Brief of the Case
ITAT Delhi held in the case DCIT vs. M/s. Sam India Abhimanyu Housing that the AO initiated the penalty proceedings u/s 271AAA when the present assessee is not covered u/s 132 i.e. search conducted on the Assessee. The assessee is covered only by survey u/s 133A as such initiation of penalty proceeding u/s 271AAA is not legally tenable, so AO erred initiating action under section 271AAA.
Facts of the Case
The assessee firm was developing a housing project in Noida Extension. During the course of search and seizure operation carried out on Sam India Builtwell Private Limited & Others on 15.06.2011, few documents/loose papers (containing some notings mostly relating to cash expenditure) pertaining to the assessee were also found. Since the management was finding it difficult to correlate each of such cash notings appearing on such documents/loose papers with the entries appearing in the books of account, it had taken a conscious decision, with a view to buy peace of mind and to avoid litigation, to offer lump-sum amount of Rs.1,25,00,000/- as its income for the year under consideration. In response to the notice issued u/s 153C, the assessee had filed its return of income declaring total income of Rs.1,25,00,000/- for the year under consideration. The AO also completed the assessment vide order dated 26.03.2014 u/s 143(3) r.w.s. 153C on an income of Rs.1,25,00,000/-
The AO imposed the penalty u/s 271AAA at Rs.12,50,000/- on the basis that the case of the assessee is covered under the provisions of section 271AAA and also that the assessee had failed to satisfy the conditions made in the provision of section 271AAA.
Contention of the Assessee
The ld counsel of the assessee submitted that in the case of assessee, there was no search u/s 132, however, the penalty proceedings was initiated u/s 271AAA. Such levy of penalty is unsustainable in law in view of the provisions of section 271AAA.
Contention of the Revenue
The ld counsel of the revenue relied on the order of AO.
Held by CIT (A)
CIT (A) deleted the penalty. It was held that It is a trite law that the provisions of section 271 AAA are applicable only where search u/s 132 was conducted. I found force in this argument of the Ld AR of appellant. It is not the case of the AO that in the case of appellant, search u/s 132 was ever initiated.
Held by ITAT
ITAT held that there is no dispute on the fact that the assessee offered the disclosed income and paid taxes and that issue on quantum reached the finality. When comes to the penalty proceedings, we find that the AO initiated the penalty proceedings u/s 271AAA when the present assessee is not covered u/s 132 i.e. search conducted on the Assessee. The assessee is covered only by survey u/s 133A as such initiation of penalty proceeding u/s 271AAA is not legally tenable, so AO erred initiating action under section 271AAA. Further, on perusal of the order of the CIT (A), we find that the finding of the CIT (A) in this regard is legally right and so upheld. Therefore, the impugned order does not call for any interference and so upheld.
Accordingly appeal of the revenue dismissed.