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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-3’, NEW DELHI
Before: SHRI J. SUDHAKAR REDDY
ORDER This is an appeal filed by the Assessee directed against the order of the Ld. Commissioner of Income Tax (Appeals)-I, New Delhi pertaining to the Assessment Year (hereinafter referred to as the A.Y.) 2007-08 dated 15.07.2014.
Facts of the case:- The assessee is an individual. A search and seizure operation u/s 132 of the of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was carried out on 9.9.2010 in the Gardenia Group of cases. The assessee filed a return of income in response to notice u/s 153A of the Act on 4.12.2012 declaring income of Rs.21,67,120/-. Penalty proceedings u/s 271(1)(c) of the Act were initiated. An order u/s 143(3) r.w.s. 153A of the Act was passed on 31.3.2013 accepting the income declared by the assessee. 2.1. The A.O. levied a penalty u/s 271(1)(c) of the Act.
Aggrieved the assessee carried the matter in appeal. 3.1. The Ld.CIT(A) deleted the penalty levied u/s 271(1)(c) of the Act by agreeing to the submission of the assessee that no penalty is leviable u/s 271(1)(c) of the Act. He held that penalty is leviable u/s 271AAA of the Act 1 @ 10% of the income sought to be evaded and imposed penalty u/s 271AAA of the Act. 4. Aggrieved the assessee is before me on the following grounds . “1. On the facts and circumstances of case and in law, the CIT(A) erred in imposing penalty of Rs.90,000/- u/s 271AAA of the Act.
2. On the facts and circumstances of case and in law, the action of CIT(A) in holding imposing of penalty of Rs.90,000/- u/s 271AAA of the Act is bad in law and without jurisdiction.
3. The appellant craves leave to add one or more grounds of appeal or to alter/modify the existing ground before or at the time of hearing of appeal.”
5. The Ld.Counsel for the assessee Mr.Amit Goel submitted that : (a) The Ld.CIT(A) has no jurisdiction to impose penalty u/s 271AAA of the Act. (b) Penalty u/s 271AAA of the Act can be imposed only for the “specified P.Y. as defined in Explanation (b) to S.271AAA of the Act and that the impugned A.Y. does not fall within the purview of S.271AAA.” (c) There was no issue before the Ld.CIT(A) for adjudication in respect of penalty u/s 271AAA of the Act and hence the Ld.CIT(A) could not adjudicate the same. (d) The penalty imposed by the Ld.CIT(A) is barred by limitation as the assessment order was passed on 31.3.2013, the penalty should have been imposed on or before 30.9.2013 as per S.275 of the Act. (e) The Ld.CIT(A) has not given any show cause notice to the assessee before levying penalty u/s 271AAA of the Act, thus violating the principles of natural justice.
Ld.Sr.D.R. Shri P.Dam Kanunja submitted that these arguments are not supported by the grounds of appeal raised by the assessee. He contended that penalty is leviable u/s 271(1)(c) of the Act and that the Ld.CIT(A) has erred in passing such an order cancelling penalty levied by the A.O.
6.1. In reply the Ld.Counsel for the assessee submitted that the Revenue has not come in appeal against the order of the Ld.CIT(A).
After hearing rival submissions I find that u/s 271(1)(c) of the Act, the Ld.CIT(A) also has power to levy a penalty. A plain reading of S.271AAA of the Act demonstrates that only the A.O. has power to levy the penalty. No other authority is given such a power. As this penalty u/s 271AAA of the Act has been levied by the CIT(A), the same is bad in law. Even otherwise, penalty u/s 271 AAA can be imposed only in respect of "specified previous year" as defined in explanation (b) to section 271AAA of the Act which is reproduced as under :- 271AAA. Penalty where search has been initiated.-(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 June, 2007, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) _ Explanation.-For the purposes of this section,- (a) "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 Chief Commissioner or Commissioner before the date of the 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; (b) "specified previous year" means the previous year- (i) which has ended before the date of search, but the date of filing 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 said date; or (ii) in which search was conducted.'.
7.1. Since in the present case the search was conducted on 09.09.2010, penalty u/s 271AAA could have been levied only for A.Y. 2011-12 (search year) or A.Y. 2010-11. The year under appeal is A. Y. 2007 -08 and is therefore, out of purview of provisions of section 27 1 AAA of the Act. Hence the penalty levied is bad in law and hence cancelled.
In the result the appeal of the assessee is allowed
Pronounced in the Open Court on 20th July, 2016.