ACIT (Central)-1 , Indore V. Dinesh Chand Mittal HUF, Indore

ITA 900/Ind/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4739 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 03-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUNIT KUNAR
• Keywords: Reopening of assessment; Business income; Search and seizure; Opportunity of being heard; Principle of natural justice; Initiation of penalty proceedings; Reasonable cause; Revised return; Documents seized; Set aside
• Section: 271(1)(c); 139; 143(3); 133A; 153A; 201; 292BB; 274; 251; 139(1); 43; 48; 73; 13; 22; 153C; 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.899/IND/2019 ASSESSMENT YEAR 2015-16 ACIT, CENTRAL-1, INDORE : REVENUE V/S DINESH CHAND MITTAL (HUF) 15A/22, MANAK, Y.N. ROAD, INDORE PAN : AACHD4947F : RESPONDENT ITA NO.900/IND/2019 ASSESSMENT YEAR 2016-17 ACIT, CENTRAL-1, INDORE : REVENUE V/S DINESH CHAND MITTAL (HUF) 15A/22, MANAK, Y.N. ROAD, INDORE PAN : AACHD4947F : RESPONDENT REVENUE BY SHRI PUNIT KUNAR , SR.DR ASSESSEE BY SHRI AJAY TULSIYAN & MS. SHALINI MEHTA, CAS DATE OF HEARING 2 6 .08.2020 DATE OF PRONOUNCEMENT 28 . 0 9 . 2020 DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 2 O R D E R PER MANISH BORAD THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE O F THE REVENUE PERTAINING TO ASSESSMENT YEAR 2015-16 & 201 6-17 ARE DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-3 (IN SHORT LD.CIT(A)], BHOPAL EVENLY D ATED 17.07.2019 WHICH ARE ARISING OUT OF THE ORDER U/S 271(1)(C) O F THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 28.06.2018 FRAME D BY JCIT- OSD CENTRAL CIRCLE-1, INDORE. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL ; ITA NO.899/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 BY OVERLOOKING THE FACT THAT T HE ASSESSEE HAD DISCLOSED ADDITIONAL INCOME IN THE RETURN OF INCOME AFTER ADMITTING THE SAME U/S 132(4) OF THE INCOME TAX ACT, 1961 DURING SEARCH OPERATION AND THAT THE ASSESSEE WAS GIVEN DUE OPPORTUNITY OF BEIN G HEARD PASSING THE PENALTY ORDER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE PROVISION OF SECTION 292B OF T HE INCOME TAX ACT, 1961 AND MERELY QUOTING OF ONE PENAL SECTION INSTEAD OF SIMILAR PENAL SECTION AT THE TIME OF INITIATION OF THE PENALTY DOES NOT VITI ATE THE LEGALITY OF PENALTY LEVIED WHICH WAS CLEARLY ATTRACTED TO THE FACTS OF THE IMPUGNED CASE. ITA NO.900/IND/2019 ASSESSMENT YEAR 2016-17 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE PENALTY BY OVERLOOKING THE FACT THAT T HE ASSESSEE HAD DISCLOSED ADDITIONAL INCOME IN THE RETURN OF INCOME AFTER ADMITTING THE DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 3 SAME U/S 132(4) OF THE INCOME TAX ACT, 1961 DURING SEARCH OPERATION AND THAT THE ASSESSEE WAS GIVEN DUE OPPORTUNITY OF BEIN G HEARD PASSING THE PENALTY ORDER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE PROVISION OF SECTION 292B OF T HE INCOME TAX ACT, 1961 AND MERELY QUOTING OF ONE PENAL SECTION INSTEAD OF SIMILAR PENAL SECTION AT THE TIME OF INITIATION OF THE PENALTY DOES NOT VITI ATE THE LEGALITY OF PENALTY LEVIED WHICH WAS CLEARLY ATTRACTED TO THE FACTS OF THE IMPUGNED CASE. 3. AS THE ISSUES RAISED IN ALL THESE APPEALS ARE COMM ON AND ARE RELATED TO THE SAME ASSESSEE THESE WERE TAKEN TOGET HER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAK E OF CONVENIENCE AND BREVITY. 4. FIRST WE TAKE UP ITA NO.899/IND/2019 FOR ADJUDICAT ION. 5. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT DINESH CHAND MITTAL HUF COMPRISING OF THE FAMILY ME MBERS OF SHRI DINESH CHAND MITTAL OF 'MITTAL GROUP' OF LNDORE. A SURVEY OPERATION WAS CARRIED OUT UNDER SECTION 133A ON 01.09.2014 WH EREIN THE RESPONDENT OFFERED RS. 4,77,00,000/- AS ADDITIONAL INCOME FOR A.Y. 2015-16 WHICH WAS ALSO ACCEPTED BY THE DEPARTMENT. THE RESPONDENT HONOURED SUCH OFFER AND PAID THE ADVANCE TAX OF RS. 1,45,40,000/- IN DECEMBER 2014 AND MARCH 2015, IN R ESPECT OF THE SAID INCOME OFFERED IN SURVEY PROCEEDINGS. BEFORE THE RESPONDENT COULD FILE ITS RETURN OF INCOME FOR THE CAPTIONED Y EAR'S, A SEARCH AND SEIZURE OPERATIONS U] S 132 WERE CARRIED ON THE BUS INESS AS WELL AS DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 4 RESIDENTIAL PREMISES OF THE 'MITTAL GROUP' OF INDOR E ON 04.09.2015, IN THE CASE OF MITTAL APPLIANCE LIMITED, SHRI DINES H MITTAL, SHRI ANSHUL MITTAL, SHRI ANKIT MITTAL, SMT. RAJRANI MITT AL, SMT. NEHA MITTAL AND SMT. 8HWETA MITTAL. CERTAIN ADDITIONAL I NCOMES WERE OFFERED BY THE MITTAL GROUP IN THE HANDS OF ITS VAR IOUS ENTITIES INCLUDING THE RESPONDENT FOR DIFFERENT ASSESSMENT Y EARS, WHICH WERE DULY OFFERED FOR TAXATION BY THE RESPECTIVE ENTITIE S. RESPONDENT HUF WAS NOT A PARTY TO THE SEARCH CONDUCTED UNDER SECTI ON 132 OF THE ACT AS NEITHER ANY WARRANT WAS ISSUED NOR ANY PANCH NAMA WAS DRAWN IN ITS NAME. THE RESPONDENT HAS FILED ITS RET URN OF INCOME U/S 139 FOR BOTH THE ASSESSMENT YEARS. THE CASE O F THE RESPONDENT WAS CENTRALIZED WITH THE OFFICE OF THE L EARNED AO U/S 127 OF THE ACT ON 01.03.2016 AND NOTICES UNDER SECT ION 153C WAS SERVED ON 09.08.2016 FOR AY 2010-2011 TO AY 2015-20 16 WHICH WERE DULY COMPLIED WITH. NOTICE UNDER SECTION 143(2 ) WAS ISSUED FOR A.Y. 2016-17. THE RESPONDENT IN RESPONSE TO THE NOT ICES ISSUED U/ S 153C, FILED THE RETURNS FOR THE RESPECTIVE YEARS AND SAME INCOME WHICH WAS DECLARED IN THE RETURNS FILED U/S 139 WAS REITERATED IN THE RETURN FILED U/S 153C R.W.S 139 IN A.Y. 2015-16 . THE POSITION IN THIS REGARD IS SUMMARIZED HEREUNDER:- DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 5 AY DATE OF ITR U/S 139(1) INCOME RETURNED DATE OF RETURN U/S 153C INCOME RETURNED INCOME ASSESSED 2015-16 18.03.16 12,75,39,880 08.09.16 12,75,39,880 12,76,80,335 2016-17 22.06.16 8,32,30,550 N.A N.A. 8,12,48,800 2016-17 REVISED 08.09.16 8,12,48,800 6. THE INCOME FOR THE YEARS AY 2015-16 & AY 2016-17 WERE ASSESSED AT RETURNED INCOME ACCEPTING THE ADDITIONAL INCOME OFFERED AS BUSINESS INCOME WITHOU T MAKING ANY ADJUSTMENT. HOWEVER, PENALTY PROCEEDINGS U/S 271AAB WERE INITIATED IN THE ASSESSMENT ORDER S TATING THAT THE MANNER IN WHICH THE UNDISCLOSED INCOME EAR NED WAS NOT DISCLOSED DURING THE SEARCH PROCEEDINGS U/S 132(4). A NOTICE U/S 274 R.W.S. 271AAB DATED 29.12. 2017 WAS ALSO ISSUED FOR BOTH THE ASSESSMENT YEARS. THOU GH THE LD. A.O INITIATED THE PENALTY PROCEEDINGS U/S 2 71AAB OF THE ACT FOR ASSESSMENT YEAR 2015-16 AND 2016-17 THE PENALTY ORDER WAS FINALLY FRAMED U/S 271(1)(C) OF T HE ACT AND A CONSOLIDATED ORDER WAS PASSED ON 28.6.2018 LE VYING PENALTY AT RS.4,34,00,000/- AND RS.2,80,00,000/- FO R ASSESSMENT YEAR 2015-16 AND 2016-17 RESPECTIVELY. IN THE PENALTY PROCEEDINGS ASSESSEES SUBMISSION WAS T HAT SINCE NO NEW ADDITION WAS MADE AND THE INCOME SUO-M OTO DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 6 OFFERED BY THE ASSESSEE WAS ACCEPTED AS SUCH THEN M ERELY ON THE BASIS OF SUCH OFFERING BY THE ASSESSEE WITHO UT MAKING ANY JUSTIFICATION OR ADVERSE COMMENTS ON THE SAME THE PENALTY PROCEEDINGS ARE NOT ATTRACTED IN B OTH THE ASSESSMENT YEARS. BUT THIS CONTENTION WAS NOT ACCEP TED BY THE LD. A.O AND PENALTY WAS LEVIED FOR THE ASSES SMENT YEARS 2015-16 AT RS. RS.4,34,00,000/- AND RS. 2,80,00,000/- FOR ASSESSMENT YEAR 2016-17. 7. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. C IT(A) CHALLENGING THE QUANTUM OF PENALTY AS WELL AS CHALL ENGING THE LEGALITY OF PENALTY PROCEEDINGS ON THE GROUND THAT DEFECTIVE NOTICE WAS ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT SINC E IT WAS NOT IN ACCORDANCE WITH THE LAW. LD. CIT(A) AFTER CONSIDER ING THE SUBMISSIONS OF THE ASSESSEE AND PLACING RELIANCE ON VARIOUS JUDGMENTS DECIDED IN FAVOUR OF THE ASSESSEE ALLOWIN G THE LEGAL GROUND AND ALSO ON MERITS DELETING THE PENALTY LEVI ED U/S 271(1)(C) OF THE ACT. 8. NOW REVENUE IS IN APPEAL CHALLENGING THE FINDING OF LD. CIT(A) FOR ASSESSMENT YEAR 2015-16 AND 2016-17. DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 7 9. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D SUPPORTING THE ORDERS OF LD. A.O CONTENDING THAT AS SESSEE WAS LIABLE TO PAY PENALTY U/S 271(1)(C) OF THE ACT SINC E THE INCOME OFFERED IN THE INCOME TAX RETURN IS SUBSEQUENT TO C ARRYING OUT THE SEARCH U/S 132 OF THE ACT. 10. PER CONTRA LD. COUNSEL FOR THE ASSESSEE REFERRE D TO THE FOLLOWING WRITTEN SUBMISSIONS PLACED ON RECORD:- AT THIS JUNCTURE THE RESPONDENT WISHES TO BRING FEW VERY IMPORTANT FACTS TO THE KIND ATTENTION OF YOUR HONOU R WHICH ARE AS UNDER: (I) THE RESPONDENT HAS PROPERLY HONOURED THE OFFER OF ADDITIONAL INCOME MADE U/S 133A IN THE SURVEY PROCE EDINGS AND MADE U/S 132(4) IN THE SEARCH PROCEEDINGS AND O FFERED THE RESPECTIVE INCOMES IN THE RETURNS FILED U/S 139 AS WELL AS U/S 153C. (II) EVEN THE MAJOR AMOUNT OF TAX ON THESE INCOMES WAS PAID BY WAY OF ADVANCE TAX, WHICH FACT IS EVIDENT FROM T HE COMPUTATION OF INCOME. (III) THE INCOME SO OFFERED HAS BEEN ACCEPTED IN T HE ASSESSMENT PROCEEDINGS, AS EVIDENT FROM THE COMMON ASSESSMENT ORDER PASSED FOR ALL THE YEARS COVERED I N THE BLOCK PERIOD. (IV) NO ADDITIONS HAVE BEEN MADE IN ANY OF THE SEV EN YEARS. (V) NO LITIGATIONS RELATED TO SEARCH ASSESSMENTS A RE PENDING DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 8 AS ON DATE EXCEPT THESE PENALTY APPEALS. THIS SHOWS THE EXTENT OF COOPERATION EXTENDED BY TH E RESPONDENT PURSUANT TO THE SEARCH~ WHICH IS GENERAL LY VERY RARELY SEEN IN THE SEARCH CASES. 