2024 (1) TMI 653 - AT - Income Tax

Penalty u/s 271AAB - income has been assessed u/s 143(3) in pursuance of requisition proceedings u/s 132A - matter referred to third member - Whether in the facts and circumstances of this case, penalty is leviable @ 10% u/s 271AAB(1)(a)(iii) or 60% u/s 271AAB(1)(C) of the Act? - HELD THAT - As decided by third member wherever a search is initiated u/s, 132 of the Act during the period mentioned in the provisions of section 271AAB of the Act, as in the present case of the assessee, search was initiated u/s. 132 of the Act by issuance of Warrant of Authorization in the name of Sunil Kumar Jindal on 01.12.2016 and it means that the assessee is squarely covered by the provisions of section 132 of the Act and consequently, the provisions of section 271AAB of the Act clearly applies to the present case of the assessee. The provisions of section 132A of the Act where requisition of books of accounts etc., are made by the Income Tax Department and noted by Ld. Accountant Member is not emanating from the facts of the case. Because in the present case, the Department has not issued requisition u/s. 132A of the Act, but carried out search after issuance of Warrant u/s. 132 of the Act, we disagree with the view expressed by Ld, Accountant Member in holding the view that the Department has made requisition u/s. 132A of the Act. Accordingly, do not agree with the question framed by Ld. Accountant Member on the given facts and circumstances of the case In the light of the aforesaid decision of the learned Third Member, the majority view is followed.

Summary

Issues Involved:
The issues involved in the judgment are:
1. Imposition of penalty under Section 271AAB of the Income Tax Act.
2. Determination of penalty rate under Section 271AAB(1)(a)(iii) or 271AAB(1)(C) of the Act.

Imposition of Penalty under Section 271AAB:
The appeal was against the order of the Commissioner of Income Tax (Appeals) in relation to the assessment order passed under Section 143(3) of the Income Tax Act. The matter was referred to the Third Member of ITAT due to differences of opinion between the two Members. The Third Member considered whether the penalty under Section 271AAB is permissible when income has been assessed under Section 143(3) following requisition proceedings under Section 132A of the Act. The Third Member examined the facts of a search conducted under Section 132 of the Act and the applicability of Section 271AAB in such cases. It was concluded that the assessee, being a searched person under Section 132, falls within the scope of Section 271AAB. The Third Member disagreed with the view that requisition under Section 132A was made, emphasizing that the search was conducted under Section 132. Consequently, the Third Member sided with the Judicial Member's view and disagreed with the Accountant Member's perspective on the case.

Determination of Penalty Rate under Section 271AAB:
The Second question addressed by the Third Member was the determination of the penalty rate under Section 271AAB(1)(a)(iii) or 271AAB(1)(C) of the Act based on the facts and circumstances of the case. After considering the arguments and submissions, the Third Member concluded that the penalty provisions of Section 271AAB applied to the assessee since the search was initiated under Section 132 of the Act. The Third Member aligned with the Judicial Member's question and order, disagreeing with the Accountant Member's stance in light of the case's specifics. Following the Third Member's decision, the majority view was upheld, resulting in the allowance of certain appeals while partially allowing another.

This judgment by the ITAT Delhi addressed the imposition of penalties under Section 271AAB of the Income Tax Act and the determination of penalty rates in a case involving differences of opinion among the Members. The Third Member's detailed analysis clarified the applicability of the penalty provisions in situations where a search is conducted under Section 132 of the Act, emphasizing the specific circumstances of the case to arrive at a decision. The Third Member's alignment with the Judicial Member's perspective underscored the importance of accurate interpretation and application of the relevant legal provisions in resolving the issues at hand.