Tribunal upholds CIT(A)'s cancellation of penalty under Section 271AAB without search under Section 132.

The Tribunal upheld the CIT(A)'s decision to cancel the penalty levied under Section 271AAB, emphasizing that the absence of a search under Section 132 invalidates the penalty. The appeal by the revenue was dismissed, and the cross objections filed by the assessee were also dismissed due to a procedural delay. The Tribunal's decision aligns with established precedents, reinforcing the requirement of a search under Section 132 for invoking penalty under Section 271AAB.

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Issues Involved:
1. Legality of penalty levied under Section 271AAB of the Income Tax Act, 1961.
2. Applicability of Section 271AAB in cases where search under Section 132 was not conducted.
3. Validity of the assessment order passed under Section 153C read with Section 143(3).

Detailed Analysis:

1. Legality of Penalty Levied Under Section 271AAB:
The primary issue revolves around the penalty levied by the Assessing Officer (AO) under Section 271AAB of the Income Tax Act, 1961. The AO imposed a penalty of Rs. 4,58,10,000/- at 30% on the undisclosed income of Rs. 15,27,00,000/-. The penalty was levied on the grounds that the assessee had admitted the undisclosed income under Section 132(4) and had cooperated with the department. However, the CIT(A) cancelled the penalty, leading to the revenue's appeal.

2. Applicability of Section 271AAB in Cases Without Search Under Section 132:
The Tribunal emphasized that for invoking penalty under Section 271AAB, a search under Section 132 is mandatory. The Tribunal noted that in the present case, only a survey under Section 133A was conducted, and not a search under Section 132. The Tribunal referenced several precedents, including decisions from ITAT Bangalore, ITAT Panaji, and ITAT Ahmedabad, which consistently held that the absence of a search under Section 132 invalidates the imposition of penalty under Section 271AAB. For instance, in the case of Suresh H. Kerudi vs. Income Tax Officer, it was held that penalty under Section 271AAB cannot be sustained if the person was not subjected to a search under Section 132.

3. Validity of the Assessment Order Passed Under Section 153C Read with Section 143(3):
The Tribunal observed that the assessment in the present case was completed under Section 153C read with Section 143(3), not under Section 143(3) read with Section 153A. The Tribunal reiterated that the absence of a search under Section 132 precludes the application of Section 271AAB. The Tribunal cited the case of Rajendra Kumar Jain vs. DCIT, wherein it was held that without a search under Section 132, the AO cannot invoke penalty provisions under Section 271AAA, which is analogous to Section 271AAB.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to cancel the penalty levied under Section 271AAB, emphasizing that the absence of a search under Section 132 invalidates the penalty. The appeal by the revenue was dismissed, and the cross objections filed by the assessee were also dismissed due to a procedural delay. The Tribunal's decision aligns with established precedents, reinforcing the requirement of a search under Section 132 for invoking penalty under Section 271AAB.

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