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2020 (3) TMI 283 - AT - Income TaxPenalty u/s 271AAA or 271(1)(c) - Levying penalty u/s 271AAA while initiating the penalty u/s 271(1)(c) at the time of conclusion of the assessment proceedings - HELD THAT:- For a query from the bench both the parties have replied that the AO has not dropped the penalty proceedings u/s 271(1)(c) before issue of show cause letter calling for explanation of assessee for levy of penalty u/s 271AAA. Therefore, we are of the considered opinion that the AO has applied his mind and initiated penalty u/s 271(1)(c) and conducted the proceedings u/s 271AAA. Having conducted the search and assessed the undisclosed income, the AO ought to have initiated the penalty proceedings u/s 271AAA instead of initiating the penalty u/s 271(1)(c). Hence, we are of the view that initiating the penalty u/s 271(1)(c) and conducting the proceedings u/s 271AAA is bad in law. The penalties u/s 271(1)(c) and 271AAA are attracted in different situations and both are mutually exclusive. Having initiated the penalty u/s 271(1)(c), levy of penalty u/s 271AAA is not permissible. See DM Corporation Pvt. Ltd., Vs. ACIT [2018 (9) TMI 1947 - ITAT PUNE] and ITAT Ahmedabad in the case of Dr. Naman A. Shastri [2015 (11) TMI 109 - ITAT AHMEDABAD] therefore, we set aside the orders of the lower authorities and cancel the penalty levied u/s 271AAA and allow the appeal of the assessee.
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