2016 (7) TMI 1038 - AT - Income Tax

Tribunal upholds CIT(A) decision on penalty appeal under section 271AAA for AY 2012-13

The DCIT, Central Circle-2, Surat Versus M/s. Manan Corporation

The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal against the penalty imposed under section 271AAA for the assessment year ... Penalty under section 271AAA - CIT(A) deleted the penalty levy - Held that:- The Revenue strongly argues that the CIT(A) admitted additional evidence in course of the lower appellate proceedings. No such case is being made out after perusing the lower appellate order. This plea is accordingly rejected. The Revenue’s next argument seeks to revive the impugned section 271AAA penalty by drawing support from penalty order but it however fails to place any material on record rebutting the above extracted finding that assessee’s partner Shri Rajeevbhai Patel had made the disclosing in question on the basis of documents seized, he gave project wise break up in order to account for the above undisclosed income in the form of receivables from customers. This was followed by assessment of the above stated undisclosed income and payment of taxes. It has come on record that the Revenue authorities did not even make a suggestion during search doubting veracity of the assessee’s disclosure. We are of the opinion in these facts and circumstances that the CIT(A) has rightly held the assessee to have satisfied all the three necessary three conditions for claiming section 271AAA(2) immunity i.e. it admitted undisclosed income of ₹ 1.15 crores, specified manner of having derived the same followed by substantiation thereof and paid taxes thereupon - Decided against revenue Issues:Appeal against penalty imposed under section 271AAA for A.Y. 2012-13.Analysis:1. The case involved an appeal by the Revenue against the deletion of a penalty of Rs. 11,50,000 imposed by the Assessing Officer under section 271AAA of the Income Tax Act, 1961 for the assessment year 2012-13.2. The assessee, engaged in building housing projects, disclosed Rs. 1,15,00,000 during a search conducted by the department. Subsequently, the Assessing Officer completed a regular assessment, making an addition under section 69C and computed the taxable income as Rs. 3,53,70,600. The penalty proceedings under section 271AAA were initiated as the disclosure of Rs. 1.5 crores was deemed insufficiently substantiated.3. The Assessing Officer imposed the penalty as the assessee allegedly did not specify the manner of deriving the undisclosed income along with substantiation. The CIT(A) accepted the appeal, noting that the disclosed income was declared during a statement under section 132(4), and taxes were paid on it. The CIT(A) emphasized that the conditions for immunity under section 271AAA(2) were met.4. The CIT(A) referred to the provisions of section 271AAA and highlighted the necessity for specifying the manner of disclosure and substantiating the derived income. Citing relevant case law, the CIT(A) concluded that the assessee had fulfilled the conditions for exemption from penalty as stipulated in section 271AAA(2).5. The Revenue contended that additional evidence was admitted during the appellate proceedings, but the argument was rejected. The Revenue's plea to reinstate the penalty was dismissed as it failed to provide material to challenge the CIT(A)'s findings. The CIT(A) correctly found that the assessee had met the necessary conditions for claiming immunity under section 271AAA(2) by admitting the undisclosed income, specifying the derivation method, substantiating it, and paying taxes.6. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal against the penalty imposed under section 271AAA for the assessment year 2012-13.This comprehensive analysis of the judgment highlights the key issues, arguments presented, and the final decision rendered by the Tribunal.