Tribunal upholds CIT(A) decision to delete penalty under Section 271AAB. Assessee's cross-objections dismissed.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the penalty levied under Section 271AAB. The cross-objections by the assessee were also dismissed as the main issue had been decided in favor of the assessee.

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Issues Involved:
1. Applicability of Section 271AAB of the Income Tax Act.
2. Validity of penalty proceedings initiated under Section 271AAB.
3. Defective notice under Section 274 read with Section 271AAB.
4. Assessment under Section 153C versus Section 153A.
5. Maintenance of books of accounts.

Issue-wise Detailed Analysis:

1. Applicability of Section 271AAB of the Income Tax Act:
The primary issue was whether the penalty under Section 271AAB of the Act could be levied on the assessee. The Tribunal observed that the provisions of Section 271AAB apply to cases where a search has been initiated under Section 132 of the Act. However, in this case, the search was conducted on the father of the assessee, not on the assessee herself. The Tribunal upheld the findings of the CIT(A), who noted that Section 271AAB starts with the words "Penalty where search has been initiated," and since no search was initiated against the assessee, the section was not applicable.

2. Validity of Penalty Proceedings Initiated Under Section 271AAB:
The Tribunal found that the penalty proceedings under Section 271AAB were not validly initiated. The CIT(A) had observed that the assessment was completed under Section 143(3) read with Section 153C, not under Section 153A, which is a prerequisite for invoking Section 271AAB. The Tribunal agreed with the CIT(A) that the penalty under Section 271AAB could not be levied in this case.

3. Defective Notice Under Section 274 Read with Section 271AAB:
The Tribunal noted that the notice issued under Section 274 read with Section 271AAB was defective as it did not specify the specific charge against the assessee. The CIT(A) had pointed out that the Assessing Officer did not clearly state under which clause of Section 271AAB the penalty was being levied. The Tribunal concurred with the CIT(A) that this defect rendered the penalty proceedings null and void.

4. Assessment Under Section 153C Versus Section 153A:
The Tribunal observed that the assessment in this case was completed under Section 143(3) read with Section 153C, which pertains to assessments related to persons other than the person searched. The CIT(A) had emphasized that Section 271AAB applies only to assessments completed under Section 153A, which deals with assessments of the person searched. The Tribunal upheld this view, noting that the assessment under Section 153C further supported the inapplicability of Section 271AAB.

5. Maintenance of Books of Accounts:
The Tribunal noted that the assessee did not maintain books of accounts as she did not carry out any business activity during the year under consideration. The CIT(A) had observed that the amount in question was received by the assessee as a gift, and therefore, there was no requirement for her to maintain books of accounts. The Tribunal agreed with the CIT(A) that the provisions of Section 271AAB, which apply to undisclosed income not recorded in the books of accounts, were not applicable in this case.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the penalty levied under Section 271AAB. The cross-objections filed by the assessee were also dismissed as infructuous since the main issue had already been decided in favor of the assessee. The order was pronounced on 04.10.2021.

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