Manchukonda Yethiraja Subrahmanyam Vs ACIT (ITAT Visakhapatnam)
Summary: Penalty under section 271AAB(1) cannot be sustained where the show-cause notice under section 274 does not specify the particular clause of section 271AAB(1) under which penalty is proposed, since clauses (a), (b) and (c) contemplate different factual circumstances and carry different rates of penalty.
Facts. A search under section 132 was conducted on 24.11.2015 at the assessee’s residential premises, during which silver jewellery weighing 17,220.90 grams and valued at Rs. 46,84,044 was found. In his statement under section 132(4), the assessee initially admitted the value of the silver articles as undisclosed income. The assessee subsequently explained that Rs. 23,49,000 represented his share of additional income disclosed by a partnership firm, M/s Navratna Estates, which had been utilised for investment in the silver articles. He filed a revised return declaring the balance Rs. 23,35,044 as additional income. The AO did not accept the explanation regarding Rs. 23,49,000 and made the addition. Penalty proceedings under section 271AAB were initiated.
AO / CIT(A) Finding. The AO imposed penalty under section 271AAB(1) at 60% of Rs. 23,35,044, resulting in a penalty of Rs. 14,01,026. The CIT(A) confirmed the penalty. Before the Tribunal, the assessee challenged the validity of the penalty proceedings on the ground that the notice under section 274 read with section 271AAB merely stated that penalty under section 271AAB was proposed, without specifying whether the proceedings were under clause (a), (b) or (c), or identifying the specific default/conditions alleged.
