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Income Tax Appellate Tribunal, NAGPUR BENCH : : NAGPUR
Before: S.S.GODARA & DR. DIPAK P. RIPOTE
आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the Revenue against the order of ld.Commissioner of Income Tax(Appeals)-3, Nagpur dated 18.05.2017 emanating from the order of ACIT(AO) under section 271AAB of the Act dated 15.09.2015. The Revenue has raised the following grounds of appeal: “i) On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the penalty of Rs. 90,00,000/- levied u/s. 271AAB of the Act. ii) On the facts and circumstances of the case and in law, the for A.Y.2013-14 Shri Sandeep I. Suri [R] learned CIT(A) has erred in deleting penalty levied u/s. 271AAB of the I T Act without appreciating the fact that all cases where proceedings are initiated u/s 153A or 153C are covered by provisions of section 271AAB irrespective of the fact as to whether search warrants is issued in the name of a particular person. iii) On the facts and circumstances of the case and in law, the learned CIT(A) has erred in deleting penalty levied u/s. 271AAB of the I T Act without appreciating the fact that the assessee's disclosure of additional undisclosed income of Rs. 3,00,00,000/- clearly established his nexus and proximity with the case covered u/s. 132(1) and therefore, provisions of section 271AAB are applicable to his case. iv) Any other ground that may be urged at the time of hearing.”
Brief facts: The Assessing Officer (AO) levied penalty under section 271AAB of the Act of Rs.90,00,000/-. There was a search under section 132 of the Act on 07.03.2013 in the case of Kondawar Group of cases. A survey under section 133A of the Act was conducted in the case of Assessee i.e. Sandeep I. Suri. An assessment order under section 144 r.w.s 143(3) was passed by ACIT, Central Circle-1(2), Nagpur on 31.03.2015.
Aggrieved by the penalty order, the assessee filed appeal before the ld.CIT(A). The ld.CIT(A) vide his order dated 18.05.2017 deleted the penalty on the ground that there was no search under section 132 of the Act in the case of the assessee. The ld.CIT(A) held that penalty under section 271AAB can be levied only if there is search under section 132 of the Act in the case of assessee.
Aggrieved by the order of the ld.CIT(A), the Revenue filed for A.Y.2013-14 Shri Sandeep I. Suri [R] appeal before this Tribunal.
At the time of hearing, none appeared for assessee.
6. The ld.DR relied on the order of the AO. However, the ld.DR admitted that there was no search under section 132 of the Act in the case of Sandeep I. Suri.
We have heard ld.DR and perused the records. It is mentioned in the assessment order that there was a survey in the case of the assessee. Thus, it is an admitted fact that there was no search under section 132 of the Act in the case of assessee i.e. Sandeep I. Suri. The assessment was completed under section 144 r.w.s 143(3) of the Act.
The relevant section 271AAB of the Act is reproduced here as under : 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 for A.Y.2013-14 Shri Sandeep I. Suri [R]
(B) furnishes the return of income for the specified previous year declaring such undisclosed income therein; 9. The primary condition for levy of penalty under section 271AAB of the Act is that there shall be a search under section 132 of the Act in the case of the assessee. In the case of Sandeep I. Suri it is an admitted fact that there was no search under section 132 of the Act. No warrant of authorization was issued in the case of Sandeep I. Suri.
10. The Hon’ble Andhra Pradesh High Court in the case of PCIT(Central) Vs. Silemankhan and Mahaboob Khan 437 ITR 260 has held as under : “5. The unequivocal legal position appearing from the aforesaid discussion is that no penalty under section 271AAB of the Act may be imposed where search under section 132 of the Act has not been conducted against the assessee. It is admitted no search under section 132 of the Act had been conducted in the premises of the assessee-firm. On the other hand, in the course of search under section 132A of the Act against M/s.N.S. Vaishno Devi Developers (India) Pvt. Ltd, statements of partners of the firm were recorded and pursuant thereto notice under section 156C of the Act was issued upon the assessee-firm. When return of income is filed in response to notice under section 156C of the Act by a person other than the penalty who has not been searched in execution of warrant under section 132 of the Act penalty under section 271AAB of the Act cannot be imposed. Notice under section 156C of the Act is incidental the search proceedings under section 132 thereof and cannot be a foundation to impose penalty on the assessee who has for A.Y.2013-14 Shri Sandeep I. Suri [R]
not been searched. In view of such fact, we are of the opinion there is no perversity or illegality in the finding of the Tribunal as follows:
"5.3 In the instant case, no search was conducted u/s 132 and only survey u/s 133A was conducted and the assessment order was passed u/s 153C r.w.s.143(3) of the act. Therefore, respectfully following the view taken by the coordinate bench of ITAT we hold that the Ld. CIT(A) has rightly cancelled the penalty levied u/s 271AAB of the Act and we do not find any reason to interfere with the order of the Ld. CIT(A) and the same is upheld. Accordingly, the appeal of the revenue is dismissed."
This legal position is based on the clear and unequivocal meaning transpiring from the words used in section and cannot yield to any other interpretation. The view has been consistently followed by various benches of the Tribunal, as aforesaid, and has become binding on the Department in those cases. No contrary view either of any High Court or the Apex Court has been placed before us. In the light of the settled proposition of law that Section 271AAB of the Act cannot be invoked to impose penalty when search has not been conducted under section 132 of the Act against the assessee and return of income is in response to notice under section 156C of the Act which is a consequential or incidental proceeding, we are of the opinion no question of law much less a substantial one is made out in the facts of the case.”
In the case of assessee there was no search under section 132 of the Act. Therefore, respectfully following the Hon’ble Andhra Pradesh High Court(supra), it is held that no penalty under section 271AAB of the Act can be levied in the case of assessee as there was for A.Y.2013-14 Shri Sandeep I. Suri [R] no search. Accordingly, grounds raised by the Revenue are dismissed.
In the result, appeal of the Revenue is dismissed. Order pronounced in the open Court on 13th February, 2023.