Mere surrender of income would not absolve the assessee from the levy of penalty until and unless the mandatory provisions of Section 271AAA(2) has not been complied.

 

Whether it is mandatory for the assessee to comply with the condition of sub section 2 of Section 271AAA (Penalty where search has been initiated) in spite of the fact that no query was ever raised by the learned AO

Special Leave Petition was filed by the Petitioner against impugned final judgment and order dated 24-07-2024 in ITA No. 1251/2018 passed by the High Court of Delhi at New Delhi (“DHC”).

Before Hon’ble DHC, it was challenged by the Revenue in an appeal against the order passed by Hon’ble Tribunal confirming the order passed by the learned CIT (Appeals) that penalty under section 271AAA of the Income Tax Act, 1961, where search has been initiated cannot be levied, where the Ld. AO without assigning any reason and merely on the basis of surrender made by the assessee initiated penalty proceedings.

The whole argument was on the interpretation of Subsection 2 of Section 271AAA of the Act.

Hon’ble DHC after analyzing the provisions of the statute and also after analyzing the detailed judgement (wherein question of law was admitted and after final argument, judgement was pronounced) of the Hon’ble DHC in the matter of Principal Commissioner of Income Tax vs. Ritu Singal (2018 SCC OnLine Del7692) has held that a mere surrender of income would not absolve the assessee from the levy of penalty until and unless the mandatory provisions of sub section 2 of Section 271AAA has not been complied.

Hon’ble DHC has also analyzed the earlier judgement of Hon’ble DHC in the matter of Principal Commissioner of Income Tax vs. Emirates Technologies Pvt. Ltd. ((2017) 399 ITR 189 (Del.)) wherein the Revenue appeal was dismissed without framing of the question of law.

The Hon’ble Supreme Court concur with the view taken by the Hon’ble DHC about the interpretation of sub-section 2 of Section 271-AAA of the Income Tax Act, 1961 and dismissed the SLP of the Petitioner.

This judgment of the Hon’ble DHC attain finality on the interpretation of Subsection 2 of Section 271AAA of the Act

Income Tax Act, 1961

The copy of the order is as under:

1733294394759 PDF