2019 (4) TMI 1029 - AT - Income Tax

Penalty u/s 271AAA OR u/s 271(1)(c) - search u/s 132 - HELD THAT - Section 271AAA is an overriding provision and which is applicable where the search has been initiated under Section 132 on or after 1st June, 2007 but before the 1st day of July, 2012. In respect of such search for any undisclosed income, the penalty is leviable under this Section at the rate of 10% of the undisclosed income. Sub-section (3) has clearly provided that no penalty under Section 271(1)(c) shall be imposed upon the assessee whose case is covered by Section 271AAA. Admittedly, in this case, the search has taken place on 31st January, 2011 which falls within the period in which Section 271AAA was applicable i.e., after the 1st day of June, 2007 but the 1st day of July, 2012. In the above circumstances, in our opinion, learned CIT(A) rightly held that in this case, penalty was leviable under Section 271AAA and not under Section 271(1)(c). - Decided against revenue.

Summary

Issues:
- Appeal against order of learned CIT(A) dated 13th June, 2014 for assessment year 2010-11.
- Deletion of penalty under Section 271(1)(c) and imposition of penalty under Section 271AAA.

Analysis:
1. The appeal by the Revenue was against the order of learned CIT(A) for the assessment year 2010-11. The Revenue raised grounds questioning the correctness of the CIT(A)'s order and the deletion of penalty under Section 271(1)(c) amounting to ?2,02,72,800 imposed by the Assessing Officer.

2. During the hearing, the assessee relied on a decision by ITAT, Delhi Bench in a specific case. The CIT-DR, on the other hand, relied on various other decisions. The facts revealed that a search took place at the assessee's premises on 31st January, 2011, and the Assessing Officer levied a penalty under Section 271(1)(c) which was later modified by the CIT(A) to a penalty under Section 271AAA at ?42,00,000, resulting in a relief of ?2,02,72,800.

3. Section 271AAA is an overriding provision applicable when a search is initiated under Section 132 between specific dates. It mandates a penalty of 10% of undisclosed income for cases falling within its purview. The ITAT upheld the CIT(A)'s decision that in this case, penalty was rightly levied under Section 271AAA and not under Section 271(1)(c), in line with a similar view expressed in a previous case.

4. The ITAT found no infirmity in the CIT(A)'s order and dismissed the Revenue's appeal, noting that the facts of the cases relied upon by the CIT-DR were dissimilar. Therefore, the decision to impose penalty under Section 271AAA was upheld, and the appeal was dismissed.

5. The judgment was pronounced on 16th April 2019, with the result being the dismissal of the Revenue's appeal.