7. Nukala Ramakrishna Eluru vs. DCIT
ITAT Vishakapatnam Bench
Before V. Durga Rao (JM) and G. Manjunatha (AM)
ITA Nos.: 189 to 192/Vizag/2014
A.Ys.: 2005-06 to 2008-09. Date of Order: 16th September, 2016.
Counsel for assessee / revenue: C. Subramanyam / T.S.N. Murthy
FACTS
On 16.11.2007, a search u/s. 132 of the Act was conducted in the residential as well as business premises of the assessee, engaged in the business of rearing and trading of fish and other ancillary business activities. During the course of search, department unearthed details of investments made in the purchase of immovable properties standing in the name of the assessee and his family members including business concerns. The assessee filed his return of income for AY 2008-09 on 30.09.2008 declaring total income of Rs. 75,39,560. This return of income was revised on 14.9.2009 and a total income of Rs. 1,82,84,170 was declared in the revised return of income. Subsequently, this return of income was again revised and in the final revised return of income the income disclosed was Rs. 4,10,32,920.
The AO assessed the total income of the assessee to be Rs. 4,10,32,990. He initiated penalty proceedings u/s. 271(1)(c) of the Act and after asking the assessee to explain why penalty should not be levied for concealment of particulars of income or furnishing inaccurate particulars of income, he levied penalty u/s. 271(1)(c).
Aggrieved, the assessee preferred an appeal to the CIT(A) who directed the AO to levy penalty on the difference between Rs. 1,82,84170 (being total income in first revised return) and Rs. 75,39,560 (being total income in the original return of income).
Aggrieved, the assessee preferred an appeal to the Tribunal where it was contended on his behalf that the levy of penalty for AY 2008-09 u/s. 271(1)(c) of the Act was void ab initio.
HELD
In the present case on hand, on perusal of the facts available on record we find that the search had taken place on 16.11.2007 which falls under the assessment year 2008-09 which is the year before us. The year before us was therefore, covered by the Explanation of specified previous year as per Explanation (b) to section 271AAA of the Act. It is not in dispute that the income in question has been assessed as income of the assessment year 2008-09 i.e. specified previous year. The AO himself has treated the undisclosed income of the assessee as such. Once we come to the conclusion that the year before us is a specified previous year and the undisclosed income belongs to this year, an inevitable finding in view of the discussions above is that the provisions of section 271AAA will come into play to deal with penalty for concealment of particulars of income. It is clear from the above fact that the AO has not invoked the correct provisions of law for levying penalty for concealment of income. Therefore, we are of the view that the AO erred in levying penalty u/s. 271(1)(c) of the Act, when a specific provision is provided by way of section 271AAA to deal with penalty provisions, in cases where search took place on or after 1.6.2007.
The Tribunal considering the facts and circumstances of the case and also the ratio of the decision of the Delhi Bench of the Tribunal in the case of DCIT vs. Subhash M. Patel in ITA No. 256/AHD/2012 dated 20.7.2012, held that the penalty order passed by the AO under s. 271(1)(c) of the Act, is void ab initio and liable to be quashed.
The Tribunal quashed the penalty order passed by the AO u/s. 271(1)(c) of the Act for AY 2008-09.
The appeal filed by the assessee was allowed.
