AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (1) TMI 112
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....the grounds inter alia that :- "1. A search & seizure action u/s 132 of the Income Tax Act, 1961 was conducted on the appellant as on 30.07.2009. 2. During the course of search, the appellant admits the undisclosed income in a statement under sub-section (4) of Section 132 and specifies the manner in which such income has been derived; and also substantiates the manner in which the undisclosed income was derived and paid the tax and interest in due time in respect of undisclosed income. 3. The appellant filed its return of Income declaring taxable Income of Rs.l,74,98,810/- inclusive of the aforesaid undisclosed income declared during the course of search. 4. That the assessment u/s 153(1)(b) was completed on the taxable income of Rs. 1....
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....inst the Penalty Order u/s 271 AAA, the assessee filed appeal with CIT (A), Gurgaon and Ld. CIT Appeal dismissed the appeal of the appellant company by observing the following remarks: "In the case in hand there is no dispute that the search operation took place after 1st June, 2007. To reiterate, there is no dispute that the assessee during the statement recorded u/s 132(4) has admitted the undisclosed income. However, and very importantly, the assessee has not said how exactly the undisclosed income was derived despite the queries by the AO. The details of each transaction, the persons involved have not been disclosed. Similarly it has also not substantiated the manner in which the undisclosed income was derived Further, the assessee whe....
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....onus of substantiating the manner in which the income was derived, the condition laid down in sub section (ii) remains unfulfilled In view of the discussion above and the facts of the case, I have no reason not to uphold the impugned order of the Ld AO 9. That upon the facts and circumstances of the case, the Ld. Assessing Officer as well as CIT Appeal are not justified to impose a penalty under section 271AAA of the Income Tax amounting to Rs. 17,04,317/- which is arbitrary, illegal and bad in law and based on the surmises and conjecture. 10. The applicant craves leave to make addition or alteration, if any on the grounds of appeal at the time of hearing, if required." 2. Briefly stated the facts of this case are : on the basis of searc....
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....e :- Income relating to assessment year Amount of unaccounted income Nature of investment of unaccounted income 2009-10 35,00,000/- Invested in showroom (Building construction, furniture and fixture 2010-11 1,38,33,000/- Stock in trade (jewellery) 2010-11 32,10,170/- Stock in trade (jewellery) Total 2,05,43,170/- 6. During the appellate proceedings qua the penalty order dated 30.01.2001 for AY 2009-10 passed u/s 271AAA on the basis of disclosure of income of Rs. 35,00,000/- made during the same search and seizure operation conducted on 30.07.2009, it is observed by CIT (A) that when the revenue has not asked the assessee to disclose the manner in which such income was earned, particularly when income is surrend....
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....2) Nothing contained in sub-section (1) shall apply if the assessee,- (i) in the course of the search, in a statement under subsection (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income. (3) 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)." 10. Under section 271AAA(2)(i) of the Act, penalty @ 10% of the undisclosed income shall not be imposed if the assessee, "in the course....