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27-11-2019, S&P Foundations, Section 271(1)(c), 271AAA, Tribunal Chennai

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1 week 5 days ago #11619 by amit
Section - 271(1)(c), 271AAA, 153A, 132, 139(1)
Order Date - 27-11-2019
Favouring - Assessee Partly
Court - Tribunal Chennai
Appellant - S&P Foundations Pvt. Ltd.
Respondent - ACIT
Justice - Inturi Rama Rao AM & Duvvuru RL Reddy JM
Citation - 1219Taxpundit8
Appeal No. - I.T.A. No. 382/Chny/2013
Asstt. Year - 2007-08

Order

PER : DUVVURU RL REDDY

These cross appeals filed by the assessee as well as Revenue are directed against the order of the ld. Commissioner of Income Tax (Appeals) II, Chennai, dated 05.12.2012 relevant to the assessment year 2007-08 passed under section 271(1)(c) of the Income Tax Act, 1961 [“Act” in short].

2. Both the cross appeals filed by the assessee as well as Revenue are delayed by 10 days and 39 days respectively, for which, the ld. Counsel for the assessee has filed a petition in support of an affidavit for condonation of the delay in the filing the appeal by the assessee and the Department has filed a petition for condonation of delay in filing the appeal, to which; the ld. DR as well as ld. Counsel have not raised any objection. Consequently, since the assessee as well as Revenue was prevented by sufficient cause, the delays in filing of both the appeals are condoned and the appeals are admitted for adjudication.

3. The assessee filed the appeal challenging the direction of the ld. CIT(A) to levy the penalty under section 271AAA of the Act in place of penalty levied under section 271(1)(c) of the Act on the undisclosed income of ₹.3,89,32,110/-.

4. Brief facts of the case are that the assessee is engaged in carrying on construction and real estate business. There was a search and seizure operation in the premises of the assessee on 10.01.2008. During the course of search, books of account and documents were found and seized. In response to the issue of notice under section 153A of the Act, the assessee filed return of income for the assessment year 2007-08 on 12.08.2009 admitting income of ₹.3,89,32,110/-. The assessment under section 153A r.w.s. 143(3) of the Act was completed by determining the total income at ₹.4,03,96,828/-. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Act on account of unaccounted cash, negative cash balance. After considering the submissions of the assessee during the course of penalty proceedings, the Assessing Officer levied penalty of ₹.1,35,97,572/- under section 271(1)(c) of the Act. On appeal, besides holding that the penalty is not leviable on the additions of ₹.64,840/-, ₹.2,99,878/- and ₹.11,00,000/- under section 271(1)(c) of the Act, the ld. CIT(A) directed the Assessing Officer to levy penalty at the rate of 10 per cent on such undisclosed income of the assessee under section 271AAA of the Act.

5. On being aggrieved, the assessee is in appeal before the Tribunal and the ld. Counsel for the assessee argued that penalty under section 271AAA of the Act is not leviable and prayed for quashing the direction issued to the Assessing Officer to levy penalty under section 271AAA of the Act and also prayed for confirming the order of the ld. CIT(A) having found that the penalty levied under section 271(1)(c) of the Act is untenable.

6. Per contra, by filing cross appeal, the ld. DR has submitted that the ld. CIT(A) has erroneously directed the Assessing Officer to levy the penalty under section 271AAA of the Act since the provisions of section 271AAA of the Act are applicable in respect of income of “specified previous year” as provided in Explanation (b) to section 271AAA of the Act. It was further submission that the assessee has not filed its return of income under section 139(1) of the Act and but for the search undertaken under section 132 of the Act, the undisclosed income would not came into light and thereby penalty under section 271(1)(c) of the Act is very much warranted and pleaded for confirming the levy of penalty under section 271(1)(c) of the Act.

7. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book and case law filed. The first point at issue is whether the provisions of section 271AAA of the Act are applicable in this case or not. The assessee is a private limited company, carrying on construction and real estate business, should have filed its return of income under section 139(1) of the Act by 31.10.2007 whereas, the assessee company has not filed its return of income. The Department initiated search action under section 132 of the Act on 10.01.2008 and seized books of account and other documents. Since the assessee has not filed its return of income, the Assessing Officer issued notice under section 153A if the Act on 29.09.2008 and duly served on the assessee requiring to furnish a return of income for the assessment year 2007-08. Accordingly, the assessee filed its return of income on 12.08.2009 admitting a total income of ₹.3,89,32,110/-. After considering the

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