2014 (5) TMI 1179 - AT - Income Tax

Penalty of Rs. 46,00,000 under Income-tax Act deleted for AY 2009-2010

The D.C.I.T Central Circle - 1 5, Udaipur Versus Shri Babu Lal Motawat

The D.C.I.T Central Circle - 1 5, Udaipur Versus Shri Babu Lal Motawat - TMI Issues Involved:Deletion of penalty under section 271AAA of the Income-tax Act, 1961 for Assessment Year 2009-2010.Analysis:Issue 1: Deletion of PenaltyThe appeal was filed by the revenue against the deletion of a penalty of Rs. 46,00,000 under section 271AAA of the Income-tax Act, 1961. The penalty was imposed by the Assessing Officer (A.O) as the conditions laid down in sub-section(2) of section 271AAA were not fulfilled by the assessee. The search and seizure operation conducted at the business and residential premises of the assessee led to the gathering of incriminating evidence. The assessee filed a return declaring total income, and subsequently, the penalty was initiated and imposed. The CIT(A) deleted the penalty, leading to the revenue's appeal before the Appellate Tribunal.Issue 2: Applicability of Penalty ProvisionThe Tribunal noted that during the search, the assessee made statements under relevant sections of the Act and surrendered undisclosed income, which was accepted by the department. However, the penalty was imposed as the assessee could not explain the manner in which the undisclosed income was derived. The Tribunal observed that the A.O admitted the surrender based on the assessee's business activity. The Tribunal referred to a decision by the Cuttack Bench of the ITAT, which stated that there is no prescribed method to indicate the manner in which income was generated when the definition of 'undisclosed income' is defined in the Act. The Tribunal held that the levy of penalty under section 271AAA was correctly deleted by the CIT(A).Issue 3: Precedent and Case LawThe Tribunal further referenced a case decided by the ITAT Jodhpur Bench, where it was held that the assessee disclosed the entire undisclosed income and explained the modus of earning the income, which led to the conclusion that the penalty under section 271AAA could not be imposed. The Tribunal highlighted that the Act does not provide a specific manner of disclosing undisclosed income. The Tribunal also noted that the authorized officer did not specifically inquire about the manner in which the undisclosed income was earned during the proceedings. The Tribunal dismissed the revenue's appeal by following the precedent and confirmed the findings of the CIT(A).In conclusion, the Tribunal dismissed the revenue's appeal, upholding the deletion of the penalty under section 271AAA of the Income-tax Act, 1961 for the Assessment Year 2009-2010.