Dr. Rajesh Jain, indore, Indore V. The DCIT Central 1 indore, Indore

ITA 905/Ind/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5410 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-02-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 03-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S AMBEDKAR
• Assessee Lawyers: AMIT S JAIN
• Keywords: Opportunity of being heard; Principle of natural justice; Retrospective amendment; Question of law; Reasonable cause; Set aside
• Section: 271(1)(c); 143(3); 142(1); 153A; 292BB; 274; 143(2); 139(1); 13; 153; 22; 27; 132; 11; 139

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.905/IND/2018 ASSESSMENT YEAR 2014-15 REVENUE BY SHRI R.S. AMBEDKAR , SR.DR ASSESSEE BY SHRI AMIT S JAIN, AR DATE OF HEARING 05.02 .20 20 DATE OF PRONOUNCEMENT 19.0 2. 2020 O R D E R PER MANISH BORAD, AM THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE OF THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2014-15 IS DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEA LS)-III (IN SHORT LD.CIT(A)], INDORE DATED 10.07.2018 WHICH IS ARIS ING OUT OF THE ORDER U/S 271AAB OF THE INCOME TAX ACT 1961(IN SHOR T THE ACT) DATED 28.09.2016 FRAMED BY DCIT(CENTRAL)-1, INDORE. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEA L; DR. RAJESH JAIN, E-36 SAKET NAGAR, INDORE VS. DCIT (CENTRAL ) - 1, INDORE (APPELLANT) (RESPONDENT ) PAN NO. A BTPG0870H DR. RAJESH JAIN ITA NO. 905/IND/2018 2 1. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS. 2,04,900/- LEVIED BY THE AO U/S 271AAB IN RESPECT OF ALLEGED UNACCOUNTED CASH OF RS . 6,83,000/-. THAT ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE AND IN LAW THE PENALTY LEVIED IS UNCALLED FOR AND BAD IN L AW AND IT IS PRAYED THAT THE PENALTY MAY VERY KINDLY BE DELETED. . 2. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS. 2,04,900/- LEVIED BY THE AO U/S 271AAB ALSO FOR THE REASON THAT THE PENALTY NOTICE ISSUED BY THE AO WAS NOT IN ACCORDANCE WITH LAW. 3. THAT THE LD. CIT(A) ERRED IN UPHOLDING THAT PENALTY IS LEVIABLE U/S 271 AAB OVERLOOKING THE FACT THAT NEITHER THE REQUISITE CONDITIONS AS ENVISAGED BY LAW FOR THE PURPOSE OF LEVYING THIS PENALTY ARE PRESENT / FULFILLED IN THIS CASE NOR THE ORDER IMPOSING THE PENALTY IS A SPEAKI NG ORDER. 4. THAT THE PENALTY IS PRAYED TO BE DELETED ALSO FOR T HE REASON THAT THE SAME WAS LEVIED BY THE LEARNED AO U/S 271AAB(C) STATING THAT THE APPELLANT DID NOT DISCLOSED THE METHOD OF EARNING U NDISCLOSED INCOME AND THE LEARNED CIT(A) WHILE CONFIRMING THE PENALTY HEL D OTHERWISE. 5. 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. 3 . THE SOLE GRIEVANCE OF THE ASSESSEE RELATES TO T HE LEVY OF PENALTY U/S 271AAB CONFIRMED BY THE LD. CIT(A). 4. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT THE AS SESSEE IS A DOCTOR AND HAS EARNED INCOME FROM MEDICAL CONSULTAN CY, RECEIVED SALARY FROM M/S CONVENIENT HOSPITAL LTD, RENTAL INC OME AND OTHER INCOME FROM OTHER SOURCE I.E. DIVIDEND INCOME AND I NTEREST INCOME DR. RAJESH JAIN ITA NO. 905/IND/2018 3 ON SAVING BANK ACCOUNT, FDR, NSC, PPF ETC. SEARCH U /S 132 OF THE ACT WAS CARRIED OUT ON 04.10.2013. NOTICES U/S 153 A, 143(2) & 142(1) OF THE ACT DULY SERVED. RETURN OF INCOME FIL ED ON 29.11.2014 DECLARING INCOME OF RS.37,96,310/-. ASSESSMENT WAS COMPLETED U/S 153A R.W.S. 143(3) OF THE ACT ON 22.03.2016 ADDING UNDISCLOSED CASH OF RS.6,83,000/- FOUND DURING THE COURSE OF SE ARCH & SEIZURE OPERATION AND ALSO LEVIED PENALTY @30% OF UNDISCLOS ED INCOME AT RS.2,04,900/- U/S 271AAB OF THE ACT. AGGRIEVED ASSE SSEE PREFERRED APPEAL BEFORE LD. CIT(A) AGAINST THE LEVY OF PENALT Y U/S 271AAB OF THE ACT BUT COULD NOT SUCCEED. