TMI Blog2021 (2) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... ise disclose any such income to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of search; the alleged income is not any income represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course. Assessee has neither made any surrender of any undisclosed income during the search action nor the penalty has been initiated on the basis of undisclosed income found during such search action. In view of the above factual position, the impugned order of the AO imposing the penalty on the assessee under section 271AAB of the Act does not pass the mandate of the provisions of section 271AAB - Decided in favour of assessee. - ITA No.194/Pat/2019 - - - Dated:- 11-2-2021 - Shri Sanjay Garg, Judicial Member For the Appellant : Shri Nishant Maitin, CA For the Respondent : Shri Indrjit Singh, CIT-DR ORDER The present appeal has been preferred by the assessee against the order dated 16.05.2019 of the Commissioner of Income-tax (Appeals)-3, Patna [hereinafter referred to as CIT(A) ] agitating the action of the Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of account or other documents or transactions found in the course of a search under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted. 5. The Ld. counsel for the assessee has contended that for the purpose of levy of penalty, the income surrendered during search has to qualify as undisclosed income as defined above, which means that it should be represented either by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or documents or transaction found during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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) declares such income in the return of income furnished for the specified previous year; and (B) pays the tax, together with interest, if any, in respect of the undisclosed income; (c) a sum which shall not be less than thirty per cent but which shall not exceed ninety per cent of the undisclosed income of the specified previous year, if it is not covered by the provisions of clauses (a) and (b). (2) No penalty under the provisions of clause (c) of subsection (1) of section 271 shall be imposed upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal in the cases of ACIT Vs. Marvel Associates, ITA No. 147/Vizag/2017order dated 16.3.2018 (ITAT Visakhapatnam Bench); DCIT Vs. M/s Rashmi Metaliks Ltd. , ITA No.1608/Kol/2017 dated 1.2.2019; (ITAT Kolkata Bench);DCIT Vs. Rashmi Cement Ltd, ITA No.1606/Kol/2017 order dated 28.2.2019 (ITAT Kolkata Bench). The co-ordinate Chandigarh bench of the Tribunal (supra) after analyzing the aforesaid decisions, wherein, reliance has also been placed on the decisions of the Hon'ble High Courts has held that levy of penalty u/s 271AAB of the Act is not mandatory. It has also been noted that the Legislature has consciously used the word may in contradistinction to the word shall in the opening words of Section 271AAB of the Act. That the choice of the expression may and not shall in the opening Section of 271AAB shows that the Legislature did not intend to make the levy of penalty statutory, automatic and binding on the Assessing Officer but the Assessing Officer has been given discretion in the matter of levy of penalty. Further that as per sub section (3) of section 271AAB of the Act, the provisions of section 274 and 275 of the Act have been made applicable in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 271AAB are self contained and are not dependent upon commencement or finalization of the assessment proceedings. It is further pertinent to note here it is not mandatory for the AO to invoke provisions of section 271AAB of the Act in each every case of levy of penalty pursuant to search action. There is no bar to the assessing Officer to initiate penalty proceedings u/s 271(1)(c) of the Act even in cases involving search actions if in the facts and circumstances of the case, it is so warranted. The only bar is that no penalty under the provisions of section 270A or section 271(1)(c) of the Act shall be imposed in respect of the undisclosed income, as defined u/s 271AAB of the Act, unearthed during the search action carried out u/s 132 of the Act. It is to be noted that the provisions of section 271AAB and section 271(1)(c) of the Act simultaneously existed and were operational till the provisions of section 271AAC become effective from 01.04.2017. The Assessing Officer has levied penalty @ 10% of the alleged undisclosed income, however, it is a matter of record in this case that the assessee has not made any surrender of any undisclosed income during ..... X X X X Extracts X X X X X X X X Extracts X X X X
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