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of <h1>Tribunal Upholds Deletion of Penalty in Income Tax Appeal</h1> <h3>ACIT, Cent. Cir. 1, Surat Versus M/s. Swapna Enterprise</h3> ACIT, Cent. Cir. 1, Surat Versus M/s. Swapna Enterprise - TMI Issues:- Appeal against deletion of penalty under section 271AAA of the Income Tax Act, 1961.Analysis:1. The Revenue appealed to the Tribunal against the deletion of a penalty of Rs. 1,50,00,000 imposed by the Assessing Officer (AO) under section 271AAA for the Assessment Year 2011-12.2. The case involved a firm engaged in housing projects where a search under section 132 revealed undisclosed income of Rs. 15 crores. The AO initiated penalty proceedings under section 271AAA as the assessee failed to substantiate the manner in which the undisclosed income was derived.3. The AO computed a penalty of 10% of the undisclosed income, amounting to Rs. 1.50 crores. However, the Commissioner of Income Tax (Appeals) [CIT(A)] deleted the penalty after finding that the assessee successfully demonstrated the manner of earning the income.4. The Tribunal analyzed section 271AAA which allows for a penalty of 10% of undisclosed income unless certain conditions are met by the assessee. In this case, it was acknowledged that the undisclosed income was earned through on-money payments in a building project, and the manner of earning was disclosed.5. The Tribunal concluded that the CIT(A) rightly deleted the penalty as the conditions under section 271AAA(2) were fulfilled by the assessee. Therefore, the appeal of the Revenue was dismissed, upholding the decision to delete the penalty.6. The judgment was pronounced by the Tribunal in Ahmedabad on 10th April 2017.
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