2025 (8) TMI 206 - AT - Income Tax

Penalty upheld under Section 271AAB(1)(b) for failure to substantiate surrendered income source of Rs 28.24 crores

The ITAT Delhi upheld the levy of penalty under section 271AAB(1)(b) where the assessee surrendered additional income of Rs. 28.24 crores in the statement ... Levy of penalty u/s 271AAB - income is offered for taxation in the statement u/s 132(4) of the Act and taxes paid thereon - HELD THAT:- We find in the instant case that the assessee had surrendered a sum of Rs. 28.24 crores in the statement u/s 132(4) of the Act and had duly honored the same by offering it in the return of income after due payment of taxes thereon. The assessee could not substantiate the manner in which such additional income was received. Hence, the case of the assessee squarely falls within the ambit of section 271AAB(1)(b) of the Act which has been rightly invoked by the ld AO in the instant case. Accordingly, we deem it fit to reverse the order of the ld CIT(A) and uphold the levy of penalty by the ld AO. The grounds raised by the revenue are allowed. The Appellate Tribunal (ITAT Delhi) in ITA No. 2487/Del/2023 for AY 2013-14 reviewed the deletion of penalty under section 271AAB of the Income-tax Act, 1961 by the Commissioner of Income Tax (Appeals). The issue was whether the CIT(A) was justified in deleting the penalty levied by the Assessing Officer (AO) under section 271AAB(1)(b) on undisclosed income of Rs. 28.24 crores surrendered during a search under section 132(4). The Tribunal noted that the assessee surrendered the additional income in the statement recorded during the search and paid taxes thereon. However, the assessee failed to substantiate the source or manner of receipt of such income. The AO rightly invoked section 271AAB(1)(b), which applies to undisclosed income unearthed during search and subsequently offered by the assessee. Rejecting the CIT(A)'s discretionary deletion of penalty, the Tribunal held that the case squarely falls within the ambit of section 271AAB(1)(b). The Tribunal stated that 'the grounds raised by the revenue are allowed,' thereby reversing the CIT(A)'s order and upholding the penalty levy. In conclusion, the appeal of the revenue was allowed, reinstating the penalty under section 271AAB(1)(b) on the undisclosed income offered during the search.