After a search, assessee offered to tax income of Rs.3,25,00,000 and stated that his undisclosed income was Rs.3,06,07,997. He sought immunity from penalty under explanation 5 of Sec.271(1)(c). AO made addition of Rs.1,29,3900 and imposed penalty. CIT(A) confirmed AO's order. ITAT quashed penalty as there was no satisfaction for initiation of penalty proceedings, and show cause notice u/s 274 was defective.-501304
1. A search and seizure operation u/s.132(1) of the Act in was conducted in the Builder Group of Cases. Shri. Uma Shankar Agarwal(the Assessee in these appeals) and his brother Shri.L.K.Agarwal were members of the Builder Group, during which Shri L.K. Agarwal had made an ad- hoc disclosure of Rs.6.25 Crores in respect of himself and his family members. Subsequently , assessee offered to tax income of Rs.3,25,00,000/- upto the date of search and duly reflected such disclosure in the regular books of accounts, and stated that his undisclosed income is Rs.3,06,07,997/-, which he wanted the Department to treat as his undisclosed income which was being disclosed u/s.132(4) read with explanation 5 of Sec.271(1)(c) and sought immunity from penalty u/s.271(l)(c) and prosecution. In the assessment year 2006-07, the Assessing Officer had made an addition of Rs.1,29,3900. AO imposed penalty.
2. CIT(A) confirmed the action of the AO.
3. On appeal, the ITAT held as under:
4. The aforesaid ruling will squarely apply to the facts of the present case. In the present case also satisfaction for initiation of penalty proceedings u/s.271(1)( c) of the Act is not discernible from the order of assessment. The show cause notice u/s.274 of the Act is also defective. Following the decision referred to above, we hold that the penalty imposed on the Assessee u/s.271(1)( c) of the Act cannot be sustained and the same is directed to be cancelled.”
Case Reference - Uma Shankar Agarwal -versus- D.C.I.T.
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH 'A' KOLKATA
[Before Hon'ble Shri N.V.Vasudevan, JM & Shri M.Balaganesh, AM ]
ITA Nos.1831 to 1835/Kol/2009
Assessment Years : 2002-03 to 2006-07