Tribunal rules cash in bank locker as professional income, cancels penalty under section 271AAB The Tribunal allowed the appeal, holding that the cash found in the bank locker represented the assessee's professional income for the relevant year and ...
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Tribunal rules cash in bank locker as professional income, cancels penalty under section 271AAB
The Tribunal allowed the appeal, holding that the cash found in the bank locker represented the assessee's professional income for the relevant year and was not undisclosed income. As the assessee had explained the source of the cash and the return filing deadline had not passed during the search, the penalty under section 271AAB was deemed unwarranted. The penalty imposed by the Assessing Officer was deleted.
Issues: Assessment of undisclosed income during search & seizure operation; Penalty imposition under section 271AAB of the Income Tax Act, 1961.
Analysis: The case involved an appeal against the order of the CIT(A) pertaining to the assessment year 2013-14. The assessee, a Chartered Accountant, was subjected to a search & seizure operation under section 132 of the Act, during which cash was found in the bank locker. The assessee admitted that the cash represented professional income for the relevant year. The assessment was completed accepting the returned nil income. Subsequently, penalty proceedings under section 271AAB were initiated. The Assessing Officer (A.O.) observed that the assessee had not maintained regular books of accounts and had not specified the manner in which the undisclosed income was derived. The A.O. imposed a penalty of 30% on the undisclosed income of Rs. 30 lakhs.
The assessee contended that the cash found represented current year's professional income and not undisclosed income. The CIT(A) upheld the penalty but reduced it to 20% considering the explanations provided by the assessee. The assessee appealed further.
In the final appeal, the Tribunal found that the assessee had explained the cash found as his professional income for the relevant year and had specified the manner in which it was derived. It was noted that the assessee did not maintain regular books of accounts and the time limit for filing the return had not expired at the time of search. Therefore, the cash found could not be considered undisclosed income for penalty purposes. The Tribunal held that the A.O. was wrong in imposing the penalty and directed to delete it.
In conclusion, the appeal filed by the assessee was allowed, and the penalty levied under section 271AAB was deleted.
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