1.9. FURTHER ANOTHER LETTER DATED 31.05.2018 WAS S ERVED ON THE RESPONDENT FOR BOTH THE ASSESSMENT YEARS REQUIR ING TO SHOW CAUSE AS TO WHY PENALTY U /S 271AAB BE NOT IMPOSED ON THE RESPONDENT. IN RESPONSE TO THE SAME THE RESPONDENT FILED A REPL Y ON 21.06.2018 BEFORE THE LEARNED AO, CATEGORICALLY MEN TIONING AS TO WHY PENALTY U/ S 271AAB IS NOT LEVIABLE IN IT S CASE. IT WAS STATED THAT NO SEARCH WAS CONDUCTED ON THE RESP ONDENT AND THEREFORE, PENAL PROVISIONS OF SECTION 271MB AR E NOT APPLICABLE. WITH REGARD TO THE OBSERVATION OF THE L EARNED AO IN THE ASSESSMENT ORDER THAT THE RESPONDENT HAS NOT DISCLOSED THE MANNER OF EARNING ADDITIONAL INCOME, IT WAS STATED THAT THE ADDITIONAL INCOME WAS OFFERED AS BUSINESS. INCO ME AND WAS ALSO ASSESSED AS SUCH. THERE WAS NO OBJECTION IN RESPECT OF THE INCOME OFFE RED AS BUSINESS INCOME. THE LEARNED AO WAS FACTUALLY IN AGR EEMENT WITH THE RESPONDENT THAT NO PENALTY U/S 271AAB IS IMPOSAB1E FOR THE ABOVE REASONS AND THEREFORE, NO PENALTY WAS LE VIED XX] S 271AAB. 1.10. HOWEVER, SURPRISINGLY TO THE UTTER DISMAY OF THE RESPONDENT, THE LEARNED AO PASSED A COMBINED ORDER FOR AY 2015-16 AND AY 2016-17 AND LEVIED PENALTY U/S 271(1 )(C) FOR BOTH THE ASSESSMENT YEAR. THE RESPONDENT IS UNABLE T O DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 9 DECIPHER THAT WHEN THE PENALTY PROCEEDINGS WERE INI TIATED AND WERE CONDUCTED THROUGHOUT UNDER SECTION 271AAB T HEN HOW COME THE PENALTY ORDER WAS PASSED LEVYING THE PE NALTY U/S 271(1)(C). HERE IT IS PERTINENT TO MENTION THAT THE RESPONDENT WAS NEVER REQUIRED TO SHOW CAUSE AS TO WH Y PENALTY UNDER SECTION 271(1)(C) BE NOT LEVIED FOR TH E YEAR UNDER CONSIDERATION. THE MOST IMPORTANT AND GLARING ISSUES IN THE PRESENT CASE ARE AS UNDER:- A. THE PENALTY PROCEEDINGS WERE INITIATED U/S 271AAB I N THE ASSESSMENT ORDER AS WELL AS IN. THE NOTICES ISSUED U/S 274. THE INITIATION OF PROCEEDINGS [ 271AAB WAS WRONG AND VOID-AB-INITO ON THE FOLLOWING COUNTS: (I) FIRSTLY NO SEARCH WAS CONDUCTED ON THE RESPOND ENT AND (II) ALSO FOR THE REASON THAT THE SHOW CAUSE NOTIC E ISSUED U/S 274 WAS DEFECTIVE AND BAD IN LAW. (III}. THE RESPONDENT FILED THE RETURN OF INCOME UNDER SECTION 139 MUCH BEFORE THE ISSUANCE OF NOTICE UNDER SECTION 153C. B. ISSUANCE OF PENALTY SHOW CAUSE NOTICE U/S 271AAB AN D LEVY OF PENALTY U/S 271(1)(C) HAS ALSO RENDERED THE PROCEEDINGS AS FATAL. C. THE PENALTY WAS LEVIED U/S 271(1)(C), FOR WHICH NO N OTICE WAS EVER ISSUED TO THE RESPONDENT. D. THE NOTICE ISSUED U/S 274 R.W.S. 271AAB ON THE STR ENGTH OF WHICH PENALTY IS LEVIED U/S 271(1)(C) DID NOT ME NTIONED DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 10 ANY SPECIFIC CHARGE AGAINST THE RESPONDENT. E. THE PENALTY LEVIED U/S 271(1)(C) IS ALSO WRONG AS THERE IS NO DIFFERENCE IN THE INCOME RETURNED U/S 139 AND THE INCOME ASSESSED. F. THE SATISFACTION REQUIRED TO BE DRAWN BEFORE THE I NITIATION AND ALSO BEFORE THE LEVY OF PENALTY IS MISSING AND THE PROCEEDINGS WERE INITIATED AND THE PENALTY WAS LEV IED WITHOUT APPLICATION OF MIND. THE RESPONDENT HAS CHALLENGED THE INITIATION OF PEN ALTY PROCEEDINGS U/S 271AAB AND ALSO LEVY OF PENALTY U/S 271(1)(C) BEFORE CIT(A) AND HON'BLE CIT(A) ALLOWED THE RESPON DENT'S APPEALS FOR BOTH THE ASSESSMENT YEARS. BEING AGGRIE VED WITH THE RELIEF GRANTED BY THE LEARNED CIT(A), THE DEPAR TMENT IS IN APPEAL BEFORE YOUR HONOUR. 2. INVALID INITIATION OF PEN ALTY PROCEEDINGS U/S 271AAB 2.1. THE LD. AO ERRED IN INITIATING PENALTY PROCEE DINGS U/S 271AAB AS MENTIONED IN THE ASSESSMENT ORDER PASSED U/S 143(3) ON 29.12.2017 BY STATING' ISSUE PENALTY NOTICES U/ S 271AAB FOR A. YS. 2015-16 & 2016-17.' 2.2. SECTION 271AAB OF THE INCOME TAX ACT.1961 IS A S UNDER: (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDINQ ANYT HING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRE CT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1 ST DAY OF JULY, 2012 BUT BEFORE THE DATE ON WHICH THE TAXATION. LAWS (SECOND AMENDMENT) BILL, 2016 RECEIVES THE ASSENT OF THE PRESIDENT], THE ASSESSEE SHALL PAY BY DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 11 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 UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED 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 SPECIFIE D PREVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN; (B) A SUM COMPUTED AT THE RATE OF TWENTY PER CENT O F THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER 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 FU RNISHED FOR THE SPECIFIED PREVIOUS YEAR; AND (B) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 12 UNDISCLOSED INCOME; (C) A SUM WHICH SHALL NOT BE LESS THAN THIRTY PERCENT 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 CLAUSES (A) AND (B). 2.3. IT IS AMPLY CLEAR FROM THE READING OF THE ABOVE PROVISION THAT SECTION 271AAB IS APPLICABLE ONLY WHEN A SEARCH IS CONDUCTED UPON THE ASSESSEE. IT I S AN UNDISPUTED FACT THAT NO SEARCH WAS CONDUCTED IN THE CASE OF THE RESPONDENT HUF. THE RESPONDENT HAS BEEN ASSESSED U/S 153C R.W.S. 143(3) FOR THE YEAR UNDER CONSIDERATION, WHICH FACT IN ITSELF SUBSTAN TIATE THAT IN THE CASE OF THE RESPONDENT NO SEARCH WAS CONDUCTED U/ S 13.2. THEREFORE, THE VERY INITIATION OF THE PENALTY PROCEEDINGS U/S 271AAB IS VOID AB-INITO, UNCALLED FOR AND BAD IN LAW. 2.4. IT IS TO BE SUBMITTED THAT PENALTY NOTICE DAT ED 29.12.'L.017 ISSUED U/S 274 R.W.S. 271AAB WAS SERVED UPON. THE RESPONDENT FOR BOTH THE ASSESSMENT YEARS ASKING TH E RESPONDENT AS TO WHY PENALTY U/ S 271AAB SHOULD NOT BE LEVIED ON THE RESPONDENT. 2.5. LATER ON A LETTER ISSUED BY THE AO DATED 31.0 5.2018 WAS ALSO SERVED UPON THE RESPONDENT FOR A.Y. 2015-16 & 2016-17 IN CONNECTION WITH PENALTY NOTICE U/S 271AAB TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT BE LEVIED O N THE RESPONDENT U/S 271AAB. DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 13 2.6. DURING THE COURSE OF PENALTY PROCEEDINGS FOR T HE YEAR UNDER CONSIDERATION THE RESPONDENT PROVIDED. EXPLANATION ON ITS POSITION WITH RESPECT TO SECTION 271AAB AND VEHEMENTLY OPPOSED THE PENALTY PROCEEDINGS U/S 271AAB BY CATEGORICALLY STATING IN THE SUBMISSION FILED DURING THE PENALTY PROCEEDINGS ON 21.06.2018, THAT SINCE THE RESPONDENT WAS NOT COVER ED UNDER THE SEARCH U/S 132 THEREFORE PENALTY 271AAB IS WITHOUT JURISDICTION IN THIS CASE. COPY OF SUBMISSI ON DATED 21.06.2018 FILED DURING THE PENALTY PROCEEDIN G IS ENCLOSED IN THE RESPECTIVE PAPER BOOK. 2.7. IN FACT THE LEARNED AO WAS ALSO CONVINCED WITH T HE SUBMISSION OF THE RESPONDENT AND WAS ALSO OF THE V IEW THAT PENALTY U/S 271AAB CANNOT BE IMPOSED IN THE C ASE OF RESPONDENT. THE RESPONDENT WAS CONFIDENT THAT T HE LEARNED AO WOULD DROP THE PENALTY PROCEEDINGS U/S 271AAB BUT OUT OF THE BLUE AN ORDER IMPOSING PENAL TY U/S 271(1)(C) WAS PASSED WITHOUT PROVIDING ANY OPPORTUNITY TO RESPONDENT TO EXPLAIN ITS POSITION WITH RESPECT TO PENAL PROVISIONS OF SECTION 271(1)(C) O F THE ACT. THEREFORE, SINCE THE VERY INITIATION OF PENALTY PRO CEEDINGS WAS NOT IN ACCORDANCE WITH LAW, THE ENTIRE PROCEED INGS ARE VOID-AB-INITO. THE LEARNED CIT(A) AFTER CONSIDERING THE ABOVE FACT HAS RIGHTLY HELD THAT THERE REMAINS NO DOUBT THAT THE PENALTY PROC EEDINGS INITIATED U/S 271AAB IN THE ASSESSMENT ORDER WAS NOT IN ACCORDANCE WITH LAW. 3. INITIATION OF PROCEEDINGS U/S 271AAB AND LEVY OF PENALTY U/S 271(1)(C) DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 14 3.1. THE LEARNED AO IN THE PENALTY ORDER DATED 28.0 6.2018 IN PARA 4 IN LAST FEW LINES HAS STATED THAT .. HOWEVER, SINCE, THE IMPUGNED INCOME WAS UNEARTHED O NLY DUE TO CERTAIN INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE SEARCH PROCEEDINGS CONDUCTED IN THE MITT AL GROUP THEREFORE, PENALTY PROCEEDINGS U/S 271 (1)(C) FOR AY 2015-16 AND AY 2016-17 HAS BEEN INITIATED. THE NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT HAS BEEN ISSUED ON 29.12.2017. DUE TO CLERICAL MISTAKE THE SECTION FOR INITIATION OF PENA LTY IN SUCH CASES WAS INADVERTENTLY TYPED AS 271AAB IN PLACE OF 271 (1)(C). THE PURPORT FOR INITIATION OF THE PENALTY WAS CLEARLY MENTIONED IN THE ASSESSMENT ORDER AND AS PER SECTION 292B OF THE ACT, THE INITIATION OF THE PENALTY IS VALID.' 