Rajendra Agrawal Vs DCIT (ITAT Jaipur)
These cross appeals before the Jaipur Bench of the Income Tax Appellate Tribunal concern the order of the Commissioner of Income Tax (Appeals)-2, Udaipur, dated 5 October 2018, arising from a penalty imposed under section 271AAB of the Income Tax Act for assessment year 2015-16. The assessee, an individual belonging to the Kota Dall Mill Group, filed his return under section 139(1) declaring income of ₹12,01,09,200, including surrendered long-term capital gains (LTCG) of ₹10,87,68,470 and commission income. Assessment was completed under section 143(3) read with section 153B at ₹12,24,18,200. Penalty proceedings were initiated through a show-cause notice issued on 12 January 2018. The Assessing Officer (AO), in the penalty order dated 21 June 2018, levied penalty at 30% of the alleged undisclosed income of ₹11,05,77,470 under section 271AAB(1)(c), based on the income declared in the return filed in response to section 153A. The CIT(A) reduced the penalty to 10%, treating it under section 271AAB(1)(a). Both the assessee and the Revenue filed appeals.
The assessee’s grounds included contentions that the penalty notice was invalid because it did not specify the applicable clause of section 271AAB(1), that the CIT(A) applied clause (a) without issuing mandatory notice under section 251(2), and that the surrendered income did not constitute undisclosed income as defined in section 271AAB. The assessee argued that no incriminating material was found during search, and the LTCG transactions were fully supported by documents that remained uncontroverted. Further contentions included objections to the CIT(A)’s finding that penalty was mandatory, and the absence of findings on the AO’s allegation of mens rea.
