April 2019

Section 271(1)(c), 271AAA In a case where penalty is leviable u/s. 271AAA, penalty initiated and levied u/s. 271(1)(c) is unsustainable in law.

Jagdish D. Shah | Jagdish T. Punjabi
Chartered Accountants

3.  ACIT vs. Nitin M. Shah  (Mumbai) Members: G. S. Pannu, VP and Sandeep Gosain, JM ITA No.: 2863/Mum./2017 A.Y.: 2012-13 Dated: 1st November, 2018 Counsel for revenue / assessee: B. S. Bist / Dr. P. Daniel

 

Section 271(1)(c), 271AAA   In a case where penalty is leviable u/s. 271AAA, penalty initiated and levied u/s. 271(1)(c) is unsustainable in law.

 

FACTS

The assessee was a director and key person of one company N. A search and seizure operation was carried out on the assessee and his group concerns. During the course of assessment proceedings, the Assessing Officer (AO) made addition of Rs. 5,81,07,680 and assessed his income at Rs. 12,06,72,926. Subsequently, the AO initiated penalty proceedings u/s. 271(1)(c) of the Act in respect of the additions made during the course of assessment. Aggrieved the assessee preferred an appeal to CIT(A) who confirmed the addition of Rs. 2,67,68,882. As regards, the balance additions for which relief was allowed by the CIT(A), the department filed appeal before the Tribunal. The Tribunal upheld the order of the CIT(A) and thereafter, the AO initiated the action for levy of penalty.

 

Aggrieved, the assessee preferred an appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee.

 

Aggrieved, revenue preferred an appeal to the Tribunal on the ground that explanation furnished by the assessee was not bonafide and incriminating material was found and seized in search and that the assessee had defrauded the revenue by not offering true and correct income in the return of income filed by the assessee. The assessee was therefore liable for penalty as per Explanation to section 271(1)(c) of the Act.

 

HELD

The Tribunal observed that the CIT(A) held that

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