2023 (10) TMI 1016 - AT - Income Tax

Revenue's appeal dismissed; CIT(A) justified in deleting penalty under Section 271AAA for disclosed business income.

Asstt. Commissioner of Income Tax, Circle, Karnal Versus M/s. Best Foods Limited,

The appeal by Revenue against the CIT(A)'s order under section 271AAA of the Income Tax Act, 1961, was dismissed. The Tribunal found that the additional ... Penalty u/s 271AAA - Income surrendered in search & seizure operation - Unaccounted income of group which was voluntarily offered as additional income - AO alleged assessee has shown the surrendered income as income from other sources - CIT(A) has deleted the same on the basis of fact that in the quantum appeal, the Tribunal in appea has deleted the addition - HELD THAT:- As in the quantum appeal, a co-ordinate Bench has giving a finding that the amounts disclosed during the search were part of the cash sales and included in the books of accounts. The same substantiates the manner of earning alleged undisclosed income and thus Ld. CIT(A) was not in error deleting the penalty imposed u/s 271AAA. The ground raised in the appeal have no substance. The appeal of Revenue is dismissed. Issues:The appeal by Revenue against CIT(A)'s order u/s 271AAA of the Income Tax Act, 1961.Issue 1: Search & Seizure OperationThe search & seizure operation was conducted at the residential and business premises of M/s. Best Foods group of cases on 23.11.2010. Sh. Dinesh Gupta, MD of the company admitted Rs. 44 crores as unaccounted income of the group, voluntarily offered as additional income. However, Ld. AO alleged that the assessee showed the surrendered income of Rs. 44 crores as income from other sources. Ld. AO issued notice u/s 271AAA of the Act, unsatisfied with the explanation of source and manner of earning the income, and imposed a penalty. Ld. CIT(A) deleted the penalty based on the fact that in a quantum appeal, the Tribunal had deleted the addition.Issue 2: Tribunal's FindingsThe Tribunal found that the amounts disclosed during the search were part of cash sales and included in the books of accounts. The Tribunal concluded that the additional income offered during the search is business income linked with the profit of an Industrial Undertaking. Ld. CIT(A) was justified in deleting the penalty imposed u/s 271AAA as the manner of earning alleged undisclosed income was substantiated. The appeal of Revenue was dismissed.This judgment highlights the importance of substantiating additional income offered during a search operation and the significance of findings in a quantum appeal in determining the validity of penalties imposed u/s 271AAA of the Income Tax Act, 1961.