TaxTMI 
TaxTMI 
2016 (10) TMI 1071
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....as filed declaring an income of Rs. 4,92,80,660/- and the assessment was completed u/ s 143(3) at Rs. 5,13,27,140/- Penalty proceedings u/ s 27 IAAA were initiated against surrender of unexplained/ undisclosed income of Rs. 6,45,00,000/- found during the search conducted u/ s 132 of the Income Tax Act, 1961. In response to the show cause notice, it was the assessee's contention that no penalty u/ s 271 AAA was imposable, if the assessee - (1) admits the undisclosed income in its statement at the time of search, (2) substantiates the manner in which the undisclosed income has been derived and (3) pays tax along with interest on the undisclosed income. It was the assessee's claim that the assessee had satisfied all the three condition....
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....mitted that since the AO had accepted the income offered by the assessee, it cannot be said that the assessee had failed to substantiate the income offered by it. It was further submitted that neither during the course of the search at the time of recording the statement nor during the course of assessment was the assessee questioned about the source or the nature of income. However, the AO has merely stated that the assessee has not specified the manner in which the income had been derived and the penalty was levied on the ground that the assessee had failed to substantiate the manner in which the income was derived. He drew our attention to copy of the statement recorded and placed at pages 26 to 32 of the Paper book and pointed out that....
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....s (Q-3 & 4) - during the course of search. Regarding jewellery he replied that it had been declared in the respective wealth tax returns. Regarding documents he stated that these were expenses/ investments not accounted for, earned in real estate transactions and admitted the transactions as undisclosed income. Regarding cash he stated that he did not have any documentary evidence and, therefore, he was offering it as undisclosed income. He also gave an undertaking to furnish the details after examining the records and books. Consequently, the amounts of Rs. 96,28,150/- and Rs. 5,16,00,000/- each were admitted as undisclosed income of the appellant and his brother Shri Sundeep Gupta, and an amount of Rs. 6,45,00,000/- was admitted as undisc....