3.2. WITH DUE RESPECT, IT IS SUBMITTED THAT THE ABO VE OBSERVATIONS MADE IN THE PENALTY, ORDER ARE FACTUALLY INCORRECT, MISLEADING AND WRONG. PENALTY PROCEEDINGS WERE INIT IATED ONLY U/S 271 AAB AND IN FACT WERE ALSO INTENDED TO BE INI TIATED U/S 271AAB AND NOT U/S 271(1)(C). THIS CONTENTION OF TH E RESPONDENT IS SUPPORTED BY THE FOLLOWING CONTENTION S. (I) THE INITIATION OF PENALTY PROCEEDINGS U/S 271AAB HAS BEEN MENTIONED NOT ONCE BUT MULTIPLE TIMES IN T HE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 153C. (II) THE PENALTY SHOW CAUSE NOTICE ISSUED U/S 274 ALONG WITH THE ASSESSMENT ORDER WAS ALSO ISSUED WIT H RESPECT TO THE PENALTY PROCEEDINGS U/S 271AAB AS EVIDENT FROM THE HEADING OF THE SAID NOTICE, COPY OF WHICH IS ENCLOSED IN THE RESPECTIVE PAPER BOOK. DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 15 (III) THE LETTER DATED 31.05.2018 ISSUED BY THE AO WAS ALSO ISSUED REFERRING TO THE PENALTY NOTICE U/S 271 AAB AND TO THE PENALTY PROCEEDINGS U/S 271AAB. (IV) THE MOST IMPORTANT PIECE OF EVIDENCE TO SHOW THA T THE PENALTY PROCEEDINGS WERE INITIATED ONLY U/ S 27 1AAB AND WERE NEVER INTENDED TO BE INITIATED U/S 271(1)(C ) IS AVAILABLE IN THE ASSESSMENT ORDER ITSELF WHEREIN IN PARA 5.2 WHILE INITIATING THE PENALTY PROCEEDINGS IT HAS BEEN STATED BY THE LEARNED AO THAT 'THE MANNER IN WHICH THE UNDISCLOSED INCOME EARNED WAS NOT DISCLOSED DURING THE SEARCH PROCEEDINGS U/S 132(4) OF THE ACT. IN VIEW OF THE PROVISIONS OF SECTION OF 271AAB OF T HE ACT, I AM SATISFIED THAT PENALTY PROCEEDINGS MUST BE INITIATE D FOR THE AMOUNT OF DISCLOSURE MADE U/ S 132(4) OF THE ACT. HENCE, PENALTY PROCEEDINGS U/S 271AAB IS HEREBY INITIATED FOR A.YS. 2015-16 & 2016-17.' SINCE THE ISSUE OF DISCLOSING THE MANNER OF EARNING UNDISCLOSED INCOME IS PECULIAR AND IMPORTANT ONLY F OR THE PURPOSES OF LEVYING PENALTY U/S 271AAB AND HAS NO RELEVANCE AT ALL FOR THE PURPOSES OF LEVYING PENALTY U/S 271(1)(C), MENTIONING OF THIS ISSUE BEFORE INITIATING THE PENA LTY PROCEEDINGS IN THE ASSESSMENT ORDER, EVIDENTLY ESTA BLISHES THAT THE LEARNED AO HAD ALL AND THE ONLY INTENTION TO INITIATE THE PENALTY PROCEEDINGS U/S 271AAB AND NOT U/S 271(1)(C). (V) THIS CONTENTION OF THE RESPONDENT IS ALSO ESTA BLISHED FROM THE PENALTY ORDER WHEREIN ALSO IN PARA 4 IT IS STATED' ... HOWEVER, SINCE, THE IMPUGNED INCOME WAS UNEARTHED O NLY DUE TO CERTAIN INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE SEARCH DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 16 PROCEEDINGS CONDUCTED IN THE MITTAL GROUP THEREFORE , ..... '. (VI) THE USE OF PHRASES LIKE UNEARTHING THE INCOME ON THE BASIS OF INCRIMINATING DOCUMENT FOUND AND SEIZED DU RING THE SEARCH ARE USED AND ARE APPLICABLE ONLY FOR THE PUR POSES OF LEVYING PENALTY U/S 271AAB AND ARE IRRELEVANT FOR T HE PURPOSES OF LEVYING PENALTY U/S 271(1)(C) FOR WHICH THE PHRASES LIKE 'CONCEALMENT OF INCOME' OR 'FURNISHING OF INAC CURATE PARTICULARS OF INCOME' ARE ONLY RELEVANT. IT IS FUR THER SUBMITTED THAT NO SUCH RELEVANT PHRASES HAVE BEEN USED IN THE ASSESSMENT ORDER WHILE INITIATING THE PENALTY PROCE EDINGS. (VII) IT IS FURTHER STATED IN THE PENALTY ORDER TH AT THE PURPORT FOR INITIATION OF THE PENALTY WAS CLEARLY MENTIONED IN THE ASSESSMENT ORDER. IN THIS RESPECT IT IS SUBMITTED T HAT, NO DOUBT THE PURPORT FOR INITIATION OF THE PENALTY WAS CLEARLY MENTIONED IN THE ASSESSMENT ORDER, BUT AS EXPLAINED ABOVE, THE SAME CLEARLY INDICATED THE INITIATION OF PROCEE DINGS U/S 271AAB AND NOT U/S 271(1)(C). 3.3. FROM THE ABOVE MENTIONED FACTS IT IS VERY CLE AR THAT THE LD. AO WAS CATEGORICALLY CLEAR AS TO THE SECTION UN DER WHICH PENALTY PROCEEDINGS WERE INITIATED. IT IS OUT OF IM AGINATION TO BELIEVE THAT THE LD. AO MENTIONED 271AAB IN PLACE O F 271(1)(C) NOT ONCE BUT MULTIPLE TIMES IN THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S.153C, ALSO IN THE NOTICE DATED 29. 12.2017 ISSUED U/S 274 R.W.S. 271AAB AND AGAIN IN THE PENAL TY NOTICE DATED 31.05.2018 ISSUED U/ S 271AAB. IN VIEW OF THE ABOVE, THE RESPONDENT RESPECTFULLY S UBMITS THAT THE OBSERVATION OF THE AO THAT DUE TO CLERICAL MIST AKE THE SECTION FOR INITIATION OF PENALTY WAS INADVERTENTLY TYPED AS DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 17 271AAB IN PLACE OF 271(I)(C), IS FACTUALLY INCORREC T AS ALREADY DEMONSTRATED ABOVE. THE LEARNED CIT(A) AFTER CONSIDERING THE VARIOUS FA CTS HAS RIGHTLY OBSERVED ON INTERNAL PAGE 25 OF HIS ORDER T HAT 'CLEARLY THE AO INITIATED THE PROCEEDINGS U/ S 271AAB AND HAD NO INTENTION TO INITIATE THE SAME U/ S 271 (L)(C). THIS IS ALSO EVIDENT FROM THE ASSESSMENT ORDER WHERE THE SOLE REASON FOR INITIATIN G THE PENALTY PROCEEDINGS IS STATED TO BE THAT THE APPELLANT HAS NOT DISCLOSED THE MANNER OF EARNING UNDISCLOSED INCOME DURING THE PRO CEEDINGS U/ S 132(4) AND THERE IS NO REFERENCE AT ALL TO THE CHARGES SUCH AS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THEREFORE, IT CANNOT BE SAID THAT THE SECTION FOR INITIATION OF PENALTY WAS INADVERTENTLY TYPED AS 271AAB IN PLACE OF SECTION 271(1){C) IN THE ASSESSMENT ORDER AND ALSO IN THE PENALTY NOTICE. 3.4. THE LD. AO HAS STATED SUCH A MISTAKE MERELY TO BE A CLERICAL MISTAKE AND MADE AN UNSUCCESSFUL ATTEMPT T O TAKE SHELTER OF SECTION 292B, BUT AS DEMONSTRATED ABOVE, CLEARLY THE PENALTY PROCEEDINGS WERE INITIATED U/S 271AAB A ND NOT U/S 271(1)(C). IT IS A SETTLED POSITION OF LAW THAT SUCH DEFECT IS NOT CURABLE U/S 292BB OF THE ACT. 3.5. FROM THE ASSESSMENT ORDER IT IS ESTABLISHED TH AT THE LD. AO INTENDED TO INITIATE THE PENALTY U/S 271AAB ONLY , SINCE HE WAS OF THE VIEW THAT DURING THE SEARCH PROCEEDINGS U/S 132(4), THE RESPONDENT DID NOT DISCLOSE THE MANNER IN WHICH THE INCOME WAS EARNED. IT IS ALSO ESTABLISHED THAT IT WAS NO CLERICAL MISTAKE UNDERTAKEN BY THE AO AS HE INITIAT ED THE PENALTY PROCEEDINGS U/S 271AAB ON THE BELIEF THAT S EARCH U/S 132 WAS CONDUCTED ON THE RESPONDENT AND THE RESPOND ENT DID NOT DISCLOSE THE MANNER IN WHICH THE INCOME WAS EAR NED. DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 18 SINCE IT IS ESTABLISHED THAT THE PENALTY PROCEEDING S WERE INTENDED TO BE INITIATED ONLY U/S 271AAB AND NOT U/ S 271(1)(C), IT IS SUBMITTED THAT IN SUCH CIRCUMSTANC ES SECTION 292B CANNOT COME TO THE RESCUE OF THE AO. 3.6. WITH DUE RESPECT IT IS SUBMITTED THAT AN ATTEM PT HAS BEEN MADE TO DECEIVE THE LAW BY TAKING SHELTER OF I NADVERTENT MISTAKE. IN THE CLEAR CIRCUMSTANCES AS STATED ABOVE , PROVISIONS OF SECTION 292B OF THE ACT DO NOT COME T O THE RESCUE OF THE AO AND THE INITIATION OF THE PENALTY PROCEEDINGS IS INVALID AND VOID-AB-INITO. THUS, THE PROCEEDINGS INITIATED AND ORDER PASSED IS WRONG AND BAD IN LAW THEREFORE IS PRAYED TO BE QUASHED . 3.7. THE RESPONDENT ASSESSEE PLACES RELIANCE ON THE DECISION OF THIS HONOURABLE BENCH ITSELF IN THE CASE OF VIVE K CHUGH V/S ACIT CENTRAL 2, INDORE IN ITA NO. 636/LND/2017 DATED 28.03.2019 WHEREIN IT HAS BEEN HELD THAT SUCH DEFECT IS NOT CURABLE U/ S 292BB OF THE ACT. 4. LEVYING PENALTY U/S 271(1L(C) IS WRONG AS NO NOTICE WAS ISSUED U/S 271(1)(C) 4.1. WHILE THE PENALTY PROCEEDINGS WERE INITIATED AND CONDUCTED U/S 271AAB, THE PENALTY ORDER WAS PASSED U/S 271(1)(C) IS BAD IN LAW. 4.2. THE PENALTY PROCEEDINGS WERE INITIATED UNDER S ECTION 271AAB IN THE ASSESSMENT ORDER, TWO SHOW CAUSE NOTI CES WERE ALSO ISSUED UNDER SECTION 271AAB AND THE REPLY OF T HE RESPONDENT WAS ALSO FILED IN RESPONSE TO THESE PROC EEDINGS INITIATED UNDER SECTION 271AAB, INTER ALIA CHALLENG ING THE DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 19 PROCEEDINGS INITIATED U/S 271AAB AS NO SEARCH WAS C ONDUCTED IN THIS CASE. THE RESPONDENT ALSO SUBMITTED DURING THE PENALTY PROCEEDINGS THAT THE METHOD AND MANNER OF E ARNING SUCH INCOME WAS ALSO EXPLAINED. IT SEEMS THAT THE L EARNED AO HAVING REALIZED THE MISTAKE OF INITIATING PENALTY P ROCEEDINGS U/S 271AAB, WHILE FINALIZING THE PENALTY ORDER, INS TEAD OF DROPPING THE SAME, TOOK A U TURN AND CHOSE TO LEVY PENALTY UNDER SECTION 271(1)(C) BY TAKING THE PLEA OF INADV ERTENT MISTAKE AND SHELTER OF SECTION 292B. 4.3. IT IS AN IMPORTANT FACT THAT NO PENALTY PROCE EDINGS WERE EVER INITIATED UNDER SECTION 2 71(1)(C) IN THIS CASE. NO NOTICE WAS EVER ISSUED AND SERVED UPON THE RESPONDENT REQU IRING TO SHOW CAUSE AS TO WHY PENALTY U/S 271(1)(C) BE NOT LEVIED. THE RESPONDENT WAS NEVER CALLED UPON TO EXPLAIN ITS POS ITION IN LIGHT OF THE PENAL PROVISIONS OF SECTION 271(1)(C). NO OPPORTUNITY WAS GIVEN TO RESPONDENT TO SUBSTANTIATE THAT PENALTY U/S 271(1)(C) IS NOT LEVIABLE AS NO SHOW CAUSE NOTICE U/S 271(1)(C) WAS EVER ISSUED BY THE AO. THUS THE O RDER LEVYING PENALTY U/S 271(1)(C) IS WITHOUT JURISDICTI ON AND HAS BEEN PASSED IN ARBITRARY MANNER, WITHOUT AFFORDING EVEN A SINGLE OPPORTUNITY OF BEING HEARD TO THE RESPONDENT BEFORE LEVYING HUGE PENALTY. THE LEARNED CIT(A) HAS RIGHTLY HELD THAT SINCE NO S HOW CAUSE NOTICE WAS ISSUED U/S 271(1)(C), CLEARLY NO OPPORTU NITY OF BEING HEARD WAS GIVEN TO THE RESPONDENT BEFORE LEVY ING THE PENALTY. THEREFORE, THE PENALTY LEVIED IS WRONG FOR THIS REASON ALSO. 4.4. FURTHER, THE LD. AO IN THE PENALTY ORDER STAT ED THAT NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT. WAS ISSUED ON DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 20 29.12.2017. THE RESPONDENT CATEGORICALLY STATES THA T NO SUCH NOTICE WAS EVER SERVED ON THE RESPONDENT AND THE NO TICE ISSUED ON 29.12.2017 WAS A NOTICE U/S 274 R.W.S. 27 1AAB AND NOT U/S 271(1)(C) AS STATED BY THE AO. 4.5. IT IS SUBMITTED THAT ISSUANCE OF NOTICE U/S 2 74 IS A STATUTORY DEVICE FOR INFORMING THE ASSESSEE ABOUT T HE PROPOSAL TO LEVY PENALTY IN ORDER TO ENABLE HIM TO EXPLAIN A S TO WHY IT SHOULD NOT BE DONE. PENALTY IS NEITHER MANDATORY NO R AUTOMATIC. THE PENALTY IS LEVIABLE ONLY AFTER HEARI NG THE ASSESSEE AND IN CASE ASSESSEE IS ABLE TO MAKE OUT A CASE BY SHOWING SOME REASONABLE CAUSE OR OTHERWISE THEN PEN ALTY IS NOT LEVIED. 