIT(A) REDUCED THE PENALTY BY APPLY ING THE PROVISIONS OF SECTION 271AAB(1)(A). THERE IS NO AMBIGUITY UNDER T HE LAW SO FAR POWERS OF LD. CIT(A) IS CONCERNED, HE CAN MODIFY THE PENALTY ORDER BY ENHANCING OR REDUCING THE PENALTY. HOWEVER, WHERE THE ACT PROVID ES FOR TWO DIFFERENT RATES UNDER DIFFERENT TWO PROVISIONS OF LAW IN OUR CONSIDERED VIEW, THE ASSESSEE OUGHT TO HAVE BEEN GIVEN AN OPPORTUNITY OF HEARING ON THIS ASPECT. HOWEVER, IN THE PRESENT CASE AT THE VERY IN CEPTION NOTICE INITIATING PENALTY IS NOT IN ACCORDANCE WITH MANDATES OF LAW. MOREOVER, IT IS SETTLED POSITION OF LAW THAT SUCH DEFECT IS NOT CURABLE U/S 292BB OF THE ACT. THEREFORE, WE HEREBY QUASH THE PENALTY ORDER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.636/IND/2017 IS ALLOWED. 20. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANC ES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISIONS OF THE IND ORE I.T.A.T. RENDERED BY IN THE CASE OF DR. RAJESH JAIN (SUPRA) AND SHRI VIVEK CHUGH (SUPRA ) US ADJUDICATING THE SIMILAR ISSUES AND ALSO APPLY ING THE RATIO LAID DOWN BY THE HON'BLE JURISDICTION HIG H COURT IN THE CASE OF KULWANT SINGH BHATIA (SUPRA) DECIDED THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE AND QUASH THE PENALTY PROCEE DINGS INITIATED U/S 274 R.W.S. 271AAB OF THE ACT IN ALL THE SEVEN C ASES ITA NO.852 SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 60 TO 858/IND/2019 SINCE THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271AAB IS VAGUE AND DOES NOT FULFILL THE REQUIREMEN T OF LAW SINCE NO SPECIFIC CHARGES PROVIDED U/S 274 R.W.S. 271AAB OF THE ACT ARE APPEARING IN THE BODY OF PENALTY NOTICE. SINCE THE PENALTY PROCEEDINGS HAS BEEN QUASHED AND LEGAL GROUND ALLOW ED IN FAVOUR OF THE ASSESSEE(S), ALL THE PENALTIES SUSTAINED BY LD. CIT(A) IN ALL THESE CASES AT RS.11,14,088/- (IN THE CASE OF SMT. RAJRANI MITTAL), RS.8,44,176/- (IN THE CASE OF ANSHUL MITTAL), RS.5, 24,296/- (IN THE CASE OF ANKIT MITTAL), RS.3,64,285/- AND RS.6,50,00 0/-(IN THE CASE OF NEHA MITTAL), AND RS.4,57,513/- AND RS. 5,35,000 /- (IN THE CASE OF SHWETA MITTAL) IN ITA NO.853, 852, 854 TO 858/I ND/2019 STANDS DELETED. 21. APROPOS TO THE GROUNDS RAISED ON MERITS BY THE ASSESSEE CHALLENGING THE QUANTUM OF PENALTY SUSTAINED BY CIT (A) U/S 271AAB(A) OF THE ACT WE ARE OF THE VIEW THAT ADJUDI CATING THESE GROUNDS ON MERITS WILL BE MERELY ACADEMIC IN NATURE SINCE WE HAVE ALREADY QUASHED THE PENALTY PROCEEDINGS ALLOWING TH E LEGAL GROUND IN ASSESSEE(S) FAVOUR THEREFORE ALL THE GROUNDS RAI SED ON MERITS ARE DEEMED TO BE INFRUCTUOUS. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 61 22. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE(S ) ARE ALLOWED AS PER THE TERMS INDICATED ABOVE. 23. NOW WE TAKE UP REVENUE APPEAL NO.879/IND/2019 F OR ASSESSMENT YEAR 2015-16. REVENUE HAS CHALLENGED TH E ACTION OF LD. CIT(A) PARTLY DELETING THE PENALTY LEVIED BY TH E LD. A.O U/S 271AAB(C) OF THE ACT. WE FIND THAT IN THE CASE OF SMT. RAJRANI MITTAL WHILE ADJUDICATING THE GROUND RAISED BY THE ASSESSEE IN ITA NO.853/IND/2019 WE ALLOWED THE LEGAL GROUND AND QUA SHED THE PENALTY PROCEEDINGS BEING VAGUE AND BAD IN LAW SINC E SPECIFIC CHARGE WAS NOT MENTIONED IN THE PENALTY NOTICE ISSU ED U/S 274 R.W.S. 271AAB OF THE ACT. FOR DECIDING SO WE HAVE RELIED ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF DR. RA JESH JAIN (SUPRA) AND SHRI VIVEK CHUGH (SUPRA) AND ALSO THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KU LWANT SINGH BHATIA (SUPRA) . SINCE THE PENALTY PROCEEDINGS IN THE CASE OF SMT . RAJRANI MITTAL FOR ASSESSMENT YEAR 2015-16 STANDS Q UASHED THE INSTANT APPEAL OF REVENUE BECOMES INFRUCTUOUS. THUS THE GROUND RAISED BY THE REVENUE ARE DISMISSED. SMT.RAJRANI MITTAL & ORS ITA NOS. 852 TO 858 & 879/IND/2019 62 24. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE(S ) ITA NO.852 TO 858/IND/2019 ARE ALLOWED AND THAT OF REVENUE IN ITA NO.879/IND/2019 IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 07.09.20 20. SD/- SD/- ( KUL BHARAT) (MANI SH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 7 TH SEPTEMBER, 2020 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE