2018 (1) TMI 1140 - AT - Income Tax

Penalty u/s. 271(1)(c) or 271AAA - search and seizure action was carried out after 01/06/2007 - Held that - Intention of the Legislature is clear to this extent that in a case wherein search was initiated before 1.6.2007, provisions u/s 271(1)(c) will be applicable and in search initiated after 1.6.2007 (but before 1.7.2012) provisions u/s 271AAA of the Act will be applicable. These provisions are thus not applicable simultaneously but these are period specific. Considering the above, we hold that penalty u/s. 271(1)(c)was not leviable for the year under appeal, as it fell within the specified period. In the cases relied upon by the assessee, the issue has been deliberated upon by the Tribunal and it has been held that penal provisions of section 271(1)(c)cannot be invoked in cases where action u/s. 132(1)was initiated after 01.06.2007. The FAA has, after analyzing the provisions of both the sections, held that penalty could be levied u/s. 271AAA of the Act for the year under consideration - Decided against revenue

Summary

Issues:
1. Challenge to order of CIT(A) by AO regarding penalty under section 271(1)(c) of the Act.

Detailed Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai involved the challenge by the Assessing Officer (AO) against the order of the CIT(A)-1, Thane, regarding the penalty levied under section 271(1)(c) of the Act. The Assessee-Firm, engaged in building and development, had filed its return declaring income, which was subsequently assessed by the AO. The main issue in the appeal was the deletion of the penalty imposed by the AO.

Facts and Assessment:
The AO initiated penalty proceedings under section 271(1)(c) of the Act after conducting survey proceedings at the business premises of the Assessee. The AO concluded that the Assessee had concealed income and furnished inaccurate particulars, leading to the imposition of a penalty. The Assessee, aggrieved by this decision, appealed before the First Appellate Authority (FAA) challenging the penalty.

FAA's Decision:
The FAA considered the provisions of section 271AAA of the Act and observed that the search action had been initiated before a specified period. The FAA noted that penalty under section 271AAA was not applicable in the case and subsequently deleted the penalty levied by the AO. The FAA's decision was based on a thorough analysis of the assessment and penalty orders, along with the Assessee's submissions.

Tribunal's Decision:
During the Tribunal hearing, the arguments of both the DR and the AR were considered. The Tribunal analyzed the relevant provisions of the Act and determined that penalty under section 271(1)(c) could not be levied in cases where search and seizure action was carried out after a specific date. The Tribunal clarified that penalty provisions were period-specific, with section 271AAA applying to cases where search was initiated within a particular timeframe. Relying on precedents and legal interpretations, the Tribunal upheld the FAA's decision to delete the penalty and dismissed the appeal filed by the AO.

Conclusion:
In conclusion, the Appellate Tribunal upheld the decision to delete the penalty imposed by the AO under section 271(1)(c) of the Act. The Tribunal's detailed analysis of the legal provisions and precedents led to the dismissal of the AO's appeal, affirming the FAA's order. The judgment clarified the applicability of penalty provisions in cases of search and seizure actions, emphasizing the period-specific nature of penalty sections under the Act.