TMI Blog2020 (3) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisclosed 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 appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penalty u/s 271(1)(c) of the Act. Subsequently, the assessee went on appeal before the CIT(A), later on to ITAT and both the appellate authorities have allowed part relief to the assessee. The AO on receipt of Tribunal order, issued show cause notice dated 19.10.2012 and subsequently levied the penalty u/s 271AAA vide order dated 31.10.2012. Against which the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the order of the AO. The Ld.CIT(A) confirmed the penalty on the reason that the assessee has satisfied the condition for levy of penalty u/s 271AAA and observed that no penalty was levied by the AO u/s 271(1)(c) as provided in the Act. 3. Against the order of the Ld.CIT(A), the assessees have filed appeals be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the AO had initiated the penalty u/s 271(1)(c) and thereafter issued the show cause notice for levy of penalty u/s 271AAA without dropping the notice issued earlier u/s 271(1)( c) of the Act, hence, submitted that the AO having initiated the penalty u/s 271(1)(c), he is not permitted to impose penalty u/s 271AAA. The Ld.AR further submitted that in the assessment the addition made was only in respect of undisclosed profits for which the AO had initiated the penalty u/s 271(1)(c), therefore there is no case for initiation of proceedings u/s 271AAA again. Hence argued that it is to be construed that the AO had initiated the penalty u/s 271(1)(c), but not the penalty u/s 271AAA. 6.1. The Ld.AR further submitted that the contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax, Central Circle 2 (3), Ahmedabad [2015] 63 taxmann.com 363 (Ahmedabad-Trib), wherein the coordinate bench held that initiation of penalty u/s 271AAA and levy of penalty u/s 271(1)(c) is not permissible. 7. Per contra, the Ld.DR submitted that though the AO had initiated the penalty u/s 271(1)(c), the AO has not levied the penalty u/s 271AAA, therefore, it is to be viewed that the penalty initiated u/s 271(1)(c) was dropped. As per the provisions of section 271AAA, in a case where the penalty is leviable under this section, the action u/s 271(1)(c) is not permissible. Since the AO has not levied the penalty u/s 271(1)(c), he has rightly initiated the penalty u/s 271AAA and imposed the penalty since search was conducted and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or levying penalty u/s 271AAA of the Act pending finalization of penalty u/s 271(1)(c) which is incorrect action. 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 cond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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