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6 . LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT BEFORE LEVYING THE PENALTY U/S 271AAB OF THE ACT LD. A.O HAS TO ISSUE NOTICE U/S 274 OF THE ACT, AS PROVIDED IN SECTION 271AAB(3) OF TH E ACT. IN THE NOTICE ISSUED TO THE ASSESSEE THERE IS NO MENTION A BOUT THE VARIOUS CONDITIONS PROVIDED U/S 271 AAB OF THE ACT RELATING TO LEVY OF PENALTY @ 10% OR 20% OR 30% (AS THE CASE MAY BE). NOTHING IS SPECIFIED IN THE NOTICE ABOUT CLAUSE-A, B & C OF S ECTION 271AAB OF THE ACT AS TO AT WHAT PERCENTAGE THE PENALTY WILL B E LEVIED ON THE DR. RAJESH JAIN ITA NO. 905/IND/2018 4 ASSESSEE FOR THE UNDISCLOSED INCOME NOT SURRENDERED DURING THE COURSE OF SEARCH. THE ASSESSEE DESERVES AN OPPORTU NITY TO PLEAD BEFORE BEING VISITED WITH THE PENALTY U/S 271AAB OF THE ACT. THE ALLEGED NOTICE ISSUED U/S 274 R.W.S 271AAB OF THE A CT IS LIABLE TO BE QUASHED SINCE THERE IS A TECHNICAL DEFECT IN ISSUIN G THE NOTICE. RELIANCE PLACED ON THE DECISION OF CO-ORDINATE BENC H, CHENNAI IN THE CASE OF DCIT V/S R. ELANGOVAN 1199/CHNY/2017 ORDER DATED 05.04.2018 WHICH HAS ALSO BEEN FOLLOWED BY JAIPUR BENCH OF TRIBUNAL IN THE CASE OF RAVI MATHUR VS. DCIT, ITA NO.969/JP/2017 LAYING DOWN THE PROPOSITION THAT SHOW CAUSE NOTICE ISSUED U/S 274 OF THE ACT WITHOUT DRAWING REQUISITE LEVY OF PENALT Y U/S 271AAB OF THE ACT IS A DEFECTIVE NOTICE AND IS LIABLE TO BE Q UASHED. 7. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHEMEN TLY ARGUED SUPPORTING THE ORDERS OF LOWER AUTHORITIES A ND ALSO SUBMITTED THAT THE LEGAL ISSUE RAISED BY THE ASSESS EE IS LIABLE TO BE DISMISSED SINCE IN THE NOTICE ISSUED U/S 274 OF THE ACT THE LD. A.O HAS SPECIFICALLY MENTIONED THE SECTION 271AAB OF TH E ACT AND IT MAY HAVE BEEN A CLERICAL ERROR ON THE PART OF THE LD. A .O TO USE THE SAME PROFORMA AS USED FOR ISSUING NOTICE U/S 274 R.W.S. 271(1)(C ) OF THE DR. RAJESH JAIN ITA NO. 905/IND/2018 5 ACT. ON MERITS THE ASSESSEE HAS NO CASE SINCE THE ALLEGED ADDITION WAS NOT SURRENDERED DURING THE COURSE OF SEARCH, NO T INCLUDED IN THE INCOME TAX RETURN AND TAXES NOT PAID AND SUCH U NDISCLOSED INCOME HAS RIGHTLY BEEN PENALIZED @30% AS PER THE P ROVISIONS OF SECTION 271 AAB(C) OF THE ACT. LD. DEPARTMENTAL RE PRESENTATIVE STRONGLY RELIED ON THE JUDGMENT OF HON'BLE ALLAHABA D HIGH COURT IN THE CASE OF PR. CIT VS. SANDEEP CHANDAK (2018) 405 ITR 648. THIS JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT STANDS CON FIRMED BY HON'BLE SUPREME COURT ALSO. 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RE CORDS PLACED BEFORE US. THE LEGAL ISSUE BEFORE US IS THAT WHETHER THE NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT SUFF ERS FROM FATAL ERROR AND TECHNICAL DEFECT THEREBY NOT PROVIDING AN OPPORTUNITY TO THE ASSESSEE TO PLEAD HER CASE. SINCE THE LEGAL GRO UND 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 LEVY ING PENALTY U/S 271AAB OF THE ACT THE LD. A.O NEEDS TO PRIMARILY IS SUE NOTICE U/S DR. RAJESH JAIN ITA NO. 905/IND/2018 6 274 OF THE ACT SO FOR INITIATING PROCEEDINGS U/S 27 1AAB 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 SECTION 271AAB AND 274 OF THE ACT WHICH READS AS F OLLOWS:- 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 ASSE SSEE 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 UN DER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND S PECIFIES 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 UN DER SUB-SECTION (4) OF SECTION 132, DOES NOT ADMIT THE UNDISCLOSED INCO ME; 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 INCOM E OF THE SPECIFIED PREVIOUS YEAR, IF IT IS NOT COVERED BY THE PROVISIO NS OF CLAUSES (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 SECTION . DR. RAJESH JAIN ITA NO. 905/IND/2018 7 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 SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE O F SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE 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 VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEAR CH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NOR MAL 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 EXP ENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAIN ED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YE AR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED.'