2017 (11) TMI 806 - HC - Income Tax

Penalty u/s 271AAA - ITAT holding that the penalty imposed was on an incorrect appreciation of law - Held that - For A.Y. 2010-11, search assessment was completed under Section 153A. On the basis of additions made, the AO proceeded to impose penalty upon two Directors under Section 271AAA of the Act. The aggrieved assessee and parties preferred appeals; the Appellate Commissioner reversed the findings and deleted the penalties. The ITAT noticed that the functional jurisdiction inter alia for imposition of penalty under Section 271AAA of the Act is the admission in the course of the statement made during the search proceedings and that such a fact did not exist in the circumstances of the case. Therefore, based upon its own previous order in Addl. Commissioner of Income Tax v. Emirates Technologies Pvt. Ltd. (2016 (10) TMI 1071 - ITAT DELHI ) correctly deleted the penalty. No substantial question of law

Summary

Issues involved:
- Correctness of penalty imposed under Section 271AAA of the Income Tax Act, 1961.

Analysis:
The High Court addressed the question of law regarding the correctness of the penalty imposed under Section 271AAA of the Income Tax Act, 1961. The case involved search assessments completed under Section 153A for the assessment year 2010-11. The Assessing Officer imposed penalties on two Directors based on additions made during the assessment. However, the Appellate Commissioner reversed the findings and deleted the penalties. The ITAT observed that the imposition of penalty under Section 271AAA is contingent on the admission made during search proceedings, which was not present in this case. Citing a previous order in Addl. Commissioner of Income Tax v. Emirates Technologies Pvt. Ltd., the ITAT deleted the penalty. The Court noted that the decision in Emirates Technologies Pvt. Ltd. was upheld in a subsequent appeal by the Revenue. Consequently, the Court found no substantial question of law in the appeals and dismissed them accordingly.