Show cause notice issued in routine manner cannot be considered a valid notice

Smt. Priyanka Agarwal Vs DCIT (ITAT Jaipur)

Taking into facts and circumstances of the case it is an evident from the show cause notice u/s 274 read with section 271AAB of the Act that the Assessing Officer was not clear i.e whether it is for the clause (a) or clause (b) or clause (c) of section 271AAB(1) of the Act. Where the ld. CIT(A) and the AO failed to note that the surrendered income is not always undisclosed income. In the present case the assessee declared income of Rs. 24,67,900/- which includes surrendered income of Rs. 2,24,492/- on 16.01.2017. Therefore, there is no any doubt or question whether the income disclosed by the assessee is undisclosed income in the terms of definition u/s 271AAB(1) of the Act has to be considered.

Further on perusal of the statement recorded u/s 132(4) of the Act, we observe that the income incriminating materials were found during the search is admitted and the assessee on all occasions has voluntary surrendered income by simply accepting the figure has stated by the search team. The ld. CIT(A) and the AO failed to note that the assessee herself has explained the source of income by stating that out of cash surrender during the search at Rs. 50,000/- was withdrawn from the bank account of the assessee and Rs. 1,00,000/- was withdrawn by husband of the assessee and the remaining was past savings. We observe that as per the specific definition of undisclosed income in explanation (c) to section 271AAB of the Act., the amount of Rs. 2,22,492/- being the cash available as consequences of her saving and gifts on various occasions cannot be considered as undisclosed income and the source of income explained by the assessee herself. In the statement recorded u/s 132(4) of the Act was not disputed or disproved by the AO.

We have gone through the citation which was relied by the ld. AR for the assessee and the ld. AR for the assessee has placed strong reliance of the order passed by this Bench which are of identical nature in the case of Shri Mahaveer Prasad Agarwal vs. DCIT, Kota in ITA No. 1218/JP/2019 dated 02/06/2022 as under:-

“It is evident from the show cause notice issued under section 274 read with section 271AAB (APB Page 1) that the AO was not clear as to on what precise charge the appellant was asked to show cause, whether the assessee shall pay by way of penalty under clause (a), (b) or (c) of section 271AAB. The AO has just mentioned “deliberately concealed the true income”. Thus the AO without mentioning specific default of the assessee in terms of clause (a), (b) or (c) of section 271AAB of the Act, the show cause notice issued in routine manner cannot be considered a valid notice in the eyes of law and accordingly the levy of penalty against the assessee is held to be void ab initio. Further, the assessee has substantiated the undisclosed cash available, as to the extent of surrendered income of Rs. 8,73,000/-.

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