. 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'] DR. RAJESH JAIN ITA NO. 905/IND/2018 8 9. FROM PERUSAL OF THE ABOVE PROVISION WE OBSERVE THA T SUB SECTION 3 OF SECTION 271AAB OF THE ACT TALKS ABOUT ISSUING THE NOTICE U/S 274 OF THE ACT. SO FOR INITIATING THE PE NALTY PROCEEDINGS U/S 271AAB OF THE ACT THE FIRST STEP TO BE TAKEN BY LD. A.O IS TO ISSUE A VALID NOTICE U/S 274 OF THE ACT. SUB-SECTIO N (1) TO SECTION 274 OF THE ACT PROVIDES A PROCEDURE THAT NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHALL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD, OR HAS BEEN GIVEN A REASONABLE OPPORTUN ITY OF BEING HEARD. TO COMPLY WITH THIS REQUIREMENT THE NOTICE 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 PENAL TY FOR THE CONTRAVENTION OF THE RELATED PROVISIONS OF THE ACT WHICH IN THE INSTANT CASE RELATES TO NOT SURRENDERING OF UNDISCL OSED AMOUNT DURING THE COURSE OF SEARCH WHICH IS SUBSEQUENTLY A DMITTED DURING THE COURSE OF ASSESSMENT AND NOT CHALLENGED BEFORE THE LD. CIT(A). SO IT WAS INCUMBENT 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 ASSESS EE FALLS IN CLAUSES (A)/(B)/(C) OF SECTION 271AAB OF THE ACT. HE SHOULD HAVE FURTHER MENTIONED THAT AS THE ASSESSEES CASE FALLS UNDER CLAUSE-C OF DR. RAJESH JAIN ITA NO. 905/IND/2018 9 SECTION 271AAB OF THE ACT, WHY SHE SHOULD NOT BE VI SITED BY PENALTY @30% OF THE UNDISCLOSED INCOME. AGAINST THIS CHARG E THE ASSESSEE SHOULD HAVE BEEN GIVEN A REASONABLE OPPORTUNITY 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 T HE ALLEGED NOTICES ISSUED U/S 274 R.W.S. 271AAB OF THE ACT. NO TICE 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 :- *HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WITH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVEN UNDER 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 WITHI N THE ALLOWED AND THE MANNER REQUIRED BY THE SIDE SECTION 139(1) OR BY SU CH NOTICE. *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. DR. RAJESH JAIN ITA NO. 905/IND/2018 10 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 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/- (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 COND ITIONS PROVIDED U/S 271 AAB OF THE ACT. IN THE NOTICE DATED 22.03.2 016 THE LD. A.O HAS VERY CASUALLY USED THE PROFORMA USED FOR ISSUIN G NOTICE BEFORE LEVYING PENALTY U/S 271(1)(C) OF THE ACT FOR THE CO NCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. IT DOES NOT TALK ANYTHING ABOUT VARIOUS CLAUSES OF SECTION 271AAB OF THE ACT FOR LEVYING PENALTY @10%/20%/30%. CERTAINLY SU CH NOTICE HAS A FATAL ERROR AND TECHNICALLY IS NOT A CORRECT NOTI CE IN THE EYES OF LAW BECAUSE IT INTENDS TO PENALIZE AN ASSESSEE WITHOUT SPELLING ABOUT THE SPECIFIC CHARGE AGAINST THE ASSESSEE. 12. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT V/S KULWANT SINGH BHATIA (SUPRA) DEALT THE ISSUE OF DEFECTIVE NOTICE DR. RAJESH JAIN ITA NO. 905/IND/2018 11 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 CA SE OF CIT V/S MANJUNATHA COTTON GINNING FACTORY AND CIT V/S SSAS EMERALD MEADOWS (SUPRA) HELD THAT SUCH SHOW CAUSE NOTICES WOULD NOT SATISFY THE REQUIREMENT OF LAW AS NOTICE WAS NOT SP ECIFIC. MERELY ISSUING NOTICE IN GENERAL PROFORMA 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 PROCEEDINGS 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 CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR