Penalty under Section 271AAB upheld for post-2012 search, dismissing appeal.

The Court held that the penalty should be imposed under Section 271AAB, not Section 271(1)(c), as the search was conducted post 01.07.2012, regardless of the presence of incriminating documents. The appeal was dismissed, affirming the decisions of the CIT(A) and ITAT as legally sound.

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Issues Involved:
1. Applicability of Section 271(1)(c) versus Section 271AAB for penalty imposition.
2. Whether the ITAT's order is perverse and deserves to be set aside.

Issue-wise Detailed Analysis:

1. Applicability of Section 271(1)(c) versus Section 271AAB:

The case revolves around the imposition of penalty following a search and seizure operation under Section 132 of the Income Tax Act, 1961. The search was conducted on 03.09.2014 at the premises of a business group, and the respondent is a member of this group. No incriminating material was found during the search. The respondent filed multiple returns of income, initially showing a loss and later revising it to show an income after being confronted with audited financial statements. The Assessing Officer (AO) initiated penalty proceedings under Section 271(1)(c) for concealing particulars of income and furnishing inaccurate particulars, eventually imposing a penalty of Rs. 1,69,01,620/-.

The respondent appealed, and the Commissioner of Income Tax (Appeals) [CIT(A)] allowed the appeal, stating that the penalty should have been imposed under Section 271AAB, which specifically deals with cases where searches are initiated post 01.07.2012. The Income Tax Appellate Tribunal (ITAT) upheld this decision, leading to the current appeal.

The Court noted that Section 271AAB, introduced w.e.f. 01.07.2012, prescribes penalties for 'undisclosed income' found during searches. The section defines 'undisclosed income' and 'specified previous year' and starts with a non-obstante clause, excluding the applicability of Section 271(1)(c) if the undisclosed income pertains to the specified previous year. Since the search in this case was conducted on 03.09.2014, the penalty should be levied under Section 271AAB, not Section 271(1)(c). The Court emphasized that whether incriminating documents were found is immaterial because the law mandates penalty under Section 271AAB for searches initiated post 01.07.2012.

2. Whether the ITAT's order is perverse and deserves to be set aside:

The Court examined the orders passed by the CIT(A) and ITAT and found no infirmity in them. The CIT(A) had deliberated the issue of penalty initiation under Section 271AAB in detail, which was in accordance with the law. The ITAT had sustained the CIT(A)'s order after due examination. The Court concluded that the penalty should be levied under Section 271AAB, not Section 271(1)(c), as the case falls under the specified previous year.

Conclusion:

The Court decided both questions of law against the revenue, dismissing the appeal as devoid of merit. The penalty, if any, should be levied under Section 271AAB for searches initiated on or after 01.07.2012, irrespective of whether incriminating documents were found. The orders of the CIT(A) and ITAT were upheld as being in accordance with the law.

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