2012 (7) TMI 973 - AT - Income Tax

Whether CIT(A) has erred directing the AO to delete the penalty u/s. 271(1)(c) - Held No - AO has not invoked the correct provisions of law for levying the penalty. In this case search was conducted in the premises of the assessee on 24-09-2008, thus the date of initiation of search was on 24-09-2008. From the provisions of Section 271AAA it is clear that in the case where action U/s 132 is initiated on or after 01/06/2007, penalty cannot be levied U/s 271 (1)(c). Penalty can be levied only U/s. 271AAA of the Act when certain conditions stipulated therein is not complied. Therefore, confirm the order of the learned CIT(A) deleting the penalty levied by the learned AO.

Summary

Issues:
1. Appeal against order of CIT(A) deleting penalty under section 271(1)(c) of the IT Act for assessment year 2008-09.

Analysis:
The appeal was filed by the revenue against the order of the CIT(A) deleting the penalty imposed by the Assessing Officer under section 271(1)(c) of the IT Act for the assessment year 2008-09. The assessee admitted unaccounted income during a search conducted under section 132 of the Act. The AO levied a penalty of Rs. 12,07,665, being 100% of the tax sought to be evaded. The CIT(A) deleted the penalty based on the provisions of section 271AAA, stating that no penalty under section 271(1)(c) can be imposed for the specified previous year when the due date of filing the return had not expired before the search date. The CIT(A) highlighted that the penalty can only be imposed when the due date of filing the return has expired. The revenue challenged this decision before the ITAT.

The ITAT observed that the search was initiated on 24-09-2008, and as per section 271AAA of the Act, when a search is initiated after 01-06-2007, penalty under section 271(1)(c) cannot be imposed. The correct provision for penalty in such cases is section 271AAA, which requires specific conditions to be met for the penalty to be levied. Since the AO did not apply the correct provision of law, the ITAT upheld the CIT(A)'s decision to delete the penalty. The ITAT dismissed the revenue's appeal, confirming the deletion of the penalty.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the penalty imposed under section 271(1)(c) for the assessment year 2008-09, as the provisions of section 271AAA were applicable in this case. The correct legal provisions were not invoked by the Assessing Officer, leading to the deletion of the penalty.