Case Law Details
Ashok Bhatia Vs DCIT (ITAT Indore)
Conclusion: Penalty under section 271AAB levied on the basis of defective notice could not be sustained as there was no mention about various conditions provided u/s 271AAB as it was incumbent upon AO to mention in notice issued under section 274 read with section 271AAB as to under which clause of section 271AAB penalty was leviable and that too, at which rate.
Held: Assessee contended that in the notice issued u/s 274 to assessee there was no mention about the various conditions provided u/s 271 AAB relating to levy of penalty @ 10% or 20% or 30% (as the case may be). Nothing was specified in the notice about Clause-a, b & c of Section 27 1AAB as to at what percentage the penalty would be levied on assessee for the undisclosed income not surrendered during the course of search. Assessee deserved an opportunity to plead before AO before being visited with the penalty u/s 271AAB. The alleged notice issued u/s 274 r.w.s 271AAB was liable to be quashed since there was a technical defect in issuing the notice. It was held there was no mention about various conditions provided u/s 271 AAB. AO had very casually used the proforma used for issuing notice before levying penalty u/s 271(1)(c) for the concealment of income or furnishing of inaccurate particulars of income. Except mentioning the Section 27 1AAB in the notice it did not talk anything about the provision of section 27 1AAB. Certainly such notice had a fatal error and technically was not a correct notice in the eyes of law because it intended to penalize an assessee without spelling about the charge against the assessee. In the case of PCIT V/s Kulwant Singh Bhatia; CIT V/s Manjunatha Cotton Ginning Factory and CIT v/s SSA’S Emerald Meadows, it was held that such show cause notices would not satisfy the requirement of law as notice was not specific. Merely issuing notice in general proforma would negate the very purpose of natural justice. Following the same, the penalty proceedings had been quashed.
FULL TEXT OF THE ITAT JUDGEMENT
The above captioned appeal filed at the instance of assessee pertaining to Assessment Year 2014-15 is directed against the orders of Ld. Commissioner of Income Tax (Appeals)-III (in short ‘Ld.CIT(A)’], Indore dated 14.08.2018 which is arising out of the order u/s 271AAB(1)(c) of the Income Tax Act 196 1(In short the ‘Act’) dated 26.09.2016 framed by DCIT (Central)-1, Indore.
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