Tribunal cancels penalty under section 271AAA for AY 2011-12, finds appellant fulfilled Act conditions.

The Tribunal upheld the CIT(A)'s decision to cancel the penalty under section 271AAA of the Income Tax Act, 1961 for Assessment Year 2011-12. The Tribunal found that the appellant had fulfilled the conditions of the Act by offering total unaccounted income with clear evidence and explanations, and the Assessing officer had not followed the required procedure in asking for an explanation. Therefore, the penalty imposed by the Revenue was deemed unjustified, and the appeal was dismissed on October 29, 2018.

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Issues:
Penalty under section 271AAA of the Income Tax Act, 1961 for Assessment Year 2011-12.

Analysis:
1. The Revenue contended that the Commissioner of Income Tax (Appeals) erred in law by deleting the penalty of Rs. 92,90,000 imposed under section 271AAA, as the assessee did not satisfy the conditions laid down in the Act. The Revenue argued that the onus was on the assessee to admit, specify, and substantiate the undisclosed income, and pay tax and interest, not on the Assessing officer to establish the source of unaccounted income.

2. The Assessee, on the other hand, supported the first appellate order, stating that the CIT(A) rightly granted relief after considering all facts and circumstances, citing relevant legal precedents. The Assessee argued that the conditions of section 271AAA were fulfilled, and hence, the penalty should be deleted.

3. The CIT(A) granted relief to the assessee based on findings that the undisclosed income was derived from the construction business of the appellant company, as stated during the search operation. The CIT(A) concluded that the conditions of section 271AAA were satisfied, and hence, the penalty was not justified.

4. The Tribunal observed that the appellant had offered the total unaccounted income for the relevant assessment year, based on clear evidence and statements. The Tribunal further noted that the manner of earning undisclosed income was explained by the assessee during the search operation, fulfilling the conditions of the Act.

5. The Tribunal upheld the CIT(A)'s decision to cancel the penalty, citing legal precedents and the requirement for the Assessing officer to specifically ask the assessee to explain the undisclosed income's derivation. Since the AO did not follow this procedure, the penalty under section 271AAA was deemed unjustified.

6. The Tribunal dismissed the Revenue's appeal and the Assessee's Cross Objection, upholding the CIT(A)'s decision to cancel the penalty under section 271AAA. The order was pronounced on October 29, 2018.

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