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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -16, Chennai, dated 06.03.2019 and pertains to assessment year 2016-17, confirming the penalty levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act').
Smt. Nithya Sankaran, the Ld. representative for the assessee, submitted that the Assessing Officer levied penalty under Section 271(1)(c) of the Act which was confirmed by the CIT(Appeals) without considering the provisions of Income-tax Act.
According to the Ld. representative, there was a search operation in the premises of the assessee on 23.11.2015 and it was completed on 23.12.2015. Referring to Section 271AAB of the Act, the Ld. representative submitted that in respect of the search initiated on or after 1st day of July, 2012 but before the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the President, the penalty has to be levied only under Section 271AAB and not under Section 271(1)(c) of the Act. According to the Ld. representative, the Taxation Laws (Second Amendment) Bill, 2016 got the assent of the President by 15.12.2016. Therefore, it is obvious that penalty has to be levied under Section 271AAB of the Act. Referring to sub-section (2) of Section 271AAB of the Act, the Ld. representative submitted that no penalty under Section 271(1)(c) or any other provisions referred in sub-section (2) of Section 271AAB could be levied. Therefore, according to the Ld. representative, the CIT(Appeals) is not justified in confirming the penalty levied by the Assessing Officer.
On the contrary, Shri S. Bharath, the Ld. Departmental Representative, submitted that during the course of search operation, a sum of ₹88 lakhs was found in the bed room of the assessee. The Assessing Officer specifically found that there was concealment of income. Therefore, according to the Ld. D.R., the penalty has to be levied under Section 271(1)(c) of the Act.
We have considered the rival submissions on either side and perused the relevant material available on record. The issue arises for consideration is in respect of search initiated on 23.11.2015, whether penalty has to be levied under Section 271(1)(c) or 271AAB of the Act for concealment of income? We have carefully gone through the provisions of Section 271AAB of the Act which reads as follows:-
Penalty where search has been initiated. 271AAB (1) The Assessing Officer 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 1st day of July, 2012, 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 ten 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, admits the undisclosed income and specifies the manner in which such income has been derived ; (ii) substantiates the manner in which the undisclosed income was derived ; and (iii) on or before the specified date— (A) pays the tax, together with interest, if any, in respect of the undisclosed income ; and (B) furnishes the return of income for the specified previous 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). (2) No penalty under the provisions of section 270A or 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). (3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in this section.
Explanation For the purposes of this section,- (a) “specified date” means the due date of furnishing of return of income under sub-section (1) of section 139 or the date on which the period specified in the notice issued under section 153A for furnishing of return of income expires, as the case may be ; (b) “specified previous year” means the previous year— (i) which has ended before the date of search, but the date of furnishing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the date of search ; or (ii) in which search was conducted ; (c) “undisclosed income” means— (i) any income of the specified previous year 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, which has— (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year ; or (B) otherwise not 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.
It is not in dispute that the search was initiated within the period referred in sub-section (1) of Section 271AAB of the Act.
Therefore, it falls within the specified previous year as provided in Explanation (b) to sub-section (3) of Section 2711B of the Act.
Moreover, sub-section (2) of Section 271AAB specifically excludes the application of Section 271(1)(c) of the Act. In view of the above, this Tribunal is of the considered opinion that penalty has to be levied only under Section 271AAB of the Act and not under Section 271(1)(c) of the Act. In this case, penalty was admittedly levied under Section 271(1)(c) of the Act which was confirmed by the CIT(Appeals). In those circumstances, this Tribunal is unable to uphold the orders of both the authorities below. Accordingly, orders of both the authorities below are set aside and the penalty levied by the Assessing Officer as confirmed by the CIT(Appeals) is deleted.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the court on 20th November, 2019 at Chennai.