The Income Tax Appellate Tribunal (ITAT), Bangalore Bench deleted the penalty on undisclosed income as search was not initiated as per Section 271AAB of the Income Tax Act.
The assessment was completed for two assessment years, and later, the AO levied penalty under section 271AAB of the Act on account of undisclosed income declared by the assessee, Ashok B Sureban during the post- survey proceedings. Against this, the assessee went in appeal before the CIT(Appeals). The CIT(Appeals) confirmed the levy of the penalty under section 271AAB of the Act.
The assessee urged that the revenue authorities are not justified in imposing penalty on the assessee under section 271AAB of the Act since there was no search in the case of assessee under section 132 of the Act.
The Coram consisting of Beena Pillai and Chandra Poojari noted that section 271AAB shows that the opening words are “penalty where search has been initiated” a perusal of the provisions under Section 271AAB also talks of the assessee declaring any undisclosed income in the course of the search in the statement under section 132(4).
Admittedly in the present case, that is in the case of the assessee firm in appeal there has been no search. Search admittedly is on the residence of one of the partners of the assessee firm.
The ITAT noted that the CIT(A) order also clearly shows that the learned CIT(A) has cancelled the penalty on the ground that there was no search in the case of the assessee firm. The revenue has not been able to point out as to how this finding of the CIT(A) is erroneous. This being so the finding of the learned CIT(A) on this issue stands confirmed.
Therefore, the ITAT held that levy of penalty under section 271AAB of the Act in these two assessment years in the case of assessee is not at all justified. Accordingly deleted the penalty in both the assessment years.
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