HAVING UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAB OF DR. RAJESH JAIN ITA NO. 905/IND/2018 12 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 FU RNISHING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF I NCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVE N WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE AS SESSEE 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 T HE PENALTY NOTICE 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 PROP ERLY 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 REVENUE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT OR DER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESS EE HAS CONCEALED PARTICULARS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE DR. RAJESH JAIN ITA NO. 905/IND/2018 13 NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION 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 INCO RRECT PARTICULARS OF INCOME. SENDING PRINTED FORM WHERE A LL 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 PR OCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOT HER LIMB IS BAD IN LAW; PENALTY PROCEEDINGS ARE DISTINCT FROM T HE ASSESSMENT PROCEEDINGS : THOUGH PROCEEDINGS FOR IMP OSITION OF PENALTY EMANATE FROM PROCEEDINGS OF ASSESSMENT, THE Y ARE DR. RAJESH JAIN ITA NO. 905/IND/2018 14 INDEPENDENT AND A SEPARATE ASPECT OF THE PROCEEDING S; THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCOR RECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN T HE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE PROCEEDINGS ON THE MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PE NALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PRO CEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED I NVALID 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 HOLDING THAT SUCH SHOW CAUSE NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT ARE NOT SUSTAINABLE IN LAW. DR. RAJESH JAIN ITA NO. 905/IND/2018 15 15. AS REGARDS TO JUDGMENT OF HON'BLE ALLAHABAD HIGH C OURT IN THE CASE OF PR. CIT VS SANDEEP CHANDAK (SUPRA) WHICH HAS BEEN RELIED BY THE DEPARTMENTAL REPRESENTATIVE IS CONCERNED, WE FIND THAT IN THE DECISION RENDERED BY THE CO-ORDINATE BENCH OF J AIPUR IN THE CASE OF RAVI MATHUR VS DCIT (SUPRA) WHEREIN ALSO SIMILAR ISSUE OF DEFECTIVE NOTICE U/S 274 R.W.S. 271AAB WAS ADJUDICA TED, THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CAS E OF PR. CIT VS SANDEEP CHANDAK (SUPRA) HAS BEEN DISCUSSED 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 DR. RAJESH JAIN ITA NO. 905/IND/2018 16 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 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 CIRCUMSTA NCES OF THE CASE WHEREIN THE MATTER WRITTEN IN THE BODY OF THE NOTIC E ISSUED U/S 274 DR. RAJESH JAIN ITA NO. 905/IND/2018 17 OF THE ACT DOES NOT REFER TO THE CHARGES OF PROVISI ON OF SECTION 271AAB OF THE ACT MAKES THE ALLEGED NOTICE DEFECTIV E AND INVALID AND THUS DESERVES TO BE QUASHED. SINCE THE PENALTY PROCEEDINGS ITSELF HAS BEEN QUASHED THE IMPUGNED PENALTY OF RS. 2,04,900/- STANDS DELETED. WE ACCORDINGLY ALLOW THE LEGAL GRO UND RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY 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 ASSE SSMENT 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 MERI TS OF THE LEVY OF PENALTY ARE NOT BEEN DEALT WITH, AS THE SAME ARE RE NDERED ACADEMIC IN NATURE. THUS GROUNDS RAISED ON MERITS ARE DISMIS SED AS INFRUCTUOUS. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED O N LEGAL GROUND. DR. RAJESH JAIN ITA NO. 905/IND/2018 18 THE ORDER PRONOUNCED IN THE OPEN COURT ON 19.02.20 20. SD/- SD/- ( KUL BHARAT) (MANI SH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 19 FEBRUARY , 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