4.6. IT IS SUBMITTED THAT SECTION 274 WHICH PRESCR IBES THE 'PROCEDURE' CLEARLY STATES 'NO ORDER IMPOSING A PEN ALTY UNDER THIS CHAPTER SHALL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD, OR HAS BEEN GIVEN A REASONABLE OPPORTUNITY O F BEING HEARD'. CLEARLY NO OPPORTUNITY MUCH LESS ANY REASON ABLE OPPORTUNITY OF BEING HEARD WAS GIVEN TO. THE RESPON DENT BEFORE LEVYING THE IMPUGNED PENALTY U/S 271(1)(C) IN THE PRESENT CASE. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE LD. AO FAILED TO GIVE ANY OPPORTUNITY, MUCH LESS ANY REASONABLE OPPO RTUNITY TO THE RESPONDENT BEFORE LEVYING THE IMPUGNED PENALTY U/S 271(1)(C) WHICH IS AGAINST ALL THE PRINCIPLES OF NA TURAL JUSTICE AND CONSEQUENTIALLY AGAINST ALL THE CANNONS OF LAW. IN ABSENCE OF ANY SHOW CAUSE NOTICE U/S 271(1)(C), THE LD. AO NEVER ASSUMED ANY JURISDICTION TO INITIATE THE PENALTY U/ S 271(1)(C) AND THEREFORE, THE SAME IS BAD IN LAW AND IS PRAYED TO BE DELETED. DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 21 WITHOUT_PREJUDICE TO THE A BOVE:- IT IS SUBMITTED THAT PENALTY PROCEEDINGS WERE CATEG ORICALLY INITIATED U/ S 271AAB, WHICH WAS NOT PERMISSIBLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS CONTENDED ABOVE. I T IS ALSO SUBMITTED THAT PENALTY HAS BEEN LEVIED U/S 271(1)(C) WITHOUT ISSUING ANY SHOW CAUSE NOTICE IN THIS RESPECT, HENC E THE SAME CANNOT BE SUSTAINED. THE PENALTY NOTICE ISSUED UNDER SECTION 274 IS BAD IN LAW AND VOID-AB- INITIO AS IT DID NOT SPECIFIED THE SPECIFIC CHARGE AGAINST THE RESPONDENT . 5.1. WITHOUT PREJUDICE TO THE ABOVE, IT IS ALSO PE RTINENT TO MENTION THAT IN THE PENALTY NOTICE ISSUED UNDER SEC TION 274 R.W.S. 271AAB IT IS STATED THAT THE RESPONDENT HAS 'CONCEALED THE PARTICULARS OF THE INCOME OR FURNISHED INACCURA TE PARTICULARS OF SUCH INCOME'. THAT THE PENALTY NOTIC E WAS ISSUED IN A MECHANICAL MANNER, NOT ONLY UNDER WRONG SECTION BUT ALSO WITHOUT SPECIFYING THE SPECIFIC CHARGE AS TO WHETHER THE RESPONDENT IS FOUND GUILTY OF CONCEALING THE PA RTICULARS OF THE INCOME OR HAVE FURNISHED INACCURATE PARTICULARS OF INCOME. 5.2. IT IS ALSO IMPORTANT TO POINT OUT THAT NONE O F THESE CHARGES WERE MENTIONED IN THE ASSESSMENT ORDER, WHE REIN AN ALTOGETHER IRRELEVANT CHARGE WAS MENTION THAT THE R ESPONDENT HAS NOT DISCLOSED THE MANNER IN WHICH THE UNDISCLOS ED INCOME WAS EARNED DURING THE SEARCH PROCEEDINGS U/S 132(4) . 5.3. IN THIS CASE A CYCLOSTYLED PENALTY NOTICE WAS ISSUED. A COPY OF THE SAID NOTICE IS ENCLOSED IN THE RESPECTI VE PAPER BOOK, A PERUSAL OF THE SAME WILL SHOW THAT THE SAME HAS BEEN DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 22 ISSUED IN A MECHANICAL MANNER NOT ONLY MENTIONING W RONG SECTION BUT ALSO WITHOUT STRIKING OFF THE IRRELEVAN T PARAS AND ALSO MENTIONING BOTH THE LIMBS I.E. CONCEALMENT OF PARTICULARS' OF INCOME OR OF 'FURNISHING INACCURATE PARTICULARS' OF INCOME. 5.4. AS PER PROVISIONS OF SECTION 271(1)(C )OF THE ACT, THERE ARE TWO DIFFERENT CHARGES I.E. THE CONCEALMENT OF PARTI CULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE PENALTY CAN BE IMPOSED FOR A SPECIFIC CHARGE. IT IS A SETTLED PROPOSITION THAT BOTH THESE LIMBS I.E. CONCEALMENT OF PARTICULARS' OF INCOME OR OF 'FURNISHING INACCURATE PARTICULARS' OF INCOME CARRY DIFFERENT CONNOTATIONS AS HELD BY T HE HONOURABLE SUPREME COURT IN THE CASE OF T ASHOK PAI V/ S CIT (2007) 292ITR 11 (SC). 5.5. IT IS EQUALLY SETTLED PROPOSITION THAT SATISF ACTION OF THE CONCERNED TAX AUTHORITY TO THE EFFECT THAT THE ASSE SSEE HAS EITHER CONCEALED THE PARTICULARS OF INCOME OR FURNI SHED INACCURATE PARTICULARS OF INCOME IS THE CONDITION P RECEDENT FOR INITIATION OF PENALTY. SINCE THIS MANDATORY CONDITI ON HAS NOT BEEN FULFILLED IN THIS CASE, NEITHER IN THE ASSESSM ENT ORDER NOR IN THE SHOW CAUSE NOTICE, THE VERY INITIATION OF PE NALTY PROCEEDINGS, THE PENALTY NOTICE AND ALSO THE ORDER PASSED UNDER SECTION 271(1)(C) ARE VOID AB-INITO, DEVOID O F MERITS AND BAD IN LAW. 5.6. THE NOTICE ISSUED U/S 274 R.W.S. 271AAB IS BAD IN LAW AS IT DOES NOT SPECIFY THE PARTICULAR LIMB OF SECTION 271(1)(C) OF THE ACT UNDER WHICH IT HAS BEEN INITIATED. THEREFORE, I T IS SUBMITTED THAT THE VERY INITIATION OF THE PENALTY P ROCEEDINGS ITSELF IS NOT CORRECT. THE RESPONDENT PLACES RELIAN CE ON THE FOLLOWING PROPOSITIONS: DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 23 (I) THE HONOURABLE KARNATAKA HIGH COURT IN CIT V / S SSA'S EMERALD (II)CIT VIS MANJUNATH COTTON GINNING FACTORY (2013) 359 ITR 0565 (KARNATAKA). (III) PR. CIT VIS KULWANT SINGH BHATIA IT NO. 9 TO 14 OF2018 (MP) (IV) SMT. SHRUTI GARG V/S DCIT CENTRAL INDORE IN ITA NO. 988/IND/2016 DATED 28.06.2017 (V) SHRI BANSIDHAR SOMANI V/S DCIT CENTRAL 1 INDORE ITA NO. 619 TO 624/IND/2017 FOR AY 2008-09 TO AY 2013-14 ORDER DATED 17.12.2018 THUS, IN VIEW OF THE DECISIONS OF HONORABLE JURISDI CTIONAL HIGH COURT AND ALSO HONORABLE JURISDICTIONAL ITAT, THE V ERY INITIATION OF THE PRESENT PENALTY PROCEEDINGS IS NO T IN ACCORDANCE WITH THE LAW AND HAS LEAD TO VITIATION O F ENTIRE PENALTY PROCEEDINGS. ALSO, THE INVOCATION OF PENALT Y PROCEEDINGS IN DIFFERENT SECTION AND PASSING THE OR DERS LEVYING THE PENALTY IN ALTOGETHER IN A DIFFERENT MANNER AND IN A SPECIFICALLY DIFFERENT SECTION HAS RENDERED THE ENTIRE PROCEEDINGS AND THE ORDER INVALID AND BAD IN LAW. THE LEARNED CIT(A) BY RELYING ON THE DECISION OF JU RISDICTIONAL HIGH COURT IN THE CASE OF KULWANT SINGH BHATIA (SUP RA) HAS RIGHTLY HELD THAT THE SHOW CAUSE NOTICE ISSUED IN T HIS CASE DID NOT MET THE REQUIREMENTS OF LAW AND THE PENALTY PROCEEDINGS INITIATED IN THIS CASE ARE WRONG. DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 24 6. THE INCOME RETURNED U/S 139 AND THE INCOME ASSESSED IS SAME HENCE PENALTY U/S 271(1)(C) IS UNCALLED FOR. 6.1 THOUGH THE VERY INITIATION OF PENALTY PROCEEDIN GS IN THIS CASE, IS BAD IN LAW AS ALREADY SUBMITTED ABOVE BY T HE RESPONDENT, IT IS SUBMITTED THAT EVEN THE PENAL PRO VISIONS OF SECTION 271( 1)(C), UNDER WHICH THE PENALTY HAS BEEN LEVIED, ARE NOT AT ALL APPLICABLE IN THIS CASE. THIS CONTENTION OF THE RESPONDENT IS BORNE OUT ON THE BASIS OF THE FOLLOWING. (I) THE RESPONDENT FILED ITS RETURN OF INCOME UNDER SECTION 139 WHICH WAS ACCEPTED IN THE ASSESSMENT. THE' ASSESSED INCO ME WAS NOT HIGHER THAN THE RETURNED INCOME. IN THESE FACTS AND CIRCUMSTANCES THE PENAL PROVISIONS OF SECTION 271(1)(C) READ WITH ITS VARIOUS EXPLANATION ARE NOT ATTRACTED. (II) THE RETURN OF INCOME WAS FILED U/ S 139 MUCH B EFORE THE ISSUANCE OF NOTICE U/ S 153C. THE ASSESSMENT WAS CO MPLETED ON THE INCOME RETURNED U/S 139. THE AO DID NOT FIND ANY DEFECT IN THE ITR, ACCEPTED THE RETURNED INCOME WIT HOUT ANY MODIFICATION AND WITHOUT ANY ADVERSE COMMENT AND ST ILL LEVIED THE PENALTY MERELY ON THE BASIS OF OFFERING OF INCO ME BY THE RESPONDENT, WITHOUT MAKING OUT ANY CASE AGAINST THE RESPONDENT. FOR THIS SIMPLE REASON PENALTY U/S 271( 1)(C) IS NOT ATTRACTED IN THIS CASE. (III) FURTHER EXPLANATION SA TO SECTION 271(1)(C) H AS ALSO RIGHTLY BEEN NOT INVOKED BY THE LEARNED AO, AS THE SAME APP LIES ONLY IN THE CASE OF SEARCH ON THE ASSESSEE WHICH IS NOT THE CASE HERE. IT IS SUBMITTED THAT EXPLANATION 5A DOES NOT HAVE ANY APPLICABILITY FOR THESE TWO ASSESSMENT YEARS ALSO F OR THE REASON DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 25 THAT THE DUE DATE OF FILING OF THE RETURN FOR BOTH THESE YEARS HAS NOT EXPIRED BEFORE THE DATE OF SEARCH. THEREFORE, PENALTY U/S 271(1)(C) IS EVEN OTHERWISE NOT ATTRACTED IN THIS CASE AS THE RESPONDENT DECLARED THE INCOME IN THE RETURN FILED U/S 139, WHICH WAS FILED BEFORE ISSUAN CE OF NOTICE U/ S L53C AND THE SAID RETURNED INCOME STAND ACCEPT ED. 6.2 THE IMPOSITION OF PENALTY IS NOT AUTOMATIC AND THE SAME BEING PENAL IN NATURE HAS TO BE CONSTRUED STRICTLY AND SHOULD FALL WITHIN THE FOUR CORNERS OF THE STATUTORY PROVI SIONS. THE 'CONCEALMENT HAS TO BE IN THE RETURN OF INCOME' FIL ED BY THE ASSESSEE. WHEN THE INCOME IS ALREADY OFFERED IN THE RETURN FILED U/S 139, THEN NO PENALTY CAN BE LEVIED ON IT. THE RESPONDENT PLACES RELIANCE ON THE FOLLOWING CASE LA WS: II. DECISION OF HONOURABLE DELHI HIGH COURT IN CASE OF SAS PHARNLACEUTICALS VS. CIT (335 ITR 0259) III. DECISION OF HONOURABLE ITA1' MUMBAI IN CASE OF MANORAMA V. RATHI, MUMBAI VS ACIT CIR 21(1) IN ITA NO. 6063/MUM/2013 IV, DECISION OF HONOURABLE DELHI ITAT IN CASE OF ALO K BHANDARI VS. ACIT IN ITA NO.5747/DEL/2014 V . DECISION. OF HONOURAHLE DELHI ITAT IN CASE OF M/S. OSE INFRASTRUCTURE LTD. VS. ACIT IN ITA NO. 5891 TO 5895/DEL/ 2016 VI. DECISION OF HONOURABLE DELHI ITAT IN CASE OF ASSIST ANT COMMISSIONER OF INCOME TAX & ANR. VS. MEHAR ANAND & ANR. (2017) 50 CCH 0104 WHERE IT WAS CONCLUDED THAT THE INCOME RETURNED BY THE ASSESSEE U/S 153A OF THE ACT HAS BEEN DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 26 ACCEPTED BY THE AO AND ONCE THE AO ACCEPTS THE REVI SED RETURN FILED U/S 153A OF THE ACT, THE ORIGINAL RETURN U/S 139 OF THE ACT ABATES AND BECOMES NON-EST. THEREFORE, IN VIEW OF T HE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT, THE CONCEALMENT HAS TO BE SEEN WITH REFERENCE TO THE RE TURN WHICH HAS BEEN FILED BY THE ASSESSEE FOR THE PURPOSE OF L EVYING PENALTY U/S 271(1)(C) OF THE ACT, WHAT HAS TO BE SE EN IS WHETHER THERE IS ANY CONCEALMENT IN THE RETURN FILE D BY THE ASSESSEE U/S153A AND NOT VIS-A-VIS THE ORIGINAL RET URN FILED UJ S 139 OF THE ACT. IN THE PRESENT CASE, THE SAME INCOM E HAS BEEN ACCEPTED WHICH WAS RETURNED, BY THE ASSESSEE, THERE FORE, . THE PENALTY U/S 271(1)(C) OF THE ACT WAS NOT LEVIABLE, ACCORDINGLY, WE DO NOT SEE. ANY MERIT IN THIS APPEAL OF THE DEPA RTMENT. 