Pertaining to the levy of penalty u/s 271AAC(1), the Assessing...

Pertaining to the levy of penalty u/s 271AAC(1), the Assessing Officer (AO) initially passed an order u/s 144, concluding the assessment on a best judgment basis and making an addition of Rs. 20 lakh to the assessee's total income at a special rate u/s 115BBE. However, upon perusal of the subsequent order passed pursuant to the Tribunal's directions, it was found that the AO accepted the total income declared by the assessee in its return of income, and no addition was made. Generally, the AO has the liberty to reconsider the levy of penalty, in accordance with the fresh assessment framed. Since in the present case, the assessee was assessed at the returned income in the second round of assessment proceedings, the penalty levied u/s 271AAC(1) was deemed unsustainable and quashed. Consequently, the impugned order was set aside, and the grounds raised by the assessee were allowed.