2013 (11) TMI 1326

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..... The assessment was completed u/s 143(3) on 21-12-2010 and penalty was also initiated u/s 271AAA. During the search cash of Rs. 67 lakhs was found and seized. The assessee could not explain the source of cash found at the time of search. A statement u/s 132(4) of Shri Nitish Chordia, partner of Concrete Developers was recorded by which the assessee has offered for taxation an amount of Rs. 67 lakhs as unexplained cash and additional income of Rs. 1.53 crores in the hands of M/s Concrete Developers to cover up other discrepancies. Notice of penalty requiring assessee to show cause why penalty u/s 271AAA should not be levied was issued on 13-05-2011. During the penalty proceedings A.O. has held that the assessee could not specify the manner in which the undisclosed income has been derived and further could not substantiate the manner in which such income was derived. Therefore AO has levied penalty u/s 271AAA of Rs. 22,10,000/- being 10% of the undisclosed income of Rs. 2,21,00,000/- for AY 2009-10. 4. The assessee preferred appeal before the CIT(A), before whom the detail submissions were filed, which are recorded in the order of the CIT(A) in para 4. The submission filed on behal....

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....id on that amount. Accordingly, it has to be taken that the conditions are satisfied for not levying the penalty under section 271AAA of the Act. Further, reliance was placed in case 216 ITR 208 (sic). 7. On the other hand learned DR has placed reliance on the order of the learned CIT(A). Part of the order of the learned CIT(A) was also read. Attention of the Bench was drawn on pages 1 to 3 of the paper book, where a copy of the statement of the partner is placed. 8. Learned counsel of the assessee in rejoinder stated that copy of statement of the partner is placed at pages 1 to 3 of the paper book and in the statement the partner has categorically stated that he is offering the amount of Rs.2.21 crore conditionally as no penalty should be levied. Attention of the Bench was drawn on last para of the statement recorded. 9. We have heard the rival submissions and considered them carefully. After considering the submissions and perusing the material on record, we found that the assessee deserves to succeed in its appeal. The provisions of Section 271AAA are new provisions, which are brought on the statute w.e.f. 1-4-2007. The provisions of Section 271AAA, read as under :-  &n....

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....be false and would not have been found to be so had the search not been conducted;      (b) "specified previous year" means the previous year-      (i) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or      (ii) in which search was conducted. On a bare perusal of the provisions of Section 271AAA, it is seen that these provisions are brought in place of Section 271(1)(c) of the Act. In sub-section (2), it has been provided that if in the statement under Section 132(4), the assessee admits the undisclosed income and specifies the manner in which such income has been derived and also substantiates the manner in which the undisclosed income was derived and pays the tax, together with interest, if any, in respect of the undisclosed income. There is no dispute that the assessee has paid tax together with interest in respect of the amount disclosed during the course of search. The remaining condit....

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.... tax is paid before completion of assessment, then the condition laid down under Section 271AAA should be treated as satisfied. While holding so, the direct decision of the Hon'ble Gujarat High Court in the case of Mahendra C. Shah, reported in 299 ITR 305 was followed, whereby it was held that there is no prescription about the point of time when the tax had to be paid qua the amount of income declared in the statement under Section 132(4) of the Act. 9.3 In the present case also, the assessee has to specify the manner and substantiate the manner by which the undisclosed income was derived. During the assessment proceeding, the assessee has explained that the entire amount of disclosure should be treated as business income and the AO has accepted the same as the assessment has been completed by assessing the amount of Rs.2.21 crore under the head business income. Therefore, we are of the view that the ratio of the decision of the Kolkata Bench is applicable on the present facts of the case. 9.4 The Hon'ble Supreme Court in the case of Collector Land Acquisition v. Mst. Katiji [1987] 167 ITR 471, has held that "When substantial justice and technical considerations are pitted agai....