2012 (10) TMI 774

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....l vs State of Orissa 1972 83 ITR 26 still hold good and applicable to the appellant's case. Hence the penalty levied is unjustified. 2. That on the facts and the circumstances of the case and in law, the penalty shall not be levied ordinarily where the assessee is not at fault or guilty of misconduct. The ld. AO and Commissioner of Income Tax (Appeals) erred by levying penalty on the appellant without any finding/proving anything on record in relation to the additional income. Hence the penalty levied is uncalled and without any basis. 3. That on the facts and the circumstances of the case, the ld.CIT(A) and the ld.AO erred by considering that the appellant fails to fulfill the conditions of s.271 AAA of the Income Tax Act, 1961. Wher....

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....l contentions we find that the Tribunal after examining the statements recorded at the time of search u/s 132(4) came to a conclusion that the assessee was never asked about the manner in which the income was earned, nor that she was even asked to substantiate the manner in which undisclosed income was arrived. In the proceedings under Section 271(AAA), the question about the manner in which the income was derived was put to the assessee and she had replied to the same. The Tribunal held that, had the concerned officer posed a similar question to the assessee during the recording of the statement u/s132(4), she might have replied as to the manner in which the income was earned and she would have substantiated the manner in which the undiscl....

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....icer puts a specific question with regard to the manner in which income has been derived, it is not expected from the person to make a statement in this regard and in case in the statement the manner in which income has been derived has not been stated but has been stated subsequently, that amounts to the compliance with Explanation 5(2) of the Income Tax Act, 1961. We are also of the opinion that in case e there is nothing to the contrary in the statement recorded under Section 132(4) of the Income Tax Act, 1961, in the absence of any specific statement about the manner in which such income has been derived, it can be inferred that such undisclosed income was derived from the business which he was carrying on or from other sources. The ....