TaxTMI 
TaxTMI 
2020 (11) TMI 936
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....CIT(A). During the year under consideration, the assessee has sold the land admeasuring 8,470 sq.yds and 7,260 sq.yds located at Mangalagiri Road, Guntur to M/s N.S. Vaishno Devi Developers (India) Pvt. Ltd. on 12.06.2015 for a consideration of Rs. 8,47,00,000/- and Rs. 7,26,00,000/- respectively aggregating to Rs. 15,73,00,000/-. The assessee has filed the return of income declaring total income of Rs. 13,17,76,430/- which includes the long term capital gains of Rs. 9,44,79,229/-. A search u/s 132 was conducted in the group cases of M/s Khan Mohammed Diamonds and Jewellers Private Limited, Guntur and the assessee had admitted the additional income of Rs. 15,27,00,000/- in the hands of the firm. The above additional income of Rs. 15.27 crores was admitted as on money receipt u/s 132(4) of the Act over and above the registered value representing sale consideration from N.S.Vaishno Devi Developers (India) Pvt. Ltd. Subsequently, Notice u/s 153C was issued to the assessee and the assessee filed return of income on 10.12.2018 admitting total income of Rs. 29,81,87,770/- which includes long term capital gains of Rs. 15,27,00,000/- declared by the assessee u/s 132(4). The AO completed th....
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....nd the order of the AO to be upheld. 4.1. On the other hand, the Ld.AR relied on the order of the Ld.CIT(A). 5. We have heard both the parties and perused the material placed on record. In the group cases of M/s Mahaboob Khan Diamonds & Jewellers Pvt. Ltd., Guntur, search u/s 132 was conducted and in the case of the assessee survey u/s 133A was carried out but not the search u/s 132 of the I.T Act. The assessment was also completed u/s 153C r.w.s. 143(3), but not u/s 143(3) r.w.s. 153A of the Act. As per section 271AAB of the Act, for initiating penalty section 271AAB, search u/s 132 is mandatory. For the sake of clarity and convenience, we extract relevant section of 271AAB which reads as under : "Penalty where search has been initiated. 271AAB. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of July, 2012 but before the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the President, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,--- ....
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.... case where search has been initiated under section 132 on or after the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,-- (a) a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year, if such assessee-- (i) in the course of the search, in a statement under subsection (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) on or before the specified date-- (A) pays the tax, together with interest, if any, in respect of the undisclosed income; and (B) furnishes the return of income for the specified previous year declaring such undisclosed income therein; (b) a sum computed at the rate of twenty per cent of the undisclosed income of the specified previous year, if such assessee-- (i) in the course of the search, in a statement under sub-section (4) of section 132, does not admit the undisclosed income; and (ii) on or before the specified date-- (A) decl....
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....would not have been found to be so had the search not been conducted." 6. The AO imposed penalty on the assessee ignoring the plea of assessee that the amount brought to tax was accepted and taxes paid thereon just to purchase peace. The CIT(Appeals) confirmed the order of AO. 7. Aggrieved by the order of CIT(Appeals), the assessee has preferred the present appeals before the Tribunal. 8. Before the Tribunal, the assessee has challenged the order of CIT(Appeals) on the ground that imposition of penalty is bad in law. In this regard it was submitted that the provisions of section 271AAB(1) applies only to a person who is searched u/s. 132 of the Act and in respect of persons again whom assessments are framed u/s. 153C of the Act penalty cannot be imposed u/s. 271AAB of the Act. Our attention was drawn to the decision of ITAT Ahmedabad Bench in the case of DCIT v. Shreeji Corporation, IT(SS)A No.73 & 74/Ahd/2017 for AYs 2012-13 & 2-13-14 wherein on an identical plea the Ahmedabad Bench cancelled the order imposing penalty. Our attention was also drawn to the decision of ITAT Panaji Bench in the case of DCIT v. Volga Dresses in ITA Nos.201 & 201/PAN/2016 for....
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....r section 132(4). Admittedly in the present case, that is in the case of the assessee firm in appeal there has been no search. Search admittedly is on the residence of one of the partner of the assessee firm. Further a perusal of the order of the learned CIT(A) also clearly shows that the learned CIT(A) has cancelled the penalty on the ground that there was no search in the case of the assessee firm. The revenue has not been able to point out as to how this finding of the learned CIT(A) is erroneous. This being so the finding of the learned CIT(A) on this issue stands confirmed." 12. In view of the aforesaid decision of coordinate Benches, we are of the view that the penalty in the case of assessee cannot be sustained as the assessee was not a person who was subjected to search u/s. 132 of the Act and consequently the provisions of section 271AAB could not be invoked in his case." 5.2. Similarly, we also extract para No.10 of the order of this Tribunal in the case of Rajendra Kumar Jain (supra) with regard to invoking 271AAA of the Act. "10. The assessee is in the business of pawn brokering and there is a search conducted in his case on 03/02/2009. Subsequently....