TaxTMI 
TaxTMI 
TaxTMI 
2013 (8) TMI 965
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....pite the same having been replied in answer to question no. 18, of the statement recorded u/s 132(4) of the Act at the time of search. 3. That the learned CIT(A) has failed to appreciate that, once the assessee had made a statement that the aforesaid income has been earned from the "business operations" and has not been earned from any other source other than business operations, it could be held that it had satisfied the requirements of the aforesaid section. 4. That the learned CIT(A) has also overlooked that, the aforesaid income as was declared and was assessed under the head business income and not under any other head of income and thus the findings that assessee had not satisfied the requirement of subsection (2) of section 271AAA of the Act are misconceived and as such the. penalty imposed and levied was entirely unsustainable. 5. That the learned CIT(A) has failed to appreciate that, the assessee, in the course of search had duly offered Rs. 8 crores representing the amount paid in cash towards the agreement entered by it with M/s Kay Kay Designers Towers Pvt. Ltd. and such an income as was disclosed by it, was from the business operations carried on by it and was so....
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....claring an income of Rs. 24,79,04,507/- for the assessment year under consideration which also included income surrendered during the course of search of Rs. 26,71,70,000/-. He referred page 137 of the paper book wherein break up of Rs. 26.71 crores has been given with this further submission that it includes a sum of Rs. 8 cores representing investment in cash for the purchase of agricultural land in the agreement to say dated 27.3.2008. Ld. AR pointed out that agreement to sell dated 27.3.2008 was seized during the course of search operations, copies thereof has been made available at page Nos. 39 to 49 of the paper book. As a result of the search statement of Shri J.S. Chawla was recorded u/s 132 (4) of the Act a copy thereof has been made available at page 52 to 57 of the paper book with typed copy thereof at page Nos. 68 to 71 of the paper book. In his statement in answer to question No. 18 he submitted that the said papers are agreement for purchase of agricultural land for which initial payment aggregating to Rs. 15 crores was made prior to 31.3.2008. Due to paucity of funds in banks/books of accounts a sum of Rs. 8 crores was given as imprest for custody to the seller to ex....
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.... of clause (a) of Explanation to section 271AAA of the Act since the same is not based on any money, bullion, jewellary or other document or material found in the course of search on the appellant company. Thus levy of penalty u/s 271AAA of the Act per se on a sum of Rs. 8 crores is misconceived and hence untenable. 6. Without prejudice to the above submission, the Ld. AR contended that even assuming that a sum of Rs. 8 crores is undisclosed income though the same is disputed, penalty levied is not in accordance with section 271AAA(2) of the Act. There is no dispute that assesee had admitted the alleged undisclosed income in a statement u/s 132(4) of the Act. It is also not in dispute that assesee had paid the tax on the said undisclosed income. It is also not disputed that assesee had also specified the manner of undisclosed income as business income in the statement recorded on the date of search. However what is being disputed is that assesee has not substantiated the manner of undisclosed income i.e business income, despite the fact that the AO in its order of assessment has accepted the same by observing at page No. 10 of the assessment order , a copy thereof has been made av....
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....on. In support he placed reliance on the decision of Hon'ble Supreme Court in the case of Income Tax Officer. v. Ch. Atchaiah. 218 ITR 239 (SC). AO has accepted Rs. 8 crores as business income without any adverse finding. In this regard he referred page No. 13 of the assessment order. He reiterated that the penalty in question levied on the basis that the manner of earning of undisclosed income has not been substantiated but no question was asked about it during the course of recording of statement. However the AO has accepted Rs. 8 crores as business income in the assessment. 9. Ld. DR on the other hand tried to justify the orders of the authorities below on the question of levy of penalty u/s 271AAA of the Act. He drew our attention to the contents of the penalty order especially page No. 7 para c with this submission that there is no dispute on undisclosed income of Rs. 8 crores surrendered by the assessee. Had these not been a search, the assessee would not have disclosed the income of Rs. 8 crores for taxation. He submitted further that the decisions relied upon by the Ld. AR having distinguishable facts are not helpful to the assessee. 10. We agree with this contention of t....
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.... disclosed the amount of Rs. 8 crores which has been accepted by the department in the assessment framed u/s 153A of the Act. Being not satisfied with explanation of the assessee the AO however has levied penalty u/s 271AAA at Rs. 80 lacs i.e. @ 10% of the unaccounted income. Undisputed facts which are material for adjudicating the issue are that the assessee is engaged in the business of real estate, in his statement u/s 132(4) Rs. 8 crores has been admitted as an undisclosed income, on which tax together with interest has been paid. Now the question is as to whether the assessee has been able to specify the manner in which such income has been derived and has been able to substantiate the manner in which the undisclosed income was derived. The AO in his penalty order has alleged that assessee has failed to substantiate the manner in which the undisclosed income was derived. Ld. CIT(A) has alleged that the assessee has not said how the undisclosed income was derived and it has not substantiated the manner in which the undisclosed income was derived. He has gone further in saying as "Merely stating in its written submission that the sum of Rs. 8 crores had been derived from the bus....
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....arent from the said agreement. Due to paucity of funds in banks/books of accounts a sum of Rs. 8 crore was given as imprest for custody to the seller to exchange against cheques issued against refund of the same. the said cash may be treated as our undisclosed income from the business operations, the exact source and manner shall be intimated shortly. The cheques to Rs. 8 crores shall be issued shortly when funds are available in the books of accounts. 11. We find that though no specific question has been raised to Shri J. S. Chawla about specification of the manner in which such income has been derived and substantiation of the manner in which the undisclosed income was derived, but the assessee in answer to question No. 18 has specified the manner that the undisclosed income was from the business operations. It is also an admitted fact that the undisclosed income of Rs. 8 crore has been accepted by the department in the assessment u/s 153A of the Act. We have gone through certain following decisions on an identical issue while deciding the question in the case of Neeraj Singhal vs. ACIT , ITA No. 337/D/2013 (asstt. 2010-11) order dated 24.6.2013. These decisions are of Hon'ble A....
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....o seek. In the first instance, the statement is being recorded in the question and answer form and there would be no occasion for an assessee to state and make averments in the exact format stipulated by the provisions considering the setting in which such statement is being recorded, as noted by the Allahabad High Court in the case of CIT v. Radha Kishan Goel [2005] 278 ITR 454. Secondly, considering the social environment it is not possible to expect from an assessee, whether literate or illiterate, to be specific and to the point regarding the conditions stipulated by exception No. 2 while making statement under section 132(4) of the Act. The view taken by the Tribunal as well as the Allahabad High Court to the effect that even if the statement does not specify the manner in which the income is derived, if the income is declared and tax thereon paid, there would be substantial compliance not warranting any further denial of the benefit under exception No. 2 in Explanation 5 is commendable." The Cuttak Bench of the Tribunal in the case of Ashok Sharma and others vs. DCIT (ITA No. 476 to 480/CTK/2011 referred in the case of Neeraj Singhal vs. ACIT(supra), has observed that penalt....