Aseesee’s Employer subjected to search wherein certain information pertaining to assessee also found and assessee also gave a declaration u/s 132(4) admitting the same to be his. Upon being satisfied that it is a fit case for assessment u/s 153C, AO issued notice and later concluded the assessment making certain additions. Penalty proceedings were initiated u/s 271AAB but were later dropped on considering the replies by the assessee. PCIT in exercise of his powers u/s 263 held that the dropping of penalty was erroneous and prejudicial to the interests of revenue since penalty was automatic u/s 271AAB. Accordingly he set aside the decision of the AO and directed him to revive the proceedings.On Appeal the ITAT  held that penalty u/s 271AAB can only be levied on a person who was subject to search and in whose case assessment in concluded u/s 153A not on any other person. Accordingly when assessment order is passed u/s 153C, the question of levying penalty under the said section does not arise. Therefore even though the reasons for dropping the penalty was not specified in the order sheet, there can still be nothing erroneous and prejudicial to revenue’s interests in dropping the proceedings when penalty could not have been levied at all under that section. Hence the very initiation of Revision proceedings u/s 263 itself cannot be sustained in law and the Revision order deserves to be quashed.  ( ITA No. 1809/Bang / 2018 dt 19 -4 2021 ) ( AY. 2014 -15 )