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TMI Blog2023 (2) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... pertains to the specified previous year. Viewed from the above, the facts of the case of the Assessee is squarely covered by section 271AAB as the search was conducted on 03.09.2014 i.e., after 01/07/2012. On the date of search the due date to furnish the return for A.Y.2014-15 has not expired and the respondent has furnished the return on 30.11.2014 - respondent has not admitted any income in a statement recorded under section 132(4) nor paid any taxes on the admitted income - case of the respondent is not governed by Section 271AAB (1)(a) and Section 271AAB(1)(b). The respondent s case clearly falls under section 271AAB(1)(c) where the minimum penalty prescribed is 30% and maximum penalty is 90% of undisclosed income. Thus, as per clause (2) of section 271AAB, no penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1) of Sub Section (1A) of section 271AAB. Accordingly, the AO should have initiated and levied penalty under section 271AAB(1)(c) instead of section 271(1)(c). We do not find any infirmity in the order as stated hereinabove. At the cost o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent. The Assessing Officer also issued a notice under Section 142(1) of the Act to the respondent on 15.11.2016 seeking information from the respondent in respect of the audited financial statements of the respondent up-loaded on the Income Tax website on 30.11.2014. The respondent, upon receipt of the said notice, filed a subsequent return of income manually before the Assessing Officer on 18.11.2016 showing now a loss of Rs. 92,68,340/- for the same concerned period. Again on 21.11.2016, the respondent filed another return of income manually before the Assessing Officer showing now an income of Rs. 19,73,110/-. The respondent revised its return of income from showing a loss of Rs. 2,40,73,444/- to the income of Rs. 19,73,110/- when the Assessing Officer confronted the respondent with the audited financial statements of the respondent for the concerned period wherein it was shown that the respondent had a profit of Rs. 18,95,065/- during the concerned period. As the respondent revised its return of income from loss of Rs. 2,40,73,444/- to income of Rs. 19,73,110/-; after issuance of notice under Section 143 (2), questionnaire along with notice under Section 142(1), the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from infirmity. It is true that section 271AAB of the Income Tax Act has been inserted w.e.f. 1.7.2012 for a specific purpose to cover all those cases where search has been initiated after the 1st day of July, 2012, but before 15th of December, 2016. It is also true that the search was initiated in premises of the respondent assessee on 3.09.2014 and as such the case of the assessee falls under the above provisions as the section has been introduced in the statute for a specific purpose. However, it can be seen from the provisions of section 271AAB of the Act that the penalty is prescribed for undisclosed income which has also been defined under this section. In the case of the Assesse, no incriminating documents including the books of account or audit report was found. Thus, the question arises when no income of the specified previous year is represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132; whether section 271AAB of the Act will apply. He contended that the case of the respondent assesse is not cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s year declaring such undisclosed income therein; (b) a sum computed at the rate of twenty per cent, of the undisclosed income of the specified previous year, if such assessee (i) in the course of the search, in a statement under sub-section (4) of section 132, does not admit the undisclosed income; and (ii) on or before the specified date (A) declares such income in the return of income furnished for the specified previous year; and (B) pays the tax, together with interest, if any, in respect of the undisclosed income; (c) a sum computed at the rate of sixty per cent of the undisclosed income of the specified previous year, if it is not covered by the provisions of clauses (a) and (b). (1A) The Assessing Officer [or the Commissioner (Appeals)] may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the President, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, (a) a sum computed at the rate of thirty per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot been disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted. 8. From the plain reading of Section 271AAB, it is clear that where a search u/s.132(1) was initiated on or after the 1st day of July, 2012, penalty is leviable on the undisclosed income at the rate and conditions specified under section 271AAB(1) for the specified previous year. Further, the section also defines the term undisclosed income and specified previous year . Moreover, the section starts with non abstante clause and excludes the applicability of section 271(1)(c), if the undisclosed income pertains to the specified previous year. Viewed from the above, the facts of the case of the Assessee is squarely covered by section 271AAB as the search was conducted on 03.09.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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