Tribunal affirms deletion of penalty under section 271AAA based on assessee's compliance.

The Tribunal upheld the CIT(A)'s decision to delete the penalty under section 271AAA as the three conditions were satisfied by the assessee based on statements recorded and payment of tax and interest. The Revenue's appeal was dismissed on 13-08-2015.

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Issues:
Levy of penalty under section 271AAA.

Analysis:
The appeal filed by the Revenue was against the order of CIT(A)-II, Ahmedabad for A.Y. 2009-10. The case involved a search under section 132 of the Act at the assessee's premises, leading to a disclosure of undisclosed income of Rs. 1 crore made by the main director of a company, which included an amount made in the name of the assessee. The Assessing Officer (AO) levied a penalty under section 271AAA(1) of the Act for failure to specify the manner in which the income was derived. However, the CIT(A) deleted the penalty, stating that the disclosed income fell under the definition of 'undisclosed income' as per the Act.

The first condition under section 271AAA(2) required the admission of undisclosed income and specifying the manner in which it was derived during the search. The CIT(A) found that the brother of the assessee, in his statement recorded under section 132(4), had disclosed the income as current year business income, fulfilling the first condition. The second condition of substantiating the manner in which the income was derived was considered satisfied as well, as the authorized officer did not ask specific questions but the assessee clearly mentioned the undisclosed income was from the current year's business income.

Regarding the third condition of paying tax along with interest on the undisclosed income, it was confirmed that the assessee had indeed paid the tax and interest. The CIT(A) relied on principles laid down by the Honorable Gujarat High Court and Allahabad High Court to support the decision of deleting the penalty under section 271AAA. The Revenue failed to provide any material to challenge the CIT(A)'s findings, leading to the dismissal of the appeal.

In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the penalty under section 271AAA, as the three conditions specified under the section were found to be satisfied by the assessee based on the statements recorded and the payment of tax and interest. The appeal of the Revenue was dismissed, and the order was pronounced on 13-08-2015.

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