Tribunal dismisses revenue's appeal on penalty deletion & upholds assessee's objection.

The Tribunal dismissed the revenue's appeal against the deletion of penalty under section 271AAB by the Ld. CIT(A). The assessee's cross objection challenging the penalty initiation without a search under section 132 was allowed. The Tribunal emphasized the requirement of a search initiation for penalty under section 271AAB, which was absent in this case. As no search under section 132 was conducted, the penalty initiation was deemed unjustified, leading to the dismissal of the revenue's appeal and allowing the assessee's cross objection.

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Issues:
1. Revenue's appeal against deletion of penalty u/s. 271AAB.
2. Assessee's cross objection challenging penalty initiation without search u/s. 132.

Analysis:
1. The revenue appealed against the deletion of penalty u/s. 271AAB by the Ld. CIT(A). The issue revolved around the violation of Rule 46A of the I.T. Rules, 1962. The assessee's cross objection contended that penalty u/s. 271AAB should not have been levied as no search was initiated u/s. 132 of the Act in the case of the assessee company.

2. The Tribunal decided to address the legal issue raised by the assessee in its cross objection. Despite opposition from the Ld. CIT, DR, the Tribunal admitted the legal issue based on the NTPC Vs. CIT decision. The challenge was regarding the initiation of penalty proceedings u/s. 271AAB without a search u/s. 132 against the assessee company.

3. The facts revealed a survey operation against the assessee and subsequent 153C notice issued by the AO. The Tribunal noted the absence of a search u/s. 132 and the initiation of 153C proceedings instead of 153A. The Tribunal emphasized that penalty u/s. 271AAB requires a search initiation as per the Act, which was lacking in this case.

4. The Tribunal observed that the penalty provision specifically mentions "penalty where search has been initiated" and requires disclosure of undisclosed income during a search. As no search u/s. 132 occurred in the assessee's case, the penalty initiation was deemed unjustified. Citing a similar case precedent, the Tribunal quashed the penalty proceedings u/s. 271AAB.

5. The Tribunal highlighted the absence of search action against the assessee company and the incorrect initiation of penalty proceedings. Consequently, the revenue's appeal was dismissed, and the assessee's cross objection was allowed. The legal issue raised by the assessee led to the dismissal of the revenue's appeal, rendering it academic and infructuous.

6. In conclusion, the Tribunal dismissed the revenue's appeal and allowed the assessee's cross objection, pronouncing the order on 28th November 2018.

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