In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Kolkata bench has held that the penalty under section 271AAB of the Income Tax Act, 1961 is not leviable on the basis of disclosure made by the other persons during the search proceedings, which is not binding on the assessee.
The ITAT was considering an appeal by the Revenue against the assessee, Mr. Arjun Lal Agarwal challenging the CIT(A) order wherein the penalty imposed on the assessee was deleted.
A bench comprising Shri Rajpal Yadav, Vice-President (KZ) & Shri Girish Agrawal, Accountant Member observed that “If any disclosure was made, then it will not bind the assessee but it is just corroborative information against the assessee. The ld. CIT(D.R.) failed to appreciate the provision of section 132(4). Similarly he submitted that if penalty is not leviable under such circumstances under section 271AAB, then whole purpose of legislating provision of section 271AAB would be defeated because in such situation, no one is getting penalized for accumulating undisclosed income.”
Upholding the order of the first appellate authority, the Tribunal held that“It is totally a fallacious approach at the end of the ld. CIT(D.R.) and a fatuous attempt is being made to visit the assessee with penalty. It is pertinent to observe that 271AAB penalty is imposable on the person upon whom search was made. We have discussed it in the finding extracted supra. The other persons upon whom 153C assessment has been made would be covered by Explanation 5A of Section 271(1)(c). They could be visited with penalty for concealment but with the help of other provisions. It is not the case that on account of accumulation of undisclosed income, the other persons would be absolved for visiting any type of penalty. There are provisions under section 271(1)(c) read with Explanation 5 and 5A for taking care of such situation. But in the present situation, no penalty is imposable under section 271AAB upon the assessee. The ld. CIT(Appeals) has rightly deleted the penalty. We do not find any error in the order of ld. CIT(Appeals). Hence both the appeals are dismissed.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanPremium. Follow us on Telegram for quick updates.