6.3 IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THER E CANNOT BE ANY DISPUTE TO THE PROPOSITION THAT CONCEALMENT/ FURNISHING OF INACCURATE PARTICULARS OF INCOME/UNDI SCLOSED INCOME HAS TO BE NECESSARILY SEEN VIS-A-VIS RETURN FILED BY THE RESPONDENT. ONCE, INCOME IS DECLARED U/ S 139 W HICH IS ACCEPTED AS SUCH UNDER SECTION 153C OF ACT, THEN , THE QUESTION OF THERE BEING CONCEALMENT / FURNISHING OF INACCURATE PARTICULARS OF INCOME / UNDISCLOSED INCO ME, DOES NOT ARISE AT ALL. THE PRESENT CASE IS ON A BET TER FOOTING, THE ENTIRE INCOME HAS BEEN OFFERED. FOR TAX BY THE RESPONDENT IN THE RETURN INCOME FILED UNDER SECTION 139 BEFORE THE ISSUANCE OF NOTICE UNDER SECTION 153C AN D THE SAME RETURN WAS REITERATED IN RESPONSE TO NOTICE UN DER SECTION 153C, WHICH WAS SUBJECT MATTER OF ASSESSMEN T BEFORE ASSESSING OFFICER. THE RETURN FILED BY THE R ESPONDENT HAS BEEN ACCEPTED AS SUCH BY THE LD. AO, WITHOUT AN Y VARIATION. THEREFORE, IN THE ABSENCE OF ANY VARIATI ON BEING DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 27 FOUND IN THE, ASSESSMENT VIS-A-VIS THE RETURN FILED , THE ISSUE OF IMPOSITION OF PENALTY DOES NOT, ARISE. THE LEARNED CIT(A) BY RELYING ON THE DECISION OF HO N'BLE M.P. HIGH COURT WHICH WAS UPHELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V/S SURESH CHAND MITTAL (2001) 251 ITR 9 HAS RIGHTLY HELD THAT THE INCOME SO OFFERED BY THE APPELLANT EVEN BEFORE THE ISSUANCE OF NOTICE U/S 153C, HAVING BEEN ACCEPTED IN THE ASSESSMENT WITHOUT ANY VARIATION, P ENALTY U/S 271(1)(C) EITHER FOR CONCEALMENT OF INCOME OR EVEN FOR FURNISHING INACCURATE PARTICULARS OF INCOME IS NOT ATTRACTED. 7. LACK OF REQUISITE SATISFACTION AS ENVISAGED AND THE PENALTY ORDER IS PASSED WITHOUT PROPER APPLICATION OF MIND. 7.1 IT IS SUBMITTED THAT NO SATISFACTION MUCH LESS ANY REQUISITE SATISFACTION WAS DRAWN BEFORE THE INITIAT ION OF PROCEEDINGS. AS ALREADY EXPLAINED ABOVE THE PROCEED INGS WERE INITIATED U/ S 271AAB WHEREAS -THE PENALTY WAS LEVIED U/S 271(1)(C). 7.2 A PERUSAL OF THE PENALTY ORDER WILL SHOW THAT EXCEPT FOR REITERATING THE CONTENTION THAT THE ADDITIONAL INCO ME WAS OFFERED ONLY DUE TO SEARCH AND SEIZURE PROCEEDINGS AND THAT THE RESPONDENT HAS ACCEPTED THE UNDISCLOSED INCOME, NO SATISFACTION HAS BEEN DRAWN IN THE PENALTY ORDER. P ENALTY HAS BEEN LEVIED MERELY ON THE BASIS OF OFFERING OF THE INCOME BY THE RESPONDENT. 7.3 A PERUSAL OF THE PENALTY ORDER WOULD ALSO SHOW THAT T IME AND AGAIN REFERENCE HAS BEEN MADE TO THE SEARCH PRO CEEDINGS, DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 28 UNDISCLOSED INCOME, INCRIMINATING SEIZED MATERIAL E TC, WHICH FURTHER SUBSTANTIATE THE CONTENTION OF THE RESPONDE NT THAT NOT ONLY THE PENALTY WAS PROPOSED AND WAS INTENDED TO B E LEVIED ONLY U/S 271AAB AND NOT U/S 271(1)(C), BUT ALSO THAT THE PENALTY WAS INITIATED AND LEVIED UNDER UTTER CONFUS ED STATE OF MIND AND WITHOUT DRAWING ANY REQUISITE SATISFACTION AS ENVISAGED BY LAW. 7.4 THERE IS PASSING REFERENCE IN THE PENALTY ORDE R THAT THE RESPONDENT HAS CONCEALED ITS INCOME. HOWEVER, WHILE INITIATING THE PROCEEDINGS IN THE ASSESSMENT ORDER NO SATISFAC TION WAS RECORDED THAT THE RESPONDENT HAS CONCEALED ITS INCO ME. IN THESE CIRCUMSTANCES ALSO THE PENALTY LEVIED DOES NOT HAVE LEGAL SANCTITY AND IS REQUIRED TO BE DELETED. THE R ESPONDENT FINDS SUPPORT FROM MANY JUDICIAL AUTHORITIES FOR THIS CONTENTION, A FEW OF WHICH ARE AS UNDER.- (I) RECENTLY THE ISSUE WAS DEALT BY HON'BLE BOMBAY TRIB UNAL IN THE CASE OF INDRANI SUNIL PILLAI VS. ASSISTANT COMMISSIONER OF INCOME TAX (ITA 1339/MUM/ 2016)[(2018) 52 CCH 00 56 MUM TRIB] DATED 19.01.2018 . (II) SIMILARLY IN THE DECISION OF HON'BLE DELHI IT AT IN THE CASE OF ABR AUTO PVT. LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX [(2017) 51 CCH 0477 [DEL TRIB] DATED 04.12.2017 FOR THE ABOVE REASON ALSO THE PENALTY ORDER IS BAD IN LAW. THE RESPONDENT WISH TO CONCLUDE ITS SUBMISSIONS AND ALSO WISH TO DRAW YOUR HONOUR'S KIND ATTENTION TO THE FACT TH AT THE RESPONDENT GROUP OFFERED SUBSTANTIAL INCOME AND ALS O PAID THE DUE TAXES THEREON. THE INCOME OFFERED BY THE RESPONDENT DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 29 ULTIMATELY STOOD ACCEPTED WITHOUT ANY VARIATION. IN THE ENTIRE GROUP, SUBSTANTIAL INCOME WERE OFFERED IN ALL THE I NDIVIDUAL CASES INCLUDING THAT OF THE RESPONDENT HUF AND NO A DDITIONS WERE MADE, BARRING VERY NOMINAL AND TECHNICAL ADDIT IONS IN FEW THOUSAND RUPEES IN SOME INDIVIDUAL CASES. THIS OVERAL L EXERCISE HAS RESULTED INTO ACCEPTANCE OF RETURNED INCOME IN AL MOST ALL THE CASES. IT IS FURTHER SUBMITTED THAT THE PENALTY U/S 271(1)(C) IS NEITHER MANDATORY NOR AUTOMATIC AND CONSIDERING THE OVERALL CONDUCT OF THE RESPONDENT OF OFFERING THE C ORRECT INCOME, PAYING THE DUE TAXES WELL IN TIME AND EXTEN DING UTMOST COOPERATION IN ALL THE PROCEEDINGS, IT IS MO ST HUMBLY PRAYED THAT THE DISCRETIONARY PENALTY MAY VERY KIND LY BE DELETED. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE LEAR NED CIT(A) HAS VERY RIGHTLY DELETED THE PENALTY ON THE GROUND THAT THE INITIATION OF THE PENALTY PROCEEDINGS U/S 271AAB AN D CONCLUSION OF THE PENALTY PROCEEDINGS U/S 271(1)(C) IS WRONG. ALSO, NO SEARCH WAS CONDUCTED UPON THE RESPONDENT, THE INITIATION OF PENALTY PROCEEDINGS U/S 271AAB WAS UN WARRANTED AND THE PENALTY LEVIED U/S 271(1)(C) WITHOUT AFFORD ING ANY OPPORTUNITY OF BEING HEARD, ON THE STRENGTH OF A DE FECTIVE AND WRONG NOTICE ISSUED U/S 271AAB AND ALSO THERE BEING NO VARIATION IN THE INCOME RETURNED U/ S 139 AND THAT ASSESSED BY THE AO, THEREFORE THE PENALTY LEVIED IS WRONG AN D HEREBY DELETED, THE RESPONDENT PLACES HEAVY RELIANCE ON TH E ORDER OF LEARNED CIT(A) AND THE APPEAL FILED BY THE DEPARTME NT IS PRAYED TO BE DISMISSED. ASSESSEE HAS ALSO RELIED ON FOLLOWING DECISIONS:- DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 30 FOR THE PROPOSITION THAT THE NOTICE ISSUED U/S 274 WAS VAGUE AS THE SAME WAS ISSUED WITHOUT DRAWING REQUIS ITE SATISFACTION AND WITHOUT MENTIONING THE SPECIFIC CH ARGE AGAINST THE APPELLANT (I) KARNATAKA HIGH COURT IN THE CASE OF CIT V / S SSA'S EMERALD MEADOWS (2015) 94 CCH 0334. (II) HON BLE SUPREME COURT IN THE CASE OF CIT V / S SSA'S EMERALD MEADOWS (2016) 73 TAXMANN.COM 248. (III) HONBLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF PR. CIT V/S KULWANT SINGH BHATIA (2018) 304 CTR 0103. (IV) SMT. SHRUTI GARG V/S DCIT CENTRAL INDORE IN ITA NO. 988/IND/2016 DATED 28.06.2017 (V) SHRI BANSIDHAR SOMANI V/S DCIT ITA NO. 619 TO 624/ IND/2017 DATED 17.12.2018. (VI) HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S SH RI SAMSON PERINCHERY (2017) 98 CCH 0444. (VII) HONBLE DELHI ITAT IN THE CASE OF OM LOGISTICS LTD. V/S DCIT ITA NO.529/DEL/2016. FOR THE PROPOSITION THAT WITHOUT RECORDING REQUISIT E SATISFACTION REGARDING THE EXACT NATURE OF OFFENCE WHILE INITIATING PENALTY PROCEEDINGS, PENALTY UNDER SECTI ON 271(1)(C) CANNOT IMPOSED. (VIII) HONBLE BOMBAY TRIBUNAL IN THE CASE OF INDRANI SUNI L PILLAI V/S ACIT (2018) 52 CCH 0056 (IX) HONBLE DELHI TRIBUNAL IN THE CASE OF ABR AUTO PVT. LTD V/S ACIT (2017) 51 CCH 04777 (X) HONBLE INDORE ITAT IN THE CASE OF VIVEK CHUGH V/S ACIT ITA NO.636/IND/2017 DATED 28.03.2019 DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 31 FOR THE PROPOSITION THAT WITHOUT RECORDING REQUISIT E SATISFACTION REGARDING THE EXACT NATURE OF OFFENCE WHILE INITIATING PENALTY PROCEEDINGS, PENALTY UNDER SECTI ON 271(1)(C) CANNOT IMPOSED. (X) HONBLE ITAT INDORE BENCH IN THE CASE OF VIVEK CHUGH V/S ACIT CENTRAL-2, INDORE IN ITA NO.636/IND/2017 DATE D 28.03.2019. ( 11. