DCIT Vs Narendra Gopal Singhal (ITAT Kolkata)
No Search, No Penalty – Admission in Statement u/s 131 Can’t Trigger 271AAB Penalty- ITAT Kolkata; Section 271AAB Applicable Only Where Search Conducted on Assesse- ITAT Kolkata Deletes Penalty u/s 271AAB – No Search Conducted on Assessee
Search operations were conducted on 04.04.2019 in the case of Kishan Kumar Kalyani & Kalu Magha Ram where cash of ₹2.51 crore was seized. In his statement, Kalyani disclosed that ₹1.99 crore belonged to the assessee. Another search on 27.05.2019 in the case of Bivas Kedia led to seizure of ₹1 crore, which was later admitted to belong to assessee. Assessee, in his statement u/s 131 on 03.06.2019, admitted ownership of the above amounts. He filed ROI declaring income of ₹2.90 crore for AY 2019-20 & ₹15 lakh for AY 2020-21. AO levied penalty of ₹1.74 crore u/s 271AAB on the admitted income, treating it as “undisclosed income.”
CIT(A) deleted penalty, holding that s.271AAB applies only where search is initiated u/s 132 against the assessee, which was not the case here. Reliance was placed on ITAT Kolkata in Jorbagh Tea Co. vs. ACIT (ITA No. 778/KOL/2022, order dated 18.05.2023).
Tribunal’s noted that Section 271AAB begins with “in a case where search has been initiated u/s 132.” Both s.271AAB(1) & (1A) apply only where a search is conducted on the assessee. In the present case, search was carried out on other persons (Kalyani & Kedia), not on the assessee. Assessee’s statement was recorded u/s 131, but no search took place against him. Even AO’s penalty order admitted that assessee explained income through speculation business & accounted it in books. Since no search was conducted against assessee, invocation of s.271AAB was invalid.
