ITAT cancels penalty under section 271AAA for undisclosed income, finding explanation and tax payment sufficient.

The ITAT ruled in favor of the appellant, canceling the penalty imposed under section 271AAA for the relevant assessment year. The cash found during the search was explained as the wife's savings, not undisclosed income, and even if it was considered undisclosed income, the appellant had paid the tax due on it. The ITAT held that the penalty was not justified as the appellant had voluntarily added an amount based on his son's disclosure, fulfilling the requirements of specifying and substantiating the undisclosed income.

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Issues:
Imposition of penalty under section 271AAA of the Income Tax Act, 1961 for AY 2012-13.

Analysis:
The appellant, belonging to the Jaipuria group, was subjected to a search and seizure action under section 132 of the Income Tax Act, 1961. The appellant's son offered undisclosed income, and subsequently, the appellant revised the income in the return. The assessing officer imposed a penalty of Rs. 30,000 under section 271AAA, which the appellant contested. The appellant argued that the penalty was unjust as there was no undisclosed income as per section 271AAA. The appellant voluntarily added an amount with the hope of avoiding penalty, based on his son's disclosure. The appellant's wife's cash found during the search was explained as savings/pin money. The assessing officer and CIT (Appeals) upheld the penalty, leading the appellant to appeal to the ITAT.

The ITAT examined section 271AAA, which pertains to penalty on undisclosed income found during a search. The cash in question was claimed to be the wife's savings, not undisclosed income during the search. Even if considered undisclosed income, the appellant paid the tax due on it. The ITAT cited precedents where acceptance of surrendered income by the assessing officer fulfills the requirement of specifying and substantiating the undisclosed income. Therefore, the ITAT concluded that the penalty under section 271AAA was not justified in this case. Consequently, the penalty imposed was canceled, and the appeal of the assessee was allowed.

In conclusion, the ITAT ruled in favor of the appellant, canceling the penalty imposed under section 271AAA for the relevant assessment year.

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