INCOME TAX ACT, 1961

Section 271AAB Section 274 Section 132(4)

Penalty under section 271AAB - Leviability - Undisclosed income - Specification of charge

AO while issuing show cause notice under section 274 read with section 271AAB had not specified the default of the assessee in terms of clause (a) to (c) of section 271AAB. According to revenue levy of penalty under section 271AAB is mandatory in nature and, therefore, the AO is not required to specify the clause as per sub-section (1) of section 271AAB in the show cause. The assessee had participated in the penalty proceedings and had not raised any objection or had demanded before the AO about his unawareness of the nature of default attracting the levy of penalty under section 271AAB. Thus, the objection raised by the assessee that the AO had not specified the clause under section 271AAB(1) had no merit when the assessee himself had explained the nature of income disclosed and surrendered and also paid the tax on the same.Held: The levy of penalty under section 271AAB was not mandatory simply because the AO had to first issue a show cause notice to the assessee and then has to make a decision for levy of penalty after considering the fact that all the conditions provided under section 271AAB were satisfied. The show cause notices issued by the AO for initiation of penalty proceedings under section 271AAB were very vague and silent about the default of the assessee and further the amount of undisclosed income on which the penalty was proposed to be levied. The initiation of penalty was therefore, not valid and consequently the order passed under section 271AAB was not sustainable and liable to be quashed.

Followed:Shevata Construction Co. Pvt. Ltd. in DBIT Appeal No. 534/2008, dt. 6-12-2016, CIT v. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Karnataka) : 2014 TaxPub(DT) 0202 (Karn-HC) and CIT v. SSA's Emerald Meadows, (2016) 242 Taxman 180 (SC) : 2016 TaxPub(DT) 4242 (SC). Relied:Shevata Construction Co. Pvt. Ltd. in DBIT Appeal No. 534/2008, dt. 6-12-2016. Ravi Mathur v. DCIT [ITA No. 969/JP/2017, dt. 13-6-2018]

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16

INCOME TAX ACT, 1961

Section 271AAB

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