The ITAT Kolkata Bench ruled that there was no investigation conducted on the taxpayer and upholds the deletion of penalty under section 271AAB on undisclosed income.
The taxpayer, M/s. Clean Coal Enterprises Pvt. Limited related to The Hind Energy Group of Companies, in which an investigation was performed under section 132(1) of the income tax act as per the incriminating material, sent a notice to the taxpayer under section 153C. The assessing officer during the closure of the assessment levied a penalty of Rs 1,98,31,170 as per section 271AAB.
The taxpayer with respect to the assessment order goes before CIT(A) alleging that Section 271AAB is not subjected to be applied since no search was formed in its case. The penalty would have been deleted by the 1st Appellate Authority submitting that the penalty under section 271AAB could get levied when the investigation would get performed on the taxpayer’s premises. Under section 153A, the assessments were not formulated instead the same as stated under section 153C of the Income Tax Act. Aggrieved, revenue filed an appeal to the ITAT.
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The Tribunal found that the opening line of section 271AAB reflects, that the search must be there for invoking this provision, therefore, it is applicable where an investigation would get executed under section 132 of the Income Tax Act. Sections 153A and 153C are concerned with two different classes of taxpayers. Under section 271AAB, the imposed penalty is related to those taxpayers in which the investigation would be performed and the taxpayer’s case is unable to come beneath the second category.
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The Coram of Mr Rajpal Yadav, Vice-President (KZ), and Mr Girish Agrawal, Accountant Member, deleting the petition ruled that the assessing officer would have levied a Rs 1.98 cr penalty without making any reference to the income specified in the taxpayer’s hands, instead of availing the cognizance of the statement of the searched individual who may mention Rs 6.6 cr. The same is completely against the law and the 1st Appellate Authority has rightly valued the facts and possibilities by deleting the penalty.
On behalf of the revenue and taxpayer respectively, Mr Biswanath Das and Mr Amit Agarwal appeared
