Dellip Vijaykumar Kotecha v. DCIT. (2023) 102 ITR 671 (Pune)(Trib)

S. 271AAA : Penalty-Search initiated on or after 1st June, 2007-Issued notice under wrong section-Non-striking off of the irrelevant limb-Levy of penalty is bad in law.[S.153A, 271(1)(c)]

In this case a search was conducted by the department pursuant to which a return was filed u/s 153A. After making the assessment, the AO imposed a penalty u/s 271AAA with respect to undisclosed income, which was partially upheld by the CIT(A).

The ITAT observed that the AO had rightly imposed penalty u/s 271AAA, however, the notice for penalty was issued u/s 271 even though S. 271AAA categorically provides that no penalty u/s 271(1)(c) of the Act shall be imposed in respect of undisclosed income referred to in S. 271AAA(1). The ITAT therefore held that not only did the AO invoke the wrong section for imposing penalty u/s 271AAA but he also did not strike off the irrelevant limb in the notice u/s 271(1)(c) r.w.s. 274 of the Act.  (AY.2011-12)