Yogender Mohan Rustagi Vs ACIT (ITAT Delhi)
Summary: The Delhi Bench ‘H’ of the Income Tax Appellate Tribunal allowed Yogender Mohan Rustagi’s appeal for Assessment Year 2017-18 and deleted the penalty of Rs.43,77,932 levied under Section 271AAB(1A). The assessee, an individual deriving income primarily from his proprietary concern M/s Matadin Bhagwandas, was engaged in wholesale trading of dry fruits and other products. A search and seizure operation under Section 132 was conducted on 21.03.2017 in the case of M/s Agson Global Pvt. Ltd. and other group concerns. The assessee had declared total income of Rs.31,52,680. The assessment order made additions for alleged undisclosed sales, alleged undisclosed commission and alleged kacha bills. In quantum appeal, the CIT(A) partly allowed relief and restricted the principal addition relating to alleged undisclosed sales to Rs.12,29,578. The Assessing Officer subsequently levied penalty under Section 271AAB(1A) in respect of additions sustained by the CIT(A). The assessee challenged the penalty principally on the ground that no valid notice had been issued for assuming jurisdiction under Section 271AAB(1A). It was argued that the notice under Section 274 read with Section 271AAB did not specify the applicable condition or clause or the percentage of penalty sought to be imposed. Reliance was placed, inter alia, on PCIT Vs Shri R. Elangovan and Ravi Mathur Vs DCIT. The order also discussed authorities including Manjunatha Cotton and Ginning Factory, SSA’s Emerald Meadows, Jaina Marketing & Associates and PCIT Vs Sandeep Chandak while examining the legal requirement that the assessee be informed of the precise charge. After examining the notices reproduced in the order and Sections 271AAB and 274, the Tribunal found that the Assessing Officer had casually used a pro forma notice and, except for mentioning Section 271AAB, had not identified the relevant statutory conditions. The Tribunal held that the notice contained a fatal error and was not legally valid. Following the Madras High Court judgment in PCIT Vs Shri R. Elangovan and the Jaipur Bench decision in Ravi Mathur Vs DCIT, it quashed the penalty proceedings. Consequently, the penalty of Rs.43,77,932 stood deleted. Since the penalty was cancelled on the technical ground concerning validity of notice, adjudication on the merits became academic and the grounds on merits were dismissed as infructuous. The assessee’s appeal was allowed.