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE WRI TTEN SUBMISSIONS AND VARIOUS DECISIONS AND JUDGMENTS FIL ED BEFORE US BY LD. COUNSEL FOR THE ASSESSEE. IN THE INSTANT TW O APPEALS FOR ASSESSMENT YEAR 2015-16 AND 2016-17 REVENUE HAS CHA LLENGED THE FINDING OF LD. CIT(A) DELETING THE PENALTY OF RS.4, 34,00,000/- AND RS.2,80,00,000/- LEVIED BY THE LD. A.O FOR ASSESSME NT YEAR 2015- 16 AND 2016-17 RESPECTIVELY U/S 271(1)(C) OF THE AC T. WE FIND THAT LD.CIT(A) HAS GIVEN A DETAILED FINDING ALONG WITH P LACING VARIOUS DECISIONS ALLOWING LEGAL GROUND AS WELL AS GROUND O N MERIT RELATING TO THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. SIN CE THE FINDING OF LD. CIT(A) ADJUDICATING LEGAL GROUND IS SAME FOR AS SESSMENT YEAR 2015-16 AND 2016-17, WE ARE REPRODUCING BELOW THE F INDING OF LD. CIT(A) FOR ASSESSMENT YEAR 2015-16:- DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 32 4.1 GROUND NO. 1,2 & 3:- THROUGH THESE GROUND OF APPEAL, THE APPELLANT HAS CHALLENGED THE LEVY OF PENALTY OF RS. 2,80,00,000/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. IT IS SEEN T HAT THE APPELLANT FILED ITS RETURN OF INCOME U/S 139(1) ON 22.06.2016 DECLARING AN INCOME OF RS. 8,12,30,550/-, THEREAFTER THE APPELLANT FILED A REV ISED RETURN ON 08.09.2016, DECLARING AN INCOME OF RS. 8,12,48,800 /-AND THE AO COMPLETED THE ASSESSMENT ON 29.12.2017 ACCEPTING TH E INCOME RETURNED BY THE APPELLANT AT RS. 8,12,48,800/- AND NO ADDITI ON WAS MADE. IN THE ASSESSMENT ORDER, IN PARA 5.2 THE AO INITIATED PENA LTY U/S 271AAB STATING THAT THE APPELLANT HAS NOT DISCLOSED DURING THE SEARCH PROCEEDINGS U/S 132(4) THE MANNER IN WHICH THE UNDISCLOSED INCOME W AS EARNED. THE AO ALSO ISSUED A NOTICE U/S 274 R.W.S.271AAB DATED 29.12.2017 STATING THAT THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AFTER CONSIDERING THE REPLY OF THE APPELLANT, THE AO PASSED THE IMPUGNED PENALTY ORDER U/S 271(1)(C) ON 28.06.2018 LEVYING A PENALTY OF RS. 2,80,00,000/- F OR THIS YEAR. IN PARA 4 OF THE PENALTY ORDER THE AO STATED THAT I N THE STATEMENT RECORDED U/S 132(4) OF THE ACT ON 04.10.2015, SHRI DINESH CHAND MITTAL KARTA OF THE APPELLANT HUF, HAS OFFERED UNDISCLOSED INCOME F OR THIS YEAR IN THE HANDS OF SHRI DINESH CHAND MITTAL HUF AND THE APPEL LANT OFFERED THIS ADDITIONAL INCOME IN THE RETURN OF INCOME AND ALSO PAID THE DUES TAXES ON THE SAME AND THEREFORE, NO ADDITION WAS MADE ON THI S ACCOUNT. IT IS FURTHER STATED BY THE AO THAT SINCE THE IMPUGNED INCOME WAS UNEARTH ONLY DUE TO FINDING OF INCRIMINATING DOCUMENTS SEIZED DURING TH E SEARCH THEREFORE, PENALTY PROCEEDINGS U/S 271(1)(0) WAS INITIATED AND THE NOTICE U/S 274 R.W.S. 271(1)(C) WAS ISSUED ON 29.12.2017, HOWEVER, DUE TO CLERICAL MISTAKE THE SECTION FOR INITIATION OF PENALTY WAS I NADVERTENTLY TYPED AS 271AAB IN CASE OF SECTION 271(1)(C). THE AO FURTHER STATED THAT THE PURPORT FOR INITIATION OF THE PENALTY WAS MENTIONED IN THE ASSESSMENT ORDER AND AS PER SECTION 292B, THE INITIATION OF PENALTY IS VALI D. DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 33 ON THE OTHER HAND IT IS CONTENDED BY THE APPELLANT FIRSTLY THAT THE PENALTY PROCEEDINGS WERE INITIATED IN THE ASSESSMENT ORDER U/S 271AAB STATING THAT APPELLANT HAS NOT DISCLOSED THE MANNER IN WHIC H THE UNDISCLOSED INCOME WAS EARNED AND ACCORDINGLY A NOTICE U/S 274 R.W.S. 271AAB WAS ISSUED. HOWEVER, WHILE CONCLUDING THE PENALTY PROCE EDINGS THE AO PASSED THE PENALTY ORDER AND LEVIED PENALTY U/S 271(1)(C). THEREFORE, THE INITIATION OF THE PENALTY PROCEEDINGS U/S 271AAB AND CONCLUSION OF THE PENALTY PROCEEDINGS U/S 271(1)(C) IS WRONG AND NOT IN ACCOR DANCE WITH LAW. SECONDLY THE APPELLANT CONTENDED THAT THE VERY INIT IATION OF PENALTY PROCEEDINGS U/S 271AAB IN THE ASSESSMENT ORDER, STATING THAT THE APPELLANT HAS NOT DISCLOSED DURING THE SEARCH PROCE EDINGS U/S 132(4), THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED, WAS IN ITSELF WRONG AND UNCALLED FOR AS PENALTY U/S 271AAB CAN BE INITI ATED ONLY IN THE CASE OF AN ASSESSEE, IN WHOSE CASE SEARCH ACTION U/S 132 IS CONDUCTED AND SINCE NO SEARCH WAS CONDUCTED IN THE CASE OF THE AP PELLANT, THE VERY INITIATION OF PENALTY PROCEEDINGS U/S 271AAB IN THI S CASE WAS NOT AS PER LAW. THE APPELLANT FURTHER CONTENDED THAT THE OBSER VATION OF THE AO THAT THE APPELLANT HAS NOT DISCLOSED THE MANNER OF EARNI NG UNDISCLOSED INCOME IS ALSO NOT CORRECT, AS THE RESULTANT INCOME WAS WO RKED OUT IN RESPECT OF THE TRADING TRANSACTIONS AS EVIDENT FROM THE SEIZED MATERIAL AND WAS OFFERED ON THE BASIS OF A PROPER CASH FLOW STATEME NT PREPARED AND SUBMITTED AT THE TIME OF RECORDING OF STATEMENT U/ S 132(4) ITSELF. FURTHER THE SAID INCOME WAS OFFERED AS BUSINESS INCOME IN T HE RETURN FILED BY THE APPELLANT. THEREFORE, IT WAS CONTENDED, THAT TH E INITIATION OF PENALTY PROCEEDINGS STATING THAT THE APPELLANT HAS NOT DISC LOSED THE MANNER, IS WRONG EVEN ON FACTS. THE INITIATION OF PENALTY PROCEEDINGS ARE CONTENDED TO BE BAD IN LAW ALSO ON THE GROUND THAT THE NOTICE ISSUED U/S 271AAB WAS NOT IN ACCORDANCE WITH LAW AS THE SAME DID NOT MENTION ANY SPECIFIC C HARGE AGAINST THE DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 34 APPELLANT FOR LEVY OF PENALTY. IT IS POINTED OUT BY THE APPELLANT THAT THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271AAB IS VAGU E AND IS .NOT IN CONFORMITY WITH LAW AS THOUGH THE SAME IS ISSUED U/ S 271AAB BUT THE CHARGES MENTIONED IN THE SAID NOTICE WERE THAT OF C ONCEALING THE INCOME OR FURNISHING OF INACCURATE PARTICULARS THER EOF, WHICH ARE THE CHARGES FOR LEVY OF PENALTY U/S 271(1)(C) AND NOT U /S 271AAB. A COPY OF THE PENALTY NOTICE ISSUED IS PLACED ON PAGE 18 OF T HE PAPER BOOK, REFERRING TO WHICH IT WAS POINTED OUT THAT THE NOTICE IN THIS CASE WAS ISSUED U/S 274 R.W.S. 271AAB, HOWEVER, IT WAS MENTIONED THAT THE A SSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME. IT IS CONTENDED THAT THE CHARGES 'CONC EALMENT OF PARTICULARS OF INCOME' OR 'FURNISHING INACCURATE PARTICULARS OF IN COME' ARE APPLICABLE ONLY FOR PENALTIES INITIATED U/S 271(1)(C) AND NOT FOR P ENALTIES INITIATED U/S 271AAB AND THEREFORE, THE PENALTY SHOW CAUSE NOTICE ISSUED IN THIS CASE IS BAD IN LAW. 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. THU S IT IS CONTENDED THAT THE PENALTY NOTICE ISSUED U/S 271AAB WAS AKIN TO NO TICE 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 VARI OUS CASE LAWS FOR THE ABOVE CONTENTIONS AS MENTIONED IN THE SUBMISSION AL READY ABSTRACTED ABOVE. THE APPELLANT ALSO PLACED HEAVY RELIANCE ON THE DECISION OF HONOURABLE MP HIGH COURT IN THE CASE OF KULWANT SIN GH BHATIA IT-9 TO 14 OF2018 (MP), WHEREIN IN CONTEXT OF PENALTY U/S 271( 1)(C), IT WAS HELD BY THE HON'BLE HIGH COURT THAT THE GROUNDS MENTIONED IN TH E SHOW CAUSE NOTICE DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 35 DOES NOT SATISFIES THE REQUIREMENT OF LAW AS THE NO TICE WAS NOT SPECIFIC. DRAWING SUPPORT FROM THIS DECISION THE APPELLANT CO NTENDED THAT THE PRESENT APPEAL IS SQUARELY COVERED BY THE PROPOSITI ON RENDERED BY THE JURISDICTIONAL HIGH COURT. THE APPELLANT ALSO CONTENDED THAT THE PENALTY LEVIE D U/S 271(1)(C) WAS WITHOUT AFFORDING ANY OPPORTUNITY OF BEING HEARD AS NEITHER THE PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) IN THE ASS ESSMENT ORDER NOR ANY SHOW CAUSE NOTICE WAS EVER ISSUED TO THE APPELLANT U/S 271(1)(C). IT IS CONTENDED THAT THE PENALTY LEVIED U/S 271(1)(C) IS WRONG ALSO FOR THE REASON THAT THE INCOME DECLARED IN THE RETURN FILED U/S 139(1), WAS ACCEPTED AS SUCH IN THE ASSESSMENT ORDER WITHOUT AN Y VARIATION AND WITHOUT ANY ADVERSE COMMENT, THEREFORE, THE APPELLA NT CANNOT BE HELD GUILTY OF EITHER CONCEALING ANY INCOME OR OF FURNIS HING ANY INACCURATE PARTICULARS OF INCOME. AFTER TAKING INTO CONSIDERATION ALL THE CONTENTIONS OF THE APPELLANT CAREFULLY IT IS SEEN THAT AS RIGHTLY POINTED OUT BY THE APPEL LANT, PENALTY PROCEEDINGS WERE INITIATED U/S 271AAB IN PARA 5.2 OF THE ASSESS MENT ORDER STATING THAT 'THE MANNER IN WHICH THE UNDISCLOSED INCOME EA RNED WAS NOT DISCLOSED DURING THE SEARCH PROCEEDINGS U/S 132(4) OF THE ACT. IN VIEW OF THE PROVISIONS OF SECTION 271AAB OF THE ACT, I AM S ATISFIED THAT PENALTY PROCEEDINGS MUST BE INITIATED FOR THE AMOUNT OF DIS CLOSURE MADE U/S 132(4) OF THE ACT. HENCE PENALTY PROCEEDINGS U/S 271AAB IS HEREBY INITIATED FOR A.YS. 2015-16 AND 2016-17'. THE PENAL TY NOTICE ISSUED ALONG WITH THE ASSESSMENT ORDER WHICH IS AT PAGE NO. 18 O F THE PAPER BOOK WAS ALSO ISSUED U/S 271AAB. SUBSEQUENTLY ANOTHER LETTER WAS ISSUED ON 31.05.2018 TO THE APPELLANT WHICH IS AT PAGE 19 OF THE PAPER BOOK, WHEREIN ALSO THE AO HAS REFERRED TO THE PENAL TY PROCEEDINGS U/S 271AAB. THEREFORE, EVIDENTLY THE AO INTENDED TO INI TIATE THE PENALTY PROCEEDINGS ONLY U/S 271AAB AND NOT U/S 271(1)(C). HOWEVER, WHEN THE DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 36 APPELLANT DURING THE PENALTY PROCEEDINGS, THROUGH I TS WRITTEN SUBMISSION, (COPY ENCLOSED AT PAGE NO. 20 TO 25 OF THE PAPER BO OK) POINTED OUT THAT THE PROVISIONS OF SECTION 271AAB ARE NOT ATTRACTED SINC E NO SEARCH WAS CONDUCTED IN THE CASE OF THE APPELLANT HUF AND ALSO POINTED OUT THAT THE MANNER OF EARNING UNDISCLOSED INCOME WAS ALSO DISCL OSED, THE AO LEVIED AND PASSED THE PENALTY ORDER U/S 271(1)(C). THIS AC TION OF THE AO WAS NOT AT ALL JUSTIFIED. CLEARLY THE AO INITIATED THE PROC EEDINGS U/S 271AAB AND HAD NO INTENTION TO INITIATE THE SAME U/S 271(1)(C) . THIS IS ALSO EVIDENT FROM THE ASSESSMENT ORDER WHERE THE SOLE REASON FOR INITIATING THE PENALTY PROCEEDINGS IS STATED TO BE THAT THE APPELLANT HAS NOT DISCLOSED THE MANNER OF EARNING UNDISCLOSED INCOME DURING THE PRO CEEDINGS U/S 132(4) AND THERE IS NO REFERENCE AT ALL TO THE CHARGES SUC H AS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THEREFORE, IT CANNOT BE SAID THAT THE SECTION FOR INITIATION OF P ENALTY WAS INADVERTENTLY TYPED AS 271AAB IN PLACE OF SECTION 271(1)(C) IN TH E ASSESSMENT ORDER AND ALSO IN THE PENALTY NOTICE. THE PENALTY HAS BEEN LEVIED U/S 271(1)(C), FOR WHICH THE APPELLANT WAS NEVER REQUIRED TO SHOW CAUSE. PENALTY WAS INITIATED U/S 271AAB IN THE ASSESSMENT ORDER AND THE SHOW CAUSE NOTICE WAS ALSO ISSUED WITH RESPECT TO THE PENALTY PROCEEDINGS U/S 271AAB AND NOT WITH RESPECT TO THE