2018 (11) TMI 475 - AT - Income Tax

Tribunal cancels penalties under Income Tax Act for 2012-13 & 2013-14

The Tribunal upheld the cancellation of penalties imposed under section 271AAB of the Income Tax Act for assessment years 2012-13 & 2013-14. It was ... Penalty u/s 271AAB - no search had taken place in the case of the assessee per se u/s 132 - incidental assessment proceedings under s.153C validity - Held that:- It is manifest that applicability of Section 271AAB is integrally connected to search under s.132 of the Act. In the absence of search under s. 132 of the Act, the assessee has no occasion to avail the concessional treatment by way of admission under s.132(4) of the Act. Thus, we find obvious merits in the observations made by the first appellate authority that provisions of Section 271AAB of the Act are not applicable to the case of the assessee. In the absence of search under s.132 of the Act, the consequential or incidental assessment proceedings under s.153C of the Act will not, in our view, entitle the AO to usurp jurisdiction under s.271AAB of the Act for the purposes of imposition of penalty. - decided against revenue. Issues:Challenge to cancellation of penalty under section 271AAB of the Income Tax Act, 1961 for assessment years 2012-13 & 2013-14.Analysis:The appeals were filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) canceling the penalties imposed under section 271AAB of the Income Tax Act for the mentioned assessment years. The Revenue contested the CIT(A)'s decision to cancel penalties amounting to Rs. 20,94,797/- and Rs. 61,67,870/- for the respective years. During the hearing, the assessee did not appear, leading to the matter being proceeded ex parte based on the arguments presented by the Revenue. The CIT(A) had observed that a search action was conducted under section 132 of the Act in the Dhanjimama group of cases, leading to the initiation of proceedings under section 153C for the assessee. The CIT(A) concluded that section 271AAB was not applicable to the assessee since no search was conducted under section 132 in the assessee's case.The CIT(A) emphasized that section 271AAB is only applicable when a search under section 132 has been initiated, and the assessments are completed under section 153A or 143(3). Since no search was conducted in the assessee's case under section 132, the CIT(A) found no grounds for initiating penalty proceedings under section 271AAB. The CIT(A) highlighted that the AO erred in applying section 271AAB without a search under section 132. The assessment order confirmed that no search took place under section 132 in the assessee's case, making the applicability of section 271AAB dependent on such a search. Therefore, the CIT(A) concluded that the penalties imposed by the AO lacked merit and should be canceled.The Tribunal concurred with the CIT(A)'s findings, stating that section 271AAB's applicability is contingent upon a search under section 132. Without a search, the assessee cannot benefit from the concessional treatment provided under section 271AAB. The Tribunal held that in the absence of a search under section 132, the AO cannot invoke section 271AAB for penalty imposition based on consequential or incidental assessment proceedings under section 153C. Consequently, the Tribunal dismissed both appeals of the Revenue in the ex parte proceedings, upholding the cancellation of penalties by the CIT(A).In conclusion, the Tribunal affirmed that section 271AAB of the Income Tax Act is not applicable to the assessee as no search was conducted under section 132, thereby supporting the CIT(A)'s decision to cancel the penalties imposed by the AO.