No Search Conducted on Assessee: ITAT upholds Deletion of Penalty u/s 271AAB on Undisclosed Income [Read Order]

The Kolkata Bench of Income Tax Appellate Tribunal (ITAT), has held that no search was conducted on the assessee and upholds the deletion of penalty under section 271AAB on undisclosed income.

The assessee, M/s. Clean Coal Enterprises Pvt. Limited belongs to “The Hind Energy Group of Companies”, where a search was conducted under section 132(1) of the Income Tax Act. Based on the incriminating material, a notice under section 153C was sent to the assessee. The Assessing Officer while concluding the assessment imposed a penalty of Rs.1,98,31,170/- under section 271AAB.

The assessee against the assessment order approached the CIT(A) alleging that Section 271AAB is not applicable as no search was initiated in its case.The 1^st Appellate Authority has deleted the penalty by holding that penalty under section 271AAB can only be imposed if the search has been conducted on the premises of the assessee. The assessments were not framed under section 153A, rather these were framed under section 153C of the Income Tax Act. Aggrieved, revenue filed an appeal before the ITAT.

The Tribunal observed that the opening line of section 271AAB contemplates that there should be a search for invoking this provision, hence, it is applicable where a search has been initiated under section 132 of the Income Tax Act. Sections 153A and 153C deal with two different categories of assessees. The penalty leviable under section 271AAB concerning those assessees where the search has been conducted and the assessee’s case falls under the second category.

The Coram of Mr. Rajpal Yadav, Vice-President (KZ), and Mr. Girish Agrawal, Accountant Member while deleting the appeal has held that “Assessing Officer has imposed a penalty of Rs.1.98 crores without making any reference to the income determined in the hands of the assessee, rather taking cognizance of the statement of searched person, who might have disclosed Rs.6.6 crores. It is totally against the law and the 1s t Appellate Authority has rightly appreciated the facts and circumstances by deleting the penalty”.

Mr. Biswanath Das and Mr. Amit Agarwal appeared on behalf of the revenue and assessee respectively.

To Read the full text of the Order CLICK HERE

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