TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 685
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....and diamond for taxation. Accordingly, a sum of Rs. 1,79,22,101/- (Rs.54,81,173/- + Rs. 45,52,548/- + Rs. 78,88,380/-) was offered for taxation. The AO however, initiated the penalty proceedings u/s 271AAA of the Act on the ground that had the search was not conducted at the business premises of the assessee, the difference in cash and stock would not have been detected. 4. The submission of the assessee before the AO was as under: "With respect to your above said notice for the captioned assessee we hereby submit as under: 1. The assessee had declared a sum of Rs. 1.79 Cr. during course of search. The assessee has no other source of income than what was disclosed to the department. The assessee is in the business of jewelry and bullion and the income that was offered was generated in the course of the business activity. 2. The same has been duly accounted for in the books of accounts by passing the respective journal entries, The surrender on account of cash for Rs. 54,81,173/- has been shown as "Miscellaneous Income (Amount offered voluntarily for taxation)" in the Profit and Loss Account. The sale of surrendered stock is included in the sales turnover of the assessee and h....
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....corded in the books. 8. On perusal of statement dt. 30.08.2011 filed by the assesses before the ADIT (Inv) Unit II (3) it is observed that the assesses had clearly stated that during the course of proceeding on 20.07.2011, he had voluntarily made a disclosure u/s l32(4) to avail immunity from the penalty as per suction 271AAA of the IT Act. "I have surrendered a sum of 1.79 Cr. On behalf of M/S. S.K. Impex vide statement u/s 132 at the time of search to cover all leakages in revenue on account of cash and stock for financial year 2011-12. The Income has been earned form out of books transactions of sales and purchase of bullion/jewelry. The cash amounting to Rs. 55 lakhs seized during the search operations may kindly be used to meet the tax liabilities. The surrender has been made with the clear understanding that no penalty and interest will be imposed either u/s 271(1)(c) or u/s 271AAA and neither any prosecution would be launched against me or any of my family members or any of the firm in which I am a partner on account of the above said surrender. All the documents (page-wise) found and seized during the search proceedings has been explained during the assessment proceed....
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....ndara Kumar Gupta, Vs ACIT, CC-9, ITA No. 552/Del/2013. Wherein it was decided as: "........... The taxes had been paid along with the interest in all these individual hands. Since a statement was given during the course of search u/s 132 Income Tax Act, 1961 admitting the undisclosed income of Rs. 20 Cr. Of the Group, the quantum of disclosure on income was affirmed by an affidavit by other person of the Group. The manner was also slated in the statement by which sun income was earned. In our considered ITA Nos. 551, 552 & 553/Del./2013 view, the Croup has also substantiated the manner in which this undisclosed income was derived. In the statement recorded u/s 132(4) of the Act and in an affidavit dt. 15.05.2009, the disclosure was maintained. The assessee of the Groups have also paid the taxes applicable along with interest. In such a situation, the CIT (A) was not justified in sustaining the penalty u/s 271(1)(c) of the Act levied by the Assessing Officer. Considering all these facts and circumstances, we set aside the orders of the authorities below the and direct to delete the penalty u/s 271AAA." Which has been upheld by the honorable DELHI HIGH COURT vide Income Tax....
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....f the undisclosed income. iii) No penalty under the provisions of clause (c) of sub section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub section (1). Thus in order to absolve himself from the imposition of penalty u/s 271AAA of the I.T. Act, 1961, the assessee has not only to admit the undisclosed income in a statement u/s 132(4) of the I.T. Act, 1961 but also he has to specify the manner in which such income has been derived and he has to substantiate the manner in which the undisclosed income was derived and he has to pay the tax, together with interest, if any, in respect of undisclosed income. In the instant case, assessee neither during the recording of statement u/s 132(4) of the I.T. Act nor during the course of assessment proceedings has been able to specify the manner of deriving this undisclosed income. Mere vague submission during the recording of statement u/s 132(4) of the I.T. Act that the Income has been earned from out of books transactions of sales and purchase of bullion/jewelry do not suffice to be proper compliance of the mandate of law as stipulated in section 271AAA(2) of the I.T. Act as di....
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....ether the plea of the assessee like "voluntary disclosure", buy peace", avoid litigation etc. have any meaning or do they show the escape route resorted to by the assessee. The Hon'ble Supreme Court in the case of MAK Data Pvt. Ltd. Vs CIT-II in civil Appeal No. 772 of 2013 have observed. "We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary." The Hon'ble Supreme Court has further observed that the "AO has to satisfy whether the penalty proceedings be initiated or not during the course of assessment proceedings and the AO is not required to record his satisfaction in a particular manner or reduced it into writing. The scope of section 271(1)(c) has also been elaborated and discussed by this court in Union of India Vs Dharmendra Textiles Processors (2008) 13 SCC 369 and CIT Vs Atul Mohan Bindal (2009) SCC 589." In view of the principles laid down by the Apex Court I do not find any illegality in the action of the AO. I fully ag....