TaxTMI 
TaxTMI 
2014 (10) TMI 876
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....81 & 1082/Chd/2013 2 In these appeals the revenue has raised the following grounds: "W hether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty levied u/s 271AAA of IT Act of Rs. 10,00,000/-, 20,00,000/- and Rs. 10,00,000/- without appreciating the fact that the assessee has failed to substantiate with evidence the the manner in which undisclosed income was derived so as to qualify for non-levy of penalty within the meaning of sub-section (2) of Sec 271AAA of the Act. 3 Before us, the Ld. Counsel for the assessee submitted that in these cases the amounts which were surrendered during search was duly reflected in the return and therefore immunity was available to ....
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....s of section 271AAA make it clear that the penalty can be levied on undisclosed income of the specified year if the conditions specified in sub section (2) of section 271AAA are not satisfied. It, therefore, follows that first thing to determine is what is the amount of undisclosed income under the given circumstances. The concept of undisclosed income has been clearly defined by explanation to section 271AAA and the same reads as under:- " Undisclosed income" means- i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of search u....
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....hat entire disclosure of income at the time of search operation may not fall under the definition of undisclosed income if it could nto be relatable to some assets/documents/entry found during the course of search operation. It also means that if the AO during the course of search operation. It also means that if the AO during the course of search assessment proceedings makes certain additions independent of the incriminating material/documents found during the course of search operation then such an assessed income would not invite penalty proceedings u/s 271AAA but under section 271(1)(c). It also means that initiation of penalty proceedings would depend upon the nature of the income assessed and there could be penalty proceedings u/s 271....
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....f seized documents to the tune of Rs. 19,87,500/-. The AO's view that the assessee is required to substantiate the quantum of undisclosed income does not seem logical from the bare reading of the provisions of section 271A sub section (2). The requirement of the law is that the assessee should state the manner of earning undisclosed income and also substantiate the same. It would not be correct interpretation of the provisions to stretch the requirement to substantiate the quantum as well. There is no doubt with regard to the fact that the assessee's manner of earning undisclosed income being financing activities has been substantiated by the seized documents. The requirement of the law has therefore been fulfilled as the assessee had state....
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....he undisclosed income referred to in sub-section (1). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation.-For the purposes of this section,- (a) "undisclosed income" means- (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous ....
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.... capacity. They cover all the discrepancies in the seized papers during the course of search proceedings. " 11 Therefore clearly the Revenue has not asked the assessee to disclose the manner in which such income was earned. In any case once the income is surrendered during the course of search u/s 132(4) it can be safely assumed that during discussion the assessee must have disclosed the manner. In any case we find force in the submissions of the Ld. Counsel for the assessee that if the explanation of the assessee has been accepted for a sum of Rs. 1987500 out of total surrender of Rs. 4 crores then same manner should have been accepted for the whole of the amount. It is not clear from the penalty order how explanation for Rs. 1987....