ITO 22(3)(4), NAVI MUMBAI vs. TRISHUL ENTERPRISES, MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सदस्य, राजेन्द्र के अन सार/ PER RAJENDRA, AM- Challenging the order of the CIT(A)-1,Thane, the Assessing Officer (AO) has filed the present appeal.Assessee-Firm is builders and developers.It filed its return on 30.09.2008,declaring income of Rs.2.14 crores, the AO completed the assessment on 143(3) r.w.s 153B (b) of the Act on 30/12/2009 determining its income at Rs.3.09 crores. Effective ground of appeal is about deleting the penalty levied by the AO,u/s.271(1)(c)of the Act. Brief Facts: 2.An action,u/s.132 of the,Act was initiated in Patel group of cases on 17/01/2008.Survey proceedings were also carried out at the business premises of the group entities,including the business premises of the assessee, u/s.133A of the Act.While completing the assessment,the AO initiated penalty proceedings for concealing the particulars of income and furnishing inaccurate particulars of income,u/s.271(1)(c) of the Act and issued a notice asking the assessee as to why penalty should not be levied.After considering the submission of the assessee,the AO held the assessee had concealed the particulars of income and had furnished inaccurate particulars of income to the tune of Rs.95.67 lakhs for the year under consideration.He levied the penalty of Rs.32.52 lakhs u/s.271(1)(c) of the Act. 3.Aggrieved by the order of the AO,the assessee preferred the appeal before the First Appellate Authority(FAA).It made elaborate submissions and objected to the imposition of penalty and argued that the search and seizure action was carried out on 17/01/2008, that as per the provisions of section 271AAA no penalty u/s.271(1)(c)could be imposed in respect of undisclos -ed income of the previous year which had ended before the search but the date of filing of return of income u/s.139(1) of the Act had not expired,that the return of income was filed subsequent to the date of search. After considering assessment order,penalty order and the submission of the assessee, the FAA reproduced the provisions of section 271AAA of the Act.He observed that in assessee’s case survey action was carried out at its business premises on 17/01/2008,that the AO had passed the assessment order u/s.143(3)r.w.s153B(b)of the Act,that the assessment order proved that assessee’s case had been treated by the AO as one of the case where search and seizure action had been initiated on 17/01/2008,that search was initiated after 01/06/2007,that the previous year 2007-08 was the specified previous year,that the provisions of section 271AAA were applicable in assessee’s case for the year under consideration,that in terms of the provisions of section 271AAA (3) penalty u/s.271(1)(c) of the Act could not have been levied. He deleted the penalty levied by the AO. 4.During the course of hearing before us,the DR supported the order of AO. The AR relied upon order of the FAA and referred to the cases of Ashwini Kumar Arora(81 Taxmann.com 440)and Dr. Naman A Sastry (174 TTJ 793). 5.We have heard the rival submissions and perused the material before us.We find that the basic issue to be decided is as to whether penalty u/s.271(1)(c)could be levied where search and seizure action was carried out after 01/06/2007.We are of the opinion that penalty u/s 271(1)(c) is applicable in such cases where search u/s 132 was initiated before 1.6.2007,whereas u/s 271AAA, the provisions therein are applicable in a case where search u/s 132 of the Act has been initiated on or after 1.6.2007,but before 1.7.2012.Intention of the Legislature is clear to this extent that in a case wherein search was initiated before 1.6.2007, provisions u/s 271(1)(c) will be applicable and in search initiated after 1.6.2007 (but before 1.7.2012) provisions u/s 271AAA of the Act will be applicable. These provisions are thus not applicable simultaneously but these are period specific.Considering the above,we hold that penalty u/s.271(1)(c)was not leviable for the year under appeal,as it fell within the specified period. In the cases relied upon by the assessee,the issue has been deliberated upon by the Tribunal and it has been held that penal provisions of section 271(1)(c)cannot be invoked in cases where action u/s.132(1)was initiated