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2020 (11) TMI 65 - AT - Income TaxPenalty u/s 271(1)(c) OR u/s 271AAB - HELD THAT - CIT(A) has reversed AO s action for the sole reason that since the instant lis involves a search case covered under a specific provision u/s 271AAB of the Act, the impugned proceedings u/s. 271(1)(c) ought not to have been initiated. This clinching aspect has gone unrebutted from the Revenue side that the AO had indeed involved sec. 271(1)(c) proceedings only. The tribunal s co-ordinate bench decision(s) (supra) have already made it clear that the specific provision dealing with such penalty i.e. sec. 271AAB has overriding effect over the general one that the sec. 271(1)(c) in other words. We adopt the same reasoning mutatis mutandis and confirm the CIT(A) s action deleting the impugned penalty.
Issues Involved:
1. Legality and applicability of penalty under section 271(1)(c) of the Income Tax Act, 1961. 2. Applicability of section 271AAB in cases involving search and seizure operations. 3. Validity of the penalty proceedings initiated by the Assessing Officer (AO). Issue-Wise Detailed Analysis: 1. Legality and Applicability of Penalty under Section 271(1)(c): The primary issue revolves around the legality of the penalty of ?1,12,50,200 imposed by the AO under section 271(1)(c) for the assessment year 2014-15. The AO noted that the appellant had concealed income amounting to ?1,72,67,982 due to the conversion of a declared loss into positive income. The penalty was levied at 200% of the tax sought to be evaded. However, the appellant contended that the incorrect return showing a loss was filed due to an inadvertent error by a newly appointed accountant. The appellant had subsequently revised the return, showing the correct income before the mistake was detected by the Income Tax Department. 2. Applicability of Section 271AAB in Search and Seizure Cases: The appellant argued that since a search was conducted on 03.09.2014, the penalty, if any, should be levied under section 271AAB, which applies specifically to cases involving search operations initiated on or after 01.07.2012. The appellant's case falls under the definition of "specified previous year" as per section 271AAB, which excludes the applicability of section 271(1)(c). The CIT(A) agreed with this contention, stating that the provisions of section 271AAB, which include a non obstante clause, override the general provisions of section 271(1)(c). 3. Validity of the Penalty Proceedings Initiated by the AO: The CIT(A) found that the AO should have initiated penalty proceedings under section 271AAB(1)(c) instead of section 271(1)(c). The CIT(A) relied on judicial precedents, including the decision of the ITAT Lucknow Bench in the case of Sandeep Chandak vs. ACIT, which held that penalty proceedings under section 271(1)(c) cannot be deemed to be initiated under section 271AAB automatically. The CIT(A) also cited decisions from the ITAT Delhi and Kolkata Benches, which supported the view that penalties in search cases should be levied under the specific provisions of section 271AAB and not under section 271(1)(c). Conclusion: The CIT(A) concluded that the appellant's case was covered under section 271AAB and not section 271(1)(c). Therefore, the penalty levied by the AO under section 271(1)(c) was deemed invalid. The CIT(A) directed the AO to delete the penalty of ?1,12,05,200. The tribunal upheld the CIT(A)'s decision, emphasizing that the specific provision of section 271AAB has an overriding effect over the general provision of section 271(1)(c). Consequently, the Revenue's appeal was dismissed.
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