PROCEEDINGS U/S 271(1)(C). THUS EVIDENTLY, PENALTY U/S 271(1)(C) HAS BEEN LEVIED WITHOUT PROVIDING ANY OPPORTUNITY OF BEING H EARD TO THE APPELLANT. SECTION 274 CLEARLY STATES THAT NO ORDER IMPOSING A PENALTY SHALL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD, OR HAS BEEN GIV EN A REASONABLY OPPORTUNITY OF BEING HEARD. IN THIS CASE, SINCE NO SHOW CAUSE NOTICE WAS ISSUED U/S 271(1)(C), CLEARLY NO OPPORTUNITY OF BEING HEARD WA S GIVEN TO THE APPELLANT BEFORE LEVYING THE PENALTY. THE PENAL TY LEVIED IS WRONG FOR THIS REASON ALSO. INITIATING THE ASSESSMENT PROCEEDINGS U/S 153C ITSELF SUGGESTS THAT DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 37 SEARCH ACTION WAS NOT CONDUCTED IN THE CASE OF THE APPELLANT HUF AND THEREFORE, INITIATION OF PENALTY PROCEEDINGS U/S 271AAB ON THE CHARGE THAT THE APPELLANT HAS NOT DISCLOSED THE MANNER OF EARNI NG UNDISCLOSED INCOME DURING THE SEARCH, WAS NOT CORRECT. THIS CONTENTION OF THE APPELLANT WAS ALSO ACCEPTED BY THE AO AS HE FINALLY DID NOT LEVIE D PENALTY U/S 271AAB. THERE REMAINS NO DOUBT THAT THE PENALTY PROCEEDINGS INITIATED U/S 271AAB IN THE ASSESSMENT ORDER IN THIS CASE WERE NO T IN ACCORDANCE WITH LAW. EVEN FOR A MOMENT, IF IT IS ASSUMED THAT THE NOTICE ISSUED U/S 274 R.W.S. 271AAB DATED 29.12.2017 WAS INTENDED TO BE ISSUED U/S 271(1)(C) AND A CLERICAL TYPOGRAPHICAL MISTAKE OCCURRED IN ISSUING THE SAID NOTICE, THEN ALSO THE PENALTY PROCEEDINGS INITIATED BY THE AO ARE NOT IN ACCORDANCE WITH LAW, AS BOTH THE LIMBS OF SECTION 271(L)(C) I.E. 'C ONCEALMENT OF INCOME' AND 'FURNISHING OF INACCURATE PARTICULARS' WERE MENTION ED IN THE NOTICE ISSUED U/S 274 ON 29.12.2017. IN THESE CIRCUMSTANCES THE DECIS ION OF HONOURABLE JURISDICTIONAL HIGH COURT OF MADHYA PRAD ESH IN THE CASE OF PR. CIT VIS KULWANT SINGH BHATIA (2018) 304 CTR 0103 AN D VARIOUS OTHER DECISIONS OF THE HONOURABLE JURISDICTIONAL IT AT IN DORE BENCH COME TO THE RESCUE OF THE APPELLANT WHEREIN FOLLOWING THE DECIS ION OF HONOURABLE APEX COURT IN THE CASE OF CIT VIS SSA'S EMERALD MEADOWS AND VARIOUS OTHER DECISIONS, IT IS HELD THAT THE GROUND MENTIONED IN THE SHOW CAUSE NOTICE DOES NOT SATISFY THE REQUIREMENT OF LAW, AS CHARGES LEVIED AGAINST THE ASSESSEE IN SUCH NOTICE WAS NOT SPECIFIC AND ACCORD INGLY IT CANNOT BE SAID THAT AN EFFECTIVE OPPORTUNITY OF BEING HEARD WAS GI VEN TO THE ASSESSEE AS CONTEMPLATED U/S 274. THE RELEVANT PARA OF THE ORDE R IS ABSTRACTED HEREUNDER:- 'ON DUE CONSIDERATION OF THE ARGUMENTS OF THE LEARN ED COUNSEL OF THE APPELLANT, SO ALSO CONSIDERING THE FACT THAT TH E GROUND MENTIONED IN SHOW CAUSE NOTICE WOULD NOT SATISFY THE REQUIREM ENT OF LAW, AS DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 38 NOTICE WAS NOT SPECIFIC, WE ARE OF THE VIEW THAT TH E LEARNED TRIBUNAL HAS RIGHTLY RELYING ON THE DECISION OF CIT V/S MANJ UNATH COTTON GINNING FACTORY (SUPRA) AND CIT VIS SSA'S EMERALDS MEADOWS (SUPRA) RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE AND SET ASIDE THE ORDER OF PENALTY IMPOSED BY THE AUTHORITIES '. AS RIGHTLY CONTENDED BY THE APPELLANT THAT THE ABOV E DECISION OF THE JURISDICTIONAL HIGH COURT SQUARELY APPLIES IN THE I NSTANT CASE AS THE MATTER BEFORE THE HONOURABLE HIGH COURT WAS ALSO ID ENTICAL IN SO FAR AS PENALTIES WERE LEVIED U/S 271(1)(C) ON THE BASIS OF SHOW CAUSE NOTICE ISSUED WITHOUT STRIKING OF EITHER OF TWO CHARGES I. E. CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS AS HAS ALSO B EEN DONE IN THE PRESENT CASE. FURTHER IN THE MATTER BEFORE THE HONOURABLE H IGH COURT PENALTY PROCEEDINGS WERE INITIATED SINCE THE ASSESSEE HAD D ECLARED UNDISCLOSED INCOME ONLY AFTER THE DATE OF SEARCH, WHICH FACT IS ALSO IDENTICAL WITH THE FACTS OF THIS APPEAL. ACCORDINGLY, IT IS HELD THAT THE SHOW CAUSE NOTICE ISSUED IN THIS CASE DID NOT MET THE REQUIREMENTS OF LAW AND THE PENALTY PROCEEDINGS INITIATED IN THIS CASE ARE WRONG FOR TH IS REASON ALSO. IT IS ALSO SEEN THAT THE APPELLANT HAS FILED THE RE TURN OF INCOME U/S 139(1) ON 22.06.2016 DECLARING TOTAL INCOME OF RS. 8,12,30,550/- WHICH WAS REVISED ON 08.09.2016 DECLARING TOTAL INCOME OF RS. 8,12,48,800/-. THE AO COMPLETED THE ASSESSMENT PROCEEDINGS FOR THIS YEAR U/S 143(3) ON 29.12.2017 AT A TOTAL INCOME OF RS. 8,12,48,800/- ACCEPTING THE INCOME RETURNED U/S 139(1) AND NO ADDITION WAS MADE. THE A DDITIONAL INCOME WAS OFFERED' BY THE APPELLANT AS BUSINESS INCOME WH ICH IS EVIDENT FROM THE COMPUTATION OF INCOME FILED BY THE APPELLANT U/S 153A, COPY OF WHICH IS ENCLOSED AT PAGE NO. 3 TO 5 OF THE PAPER BOOK. T HE INCOME SO OFFERED BY THE APPELLANT EVEN BEFORE THE ISSUANCE OF NOTICE U/ S 153C, HAVING BEEN ACCEPTED IN THE ASSESSMENT WITHOUT ANY VARIATION, P ENALTY U/S 271(1)(C) EITHER FOR CONCEALMENT OF INCOME OR EVEN FOR FURNIS HING INACCURATE DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 39 PARTICULARS OF INCOME IS NOT ATTRACTED FOR THIS REA SON ALSO. THE APPELLANT ALSO GET SUPPORT FROM THE DECISION OF HONOURABLE M . P. HIGH COURT WHICH HAS ALSO BEEN UPHELD BY THE HONOURABLE SUPREME COUR T IN THE CASE OF CIT VIS SURESH CHAND MITTAL (2001) 251 ITR 9, WHEREIN IT W AS HELD THAT WHERE THE ASSESSEE FILED REVISED RETURN SHOWING HIG HER INCOME AFTER SEARCH AND NOTICE FOR REOPENING OF ASSESSMENT AND T HE DEPARTMENT SIMPLY RESTED ITS CONCLUSIONS ON THE ACTION OF VOLUNTARILY SURRENDER MADE BY THE ASSESSEE, NO PENALTY U/S 271(1)(C) COULD BE LEVIED. FOR THIS REASON ALSO THE PENALTY LEVIED U/S271(1)(C) IN THE PRESENT APP EAL IS HELD TO BE WRONG. THEREFORE, IN VIEW OF THE DISCUSSION MADE ABOVE IT IS HELD THAT THE INITIATION OF THE PENALTY PROCEEDINGS U/S 271AAB AND CONCLUSION OF THE PENALTY PROCEEDINGS U/S 271(1)(C) IS WRONG. SINCE NO 'SEARCH WAS CONDUCTED UPON THE APPELLANT, THE INITIATION OF PEN ALTY PROCEEDINGS U/S 271AAB WAS UNWARRANTED AND THE PENALTY LEVIED U/S 271(1)(C) WITHOUT AFFORDING ANY OPPORTUNITY OF BEING HEARD, ON THE ST RENGTH OF A DEFECTIVE AND WRONG NOTICE ISSUED U/S 271AAB AND ALSO THERE BEING NO VARIATION IN THE INCOME RETURNED U/S 139 AND THAT ASSESSED BY THE AO, THE PENALTY LEVIED IS WRONG AND IS HEREBY DELETED. THEREFORE, T HE PENALTY LEVIED BY THE AO U/S 271(1)(C) IS DELETED AND THE APPEAL FILED BY THE APPELLANT IS ALLOWED . 4.2 GROUND NO. 4 :- THIS GROUND OF APPEAL IS GENERAL IN NATURE WHICH DO NOT REQUIRE ANY SPECIFIC ADJUDICATION. 5. IN THE RESULT, APPEAL FILED BY THE APPELLANT IS ALLOWED. 12. MOVING FURTHER WE WILL FIRST ADJUDICATE THE LEG AL ISSUE AS TO WHETHER THE LD. CIT(A) IS JUSTIFIED IN HOLDING THAT THE PENALTY PROCEEDINGS CARRIED OUT WERE NOT IN ACCORDANCE WITH LAW SINCE DEFECTIVE NOTICE WASISSUED U/S 274 R.W.S. 271AAB OF THE ACT. IT HAS DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 40 BEEN AGREED BY BOTH THE PARTIES THAT SIMILAR NOTICE WERE ISSUED FOR BOTH THE YEARS. WE ARE REPRODUCING BELOW THE NOTIC E ISSUED U/S 274 R.W.S. 271AAB OF THE ACT FOR ASSESSMENT YEAR 20 15-16; OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL)-I, IND ORE PAN. AACHD4947F DATE: 29/12/2017 TO SHRI DINESH CHAND MITTAL (HUF), 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 25. 01.2018 AT 12.30 PM 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 13. LOOKING TO THE ABOVE NOTICE WHICH HAS BEEN ISSU ED AS PER THE PROVISIONS OF SECTION 274 R.W.S. 271AAB OF THE ACT WE OBSERVE THAT IN THE BODY OF THE ORDER NO CHARGES RELATING TO THE PENALTY LEVIABLE U/S 271AAB OF THE ACT ARE MENTIONED. RATHER THE CHA RGES PROVIDED U/S 271(1)(C) OF THE ACT ARE APPEARING AND NOT THE ONE WHICH IS DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 41 CLAIMED TO BE RELEVANT TO ASSESSEE. LOOKING TO THE ABOVE NOTICE IT IS VERY MUCH CLEAR THAT A DEFECTIVE NOTICE HAS BEEN IS SUED BY LD. A.O FOR CARRYING OUT THE PENALTY PROCEEDINGS, BECAUSE N OTICE HAS BEEN ISSUED U/S 271AAB OF THE ACT BUT ALL THE CHARGES PR OVIDED IN SECTION 271(1)(C) OF THE ACT ARE MENTIONED THEREIN AND SUCH NOTICES HAVE BEEN CONSISTENTLY HELD TO BE DEFECTIVE BY VARI OUS HONBLE COURTS AND TRIBUNALS. WE HAVE ALSO COME ACROSS SIM ILAR CASES AND RECENTLY IN THE CASE OF SMT. RAJRANI MITTAL AND ORS ITA NO.852 TO 858/IND/2019 ORDER DATED 7.9.2020 WHEREIN ALSO SIMILAR TYPE OF DEFECTIVE NOTICE WAS ISSUED SHOWING THAT THE LD. A. O HAS NOT APPLIED HIS MIND AS NO SPECIFIC CHARGE IS MENTIONED FOR WHICH THE ASSESSEE WAS REQUIRED TO BE SHOW CAUSED U/S 271AAB OF THE ACT AND IN THE ABSENCE OF THE REQUISITE CONDITIONS OF T HE SPECIFIC CHARGES, INITIATION OF PENALTY PROCEEDINGS CANNOT B E SUSTAINED AND ARE BAD IN LAW. IN THE CASE OF SMT. RAJRANI MITTAL & ORS (SUPRA) WE AFTER APPLYING THE FINDING OF OUR OWN DECISION IN T HE CASE OF DR. RAJESH JAIN (SUPRA) AND VIVEK CHUGH (SUPRA) AND ALSO APPLYING THE RATIO LAID DOWN BY THE HONBLE HIGH COURT IN THE CA SE OF KULWANT SINGH BHATIA (SUPRA) QUASHED THE PENALTY PROCEEDINGS OBSERVING AS FOLLOWS (I.E. RELEVANT EXTRACT) :- DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 42 20. