Tribunal cancels penalty under section 271AAB citing lack of evidence & adherence to strict tax penalty rules.

The Tribunal allowed the appeal, deleting the penalty imposed under section 271AAB due to the lack of incriminating evidence and in line with a previous Tribunal decision emphasizing the necessity for strict interpretation of penalty provisions in tax statutes.

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Issues involved:
Appeal against CIT(A)'s order confirming penalty u/s.271AAB for undisclosed income.

Analysis:

1. Issue of penalty u/s.271AAB:
The sole issue in this appeal was the confirmation of the penalty u/s.271AAB by the CIT(A). The Assessing Officer had levied a penalty of 30% of the undisclosed income, which was later reduced to 20% by the CIT(A). The assessee contended that the penalty should be deleted based on a similar case where the Tribunal had deleted the penalty. The Tribunal in the referenced case had emphasized the necessity of undisclosed income and specified previous year for levying the penalty. The Tribunal held that mere statement by the assessee without corroborating evidence cannot be the sole basis for penalty imposition. In the present case, the assessee admitted additional income to buy peace of mind, and no incriminating evidence was found during the search or assessment proceedings. Following the precedent, the penalty of Rs. 95,000 was deleted, and the appeal was allowed.

2. Judicial Precedent:
The Tribunal referred to a previous case where the penalty u/s.271AAB was deleted based on the lack of corroborating evidence for the undisclosed income. The Tribunal emphasized the importance of specific requirements in the Act for imposing such penalties and the need for strict interpretation of tax statutes. The decision in the referenced case was applied to the present situation, where the assessee's admission of additional income was not supported by any incriminating evidence, leading to the deletion of the penalty.

3. Argument and Decision:
The Authorized Representative of the assessee relied on the previous Tribunal decision to support the deletion of the penalty, highlighting the lack of incriminating evidence and the similarity of facts with the referenced case. The Departmental Representative could not counter this argument, leading to the Tribunal's decision to delete the penalty of Rs. 95,000. The Tribunal's decision was based on the lack of evidence supporting the undisclosed income and the necessity for strict interpretation of penalty provisions in tax statutes.

In conclusion, the Tribunal allowed the appeal of the assessee, deleting the penalty imposed u/s.271AAB based on the lack of incriminating evidence and following the precedent set by a previous Tribunal decision.

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