Ravi Mathur Vs DCIT (ITAT Jaipur)
Section 271AAB Penalty Deleted as Undisclosed Income Not Established and Defective Notice Issued: ITAT Jaipur
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) confirming a penalty of ₹1,00,20,000 imposed under Section 271AAB of the Income Tax Act for Assessment Year 2015-16.
The assessee, an individual earning income from salary, house property and other sources, was subjected to a search under Section 132 on 30 October 2014. During the search, a pocket diary containing entries relating to advances given for purchase of land was found. In the statement recorded under Section 132(4), the assessee disclosed income of ₹10.02 crore. The return of income filed for the relevant assessment year included the surrendered income, and the Assessing Officer completed the assessment by accepting the returned income. Subsequently, penalty proceedings under Section 271AAB were initiated and culminated in the imposition of penalty, which was upheld by the CIT(A).
Before the Tribunal, the assessee challenged both the validity of the show cause notices and the levy of penalty. It was contended that the notices issued under Section 271AAB read with Section 274 did not specify the clause of Section 271AAB(1), the nature of the default, or the particulars of the alleged undisclosed income. The assessee argued that the absence of a specific charge deprived him of an effective opportunity to respond. It was further submitted that the Assessing Officer had not recorded any finding that the surrendered amount constituted “undisclosed income” within the meaning of the Explanation to Section 271AAB. The assessee also argued that the entries were recorded in the seized diary, that no regular books of account were required to be maintained, and that penalty under Section 271AAB was not automatic but discretionary.
