Tax Tribunal Overturns Penalty for Lack of Evidence

The Tribunal allowed the appeal against the penalty imposed under section 271AAB of the Act, amounting to Rs. 86,000. The Tribunal relied on a precedent set by the Kolkata Bench, emphasizing that penalties cannot be solely based on the assessee's statement without corroborating evidence. As no incriminating evidence was found during the search or assessment, the penalty was deemed unjustified. Consequently, the penalty was deleted, and the assessee's appeal was upheld.

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Issues:
Levy of penalty u/s.271AAB of the Act of Rs. 86,000/-

Analysis:
The appeal was filed against the order of the CIT(A)-3, Patna, for the assessment year 2013-14, concerning the levy of penalty u/s.271AAB of the Act amounting to Rs. 86,000. The Assessing Officer observed that during a search operation at the premises of Mica Mod Group, the assessee admitted undisclosed income of Rs. 5,00,000, and in the relevant year, declared income of Rs. 5,56,360, which was accepted. Consequently, the Assessing Officer imposed a penalty of Rs. 1,29,130, being 30% of the undisclosed income of Rs. 4,30,435. On appeal, the CIT(A) reduced the penalty to 20% of the undisclosed income.

The assessee contended that a similar penalty was deleted in a case before the Kolkata Bench of the Tribunal, citing identical facts. The Departmental Representative failed to counter this submission. The Tribunal in the Kolkata case held that the penalty cannot be solely based on the statement of the assessee without corroborating evidence, especially when it is unclear which undisclosed income pertains to which specified previous year. As no incriminating evidence was found during the search or assessment proceedings, the penalty was unjustified.

In the present case, the assessee admitted additional income suo moto to buy peace of mind, but no incriminating evidence was found by the Investigation Wing or the Assessing Officer. Following the precedent set in the Kolkata case, the penalty of Rs. 86,000 was deleted, and the appeal of the assessee was allowed.

Therefore, the Tribunal, following the principles established in the Kolkata case, deleted the penalty imposed under section 271AAB of the Act, as there was no concrete evidence of undisclosed income found during the search or assessment proceedings. The decision was made based on the lack of incriminating evidence and the strict interpretation of the penalty provision in the tax statute.

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