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTAN CES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISIONS OF THE INDORE I.T.A.T. RENDERED BY IN THE CASE OF DR. RAJESH JAIN (SUPRA) AND SHRI VIVEK CHUG H (SUPRA) US ADJUDICATING THE SIMILAR ISSUES AND ALSO APPLYING T HE RATIO LAID DOWN BY THE HON'BLE JURISDICTION HIGH COURT IN THE CASE OF KULWANT SINGH BHATIA (SUPRA) DECIDED THE LEGAL ISSUE IN FAVOUR OF THE AS SESSEE AND QUASH THE PENALTY PROCEEDINGS INITIATED U/S 274 R.W.S. 271AAB OF THE ACT IN ALL THE SEVEN CASES ITA NO.852 TO 858/IND/2019 SINCE THE PE NALTY NOTICE ISSUED U/S 274 R.W.S. 271AAB IS VAGUE AND DOES NOT FULFILL THE REQUIREMENT 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 ALLOWED 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.6,50,000/-(IN THE CASE OF NEHA MITTAL), AND RS.4 ,57,513/- AND RS. 5,35,000/- (IN THE CASE OF SHWETA MITTAL) IN ITA N O.853, 852, 854 TO 858/IND/2019 STANDS DELETED. 14. THEREFORE IN LIGHT OF OUR ABOVE DECISION, THE A LLEGED PENALTY PROCEEDINGS INITIATED BY THE LD. A.O U/S 274 R.W.S. 271AAB OF THE ACT ARE RIGHTLY HELD TO BE INVALID AND BAD IN LAW B Y LD. CIT(A). 15. FURTHER WE ALSO OBSERVE THAT THE PENALTY PROCEE DINGS IN QUESTION ALSO DESERVES TO BE QUASHED ON THE GROUND THAT LD. A.O FAILED TO ISSUE FRESH NOTICE U/S 274 R.W.S. 271(1)( C) OF THE ACT. OUR THIS OBSERVATION IS BASED ON THE FACT THAT IN THE A SSESSMENT ORDER LD. A.O INITIATED PENALTY PROCEEDINGS U/S 271AAB OF THE ACT, FOR DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 43 WHICH HE ISSUED A DEFECTIVE NOTICE WHICH WAS NOT IN ACCORDANCE WITH LAW AS HELD BY US IN THE PRECEDING PARAS ABOVE . SUBSEQUENTLY THE PENALTY PROCEEDINGS WERE CARRIED OUT U/S 271(1) (C) OF THE ACT AND FINALLY THE PENALTY WAS LEVIED U/S 271(1)(C) OF THE ACT BUT TO OUR SURPRISE AND AS ADMITTED BY THE REVENUE AUTHORITIES LD. A.O FAILED TO ISSUE A NEW/FRESH NOTICE U/S 274 R.W.S. 271(1)(C ) OF THE ACT BEFORE COMMENCING THE PENALTY PROCEEDINGS AGAINST THE ASSE SSEE. SUCH ACTION OF THE LD. A.O CANNOT BE HELD JUSTIFIED BY A NY CANON OF LAW SINCE THE PRINCIPLE OF NATURAL JUSTICE HAVE NOT BEE N FOLLOWED AS NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE BEFORE COMMEN CING THE PENALTY PROCEEDINGS. THUS IN OUR CONSIDERED VIEW TH E PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT CARRIED OUT BY THE LD. A.O ARE BAD IN LAW AND ARE NOT IN ACCORDANCE WITH LAW ARE L IABLE TO BE QUASHED AND THE PENALTY SO LEVIED U/S 271(1)(C) OF THE ACT AT RS.4,34,00,000/- FOR ASSESSMENT YEAR 2015-16 AND RS.2,80,00,000/- FOR ASSESSMENT YEAR 2016-17 HAS RI GHTLY BEEN DELETED AND ALSO LD. CIT(A) FINDING ON DECIDING THE LEGAL ISSUE ARE THUS CONFIRMED. 16. NOW MOVING TO THE MERITS OF THE CASE WHICH THOU GH WILL BE MERELY ACADEMIC IN NATURE SINCE THE FINDING OF LD. CIT(A) QUASHING DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 44 THE PENALTY PROCEEDINGS HAVE BEEN CONFIRMED BY US O N TWO LEGAL GROUNDS NAMELY DEFECTIVE NOTICE U/S 274 R.W.S. 271A AB OF THE ACT AND SECONDLY NON ISSUE OF NOTICE U/S 271(1)(C) OF T HE ACT BEFORE COMMENCING AND FINALLY LEVYING THE PENALTY U/S 271( 1)(C) OF THE ACT, STILL WE WILL LIKE TO ADJUDICATE THE ISSUE ON MERIT S OF THE CASE RELATING TO LEVY OF PENALTY U/S 271(1)(C) OF THE AC T FOR ASSESSMENT YEAR 2015-16 AND ASSESSMENT YEAR 2016-17. WE OBSERV E THAT SURVEY WAS CONDUCTED U/S 133A ON 1.9.2014 IN THE CA SE OF THE ASSESSEE. AT THE TIME OF SURVEY AMOUNT OF RS.4,77, 00,000/- WAS OFFERED TO TAX BY THE ASSESSEE BEFORE THE SURVEY TE AM. THE AMOUNT SO OFFERED FOR ASSESSMENT YEAR 2015-16 WAS REQUIRED TO BE DECLARED IN RETURN TO BE FILED BUT BEFORE THE FILING OF RETU RN OF INCOME SEARCH WAS CONDUCTED ON 4.9.2015 IN THE MITTAL GROUP OF CA SES. THE ASSESSEE HUF WAS NOT A PARTY TO THE SEARCH CONDUCTE D U/S 132 NOR ANY WARRANT WAS ISSUED OR ANY PANCHANAMA WAS DRAWN IN ITS NAME. PROCEEDINGS IN THE CASE OF ASSESSEE WAS CARR IED OUT U/S 153C OF THE ACT. SUBSEQUENT TO THE SEARCH AND BEFO RE THE ISSUANCE OF NOTICE U/S 153C OF THE ACT FOR FILING THE RETURN OF INCOME ASSESSEE HAS SUOMOTO FILED THE RETURN ON 18.3.2016 AND 22.6. 2016 DECLARING DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 45 INCOME OF RS.12,75,39,880/- AND RS.8,12,30,550/- F OR ASSESSMENT YEAR 2015-16 AND 2016-17 RESPECTIVELY. 17. THEREAFTER IN COMPLIANCE TO NOTICE U/S 153C OF THE ACT ASSESSEE AGAIN SUBMITTED THE RETURN OF INCOME FOR A SSESSMENT YEAR 2015-16 AND 2016-17. IT IS PERTINENT TO NOTE THAT T HE SAME INCOME AS WAS OFFERED IN THE ORIGINAL RETURN OF INCOME WAS AGAIN OFFERED IN THE RETURN FILED IN COMPLIANCE OF NOTICE U/S 153C O F THE ACT I.E. RS.12,75,39,880/- AND RS.8,12,30,550/-. LD. A.O AF TER MAKING MINOR ADDITION FINALLY ASSESSED INCOME AT RS.12,76, 80,335/-. SO ALMOST INCOME SHOWN BY THE ASSESSEE IN THE ORIGINAL RETURN I.E BEFORE ISSUANCE OF NOTICE U/S 153C OF THE ACT WAS A CCEPTED BY LD. A.O. AS REGARDS ASSESSMENT YEAR 2016-17 AGAINST TH E ORIGINAL RETURN OF INCOME SHOWING THE INCOME AT RS.8,12,30,5 50/- THE ASSESSEE SUBMITTED THE REVISED RETURN ON 8.9.2016 S HOWING INCOME AT RS.8,12,48,800/- I.E. RS.18,250/- MORE THAN THE ORIGINAL. FOR THIS YEAR ALSO LD. A.O ACCEPTED THE RETURNED INCOME THUS MAKING NO ADDITIONS. 18. IMPORTANT FACT BROUGHT TO OUR NOTICE IS THAT MA JOR AMOUNT OF THE INCOME OFFERED TO TAX IN ASSESSMENT YEAR 2015-1 6 WAS THE AMOUNT OFFERED BY THE ASSESSEE DURING THE COURSE OF SURVEY U/S DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 46 133A CARRIED OUT ON 1.9.2014. THIS AMOUNT WAS OFFE RED BEFORE FILING OF RETURN OF INCOME. TAKING ALL THESE FACTS TOGETHER I.E. THE INCOME OFFERED DURING THE COURSE OF SURVEY FORMING PART OF THE INCOME SHOWN IN THE RETURN FILED U/S 139 OF THE AC T AND AGAIN SAME INCOME SHOWN IN RETURN FILED IN COMPLIANCE TO NOTICE U/S 153C OF THE ACT AND THE RETURNED INCOME BEING ALMOS T ACCEPTED BY THE LD. A.O THUS MAKING NO NEW ADDITIONS. THIS FACT SUPPORTS THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME AS ALLEGED BY THE LD. A.O SINCE BEFORE THE I SSUANCE OF NOTICE U/S 153C OF THE ACT THE ASSESSEE HAS ALREADY OFFERE D INCOME IN THE RETURN OF INCOME FILED U/S 139 OF THE ACT. THIS FA CT IS DULY CORROBORATED BY THE EVIDENCE PLACED ON RECORD THAT THE LD. A.O WAS NOT JUSTIFIED IN LEVYING PENALTY U/S 271(1)(C) OF T HE ACT. 19. THE RATIO THAT THE IMPOSITION OF PENALTY IS NOT AUTOMATIC AND THE SAME BEING PENAL IN NATURE HAS TO BE CONSTRUED STRICTLY AND SHOULD FALL WITHIN THE FOUR CORNERS OF SETTLED PROV ISIONS AND THE CONCEALMENT HAS TO BE IN THE RETURN OF INCOME FILED BY THE ASSESSEE AND WHEN THE INCOME IS ALREADY OFFERED IN THE RETUR N DECLARED U/S 139 THEN NO PENALTY CANNOT BE LEVIED ON IT HAS ALSO BEEN HELD BY:- DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 47 (I) HON'BLE DELHI HIGH COURT IN THE CASE OF SAS PHARMACEUTICALS VS CIT (335 ITR 0259) (II) HON'BLE I.T.A.T. MUMBAI IN THE CASE OF MANORAMA V R ATHI V/S ACIT CIR 21(1) ITA NO.6063/MUM/2013 (III) HON'BLE DELHI I.T.A.T. IN THE CASE OF ALOK BHANDARI VS ACIT ITA NO.5747/DEL/2014 (IV) HON'BLE DELHI I.T.A.T. IN THE CASE OF M/S. OSC INFRASTRUCTURE LTD VS. ACIT ITA NO.5891 TO 5895/DEL/2016. (V) HON'BLE DELHI I.T.A.T. IN THE CASE OF ACIT & ANR. V /S MEHAR ANAND & ANR (2017) 50 CCH 0104. 20. IN VIEW OF THE ABOVE STATED FACTS AND THE SETTL ED POSITION OF LAW THAT CONCEALMENT/ FURNISHING OF INACCURATE PARTICUL ARS OF INCOME/UNDISCLOSED INCOME HAS TO BE NECESSARILY SEE N VIS-A-VIS RETURN FILED BY THE ASSESSEE. ONCE THE INCOME IS D ECLARED U/S 139 AND SAME IS ACCEPTED AS SUCH U/S 153C OF THE ACT TH EN THE QUESTION OF THERE BEING CONCEALMENT/FURNISHING INAC CURATE PARTICULARS OF INCOME/UNDISCLOSED INCOME WILL FAIL TO ARISE. IN THE INSTANT CASE SINCE THE INCOME OFFERED FOR TAX BY TH E RESPONDENT IS IN THE RETURN FILED U/S 139 AND ALMOST SAME INCOME HAS BEEN SHOWN DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 48 IN THE RETURN FILED IN COMPLIANCE TO SECTION 153C O F THE ACT AND THE RETURN INCOME HAS BEEN ACCEPTED BY THE LD. A.O WITH OUT MAKING ANY VARIATION, THEN IN OUR VIEW NO QUESTION CAN ARI SES ABOUT ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. WE THEREFORE IN THE GIVEN FACTS AND CIRCUM STANCES OF THE CASE AND IN THE LIGHT OF JUDGMENTS REFERRED ABOVE A RE OF THE CONSIDERED VIEW THAT ON MERITS ALSO THE RESPONDENT ASSESSEE HAS RIGHTLY SUCCEEDED BEFORE LD. CIT(A) SINCE THE BASIC INGREDIENT FOR LEVYING PENALTY U/S 271(1)(C) OF THE ACT I.E. CONCE ALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME ARE NOT APPEARING IN THE CASE OF THE ASSESSEE. THEREFORE WE FIND NO REAS ON TO INTERFERE IN THE FINDING OF LD. CIT(A) DECIDING IN ASSESSEES FA VOUR ON MERITS OF THE CASE, WE THEREFORE CONFIRM THE FINDING OF LD. CIT(A) DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT OF RS.4,34, 00,000/- FOR ASSESSMENT YEAR 2015-16 AND RS.2,80,00,000/- FOR AS SESSMENT YEAR 2016-17. 21 ACCORDINGLY ALL THE GROUNDS RAISED IN THE REVENU E IN THE CASE OF DINESH CHAND MITTAL (HUF) ITA NO.899&900/IND/201 9 FOR ASSESSMENT YEARS 2015-16 AND 2016-17 ARE DISMISSED. DINESH CHAND MITTAL (HUF) ITA NOS. 899 & 900/IND/2019 49 22. IN THE RESULT BOTH THE APPEALS OF THE REVENUE I N ITA NO. 899 & 900/IND/2019 ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 28.09.2 020. SD/- SD/- ( KUL BHARAT) (MANI SH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 28 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