TaxTMI 
TaxTMI 
2017 (8) TMI 1291
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....No. 160/JP/2016 "1 Whether on the facts and the circumstances of the case the CIT(A) was right in deleting the penalty of Rs. 51,66,579/- levied U/s 271AAA of the IT Act, without appreciating the fact that in this case the assessee has failed to specify the manner in which the undisclosed income was derived as per sub clause (i) of Section 271AAA(2) of the IT Act, 1961. (2) Whether on the facts and the circumstances of the case the CIT(A) was right in deleting the penalty of Rs. 51,66,579/- levied U/s 271AAA of the IT Act, without appreciating the fact that in this case the assessee has failed to substantiate the manner in which the undisclosed income was derived as per sub clause (ii) of Section 271AAA(2) of the IT Act, 1961." Ground of assessee's appeal ITA No. 133/JP/2016 "1 On the facts and in the circumstances of the case, the authorities below have factually and legally erred in imposing and confirming penalty of Rs. 24,14,987/- U/s 271AAA of the Act without appreciating the facts of the case in right perspective. The penalty so imposed and confirmed deserves to be deleted." 2. All the three appeals are being heard together and for the sake of convenience and brevit....
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....here the ld. CIT(A) ought to have confirmed the penalty. 6. On the contrary, the ld CIT DR has vehemently supported the orders of the authorities below and submitted that the provisions are clear where the assessee surrenders income he has to substantiate in the manner such income was earned in the absence of such substantiation. The authorities would be within their power to impose penalty. 7. We have heard the rival contentions of both the parties, perused the material available on the record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the assessee had surrendered a sum of Rs. 2,44,10,262/- as undisclosed income during the course of search. It is also not in dispute that this income was duly included into the return filed in pursuance to the notice issued U/s 153A of the Act. Now under these facts, we need to adjudicate whether the authorities below were justified in imposing the penalty under the facts of the present case. For the sake of clarity, the relevant provisions of Section 271AAA of the Act is reproduced hereinbelow: (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of ....
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.... and the assessee has not furnished the return of income for the previous year before the said date ; or (ii) in which search was conducted. From the reading of the above provision, it is clear that as per Subsection (1) of Section 271AAA of the Act, the Assessing Officer may direct that in a case where the search has been initiated U/s 132 on or after first day of June, 2007, the assessee shall pay by way of penalty in addition to tax if any payable by him a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. As per Sub-Section (2) of Section 271AAA of the Act nothing contained in subsection (1) shall apply if the assessee (i) in the course of the search, in a statement under sub-section (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. Now coming to the facts of the present case, the assessee in his statement U/s 132 of the Act admitted undisclosed income and specified the manner in which such i....
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.... though no specific question has been raised to the assessee 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. 16, 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. 51,66,579/- has been accepted by the AO in the assessment completed u/s 143(3) r.w.s. 153A of the Act. Here I would like to quote the decision of Hon'ble ITAT Bench New Delhi in case of 2009 M/s. Spaze Tower Pvt. Ltd reported in IT A No. 2296/Del/2012 Assessment Year: 2008-09, which is quite identical to the facts of the appellant assessee as under:- "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 Allahabad High Court in the case of CIT vs. Radha Kishan Goel (2005) 278ITR 454 (All) and Hon'ble Gujarat High Court in the case of CIT vs. Mahendra C. Shah (2008) 298 ITR 305 (Guj.). The Hon'ble....
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.... 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 Cuttack 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 penalty u/s 271AAA was levied, the assessee had disclosed huge income while giving statement u/s 132 of the Act during the course of search and had paid tax thereon and the income s....
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....e) Hon'ble ITAT New Delhi while deciding the case of Neeraj Singhal has also referred decisions of following cases:- * Ashok Kumar Sharma Vs. Dy. CIT (2013) 33 taxmann.com (Cuttack) * Asstt. CIT Vs. Gebilal Kanhaialal (HUF) (2012) 252 CTR (SC) 345: (2012) 76 DTR (SC) 345 * Dy. CIT Vs. Inderchand Surajmal Bros. (ITA No. 139/Pune/2010) * Mothers Pride Education Personna (P) Ltd. Vs. Dy. CIT (ITA No. 3372/Del/2011, dt. 12th Oct. 2012) * Pramod Kumar Jain Vs. Dy. CIT (2012) 149 TTJ (Ctk) (UO) 36 : (2012) 77 DTR (Ctk) (Trib) 244 * Smt. Sulochanadevi A. Agarwal Vs. ITO (ITA No. 1052/Ahd/2012) In case of Neeraj Singhal (Supra) Hon'ble ITAT New Delhi has observed that in absence of query raised by AO during the course of recording of statement u/s 132(4) about the manner in which the undisclosed income has been derived and about it substantiation, the AO was not justified in imposing penalty u/s 271 AAA specially when the offered undisclosed income has been accepted and due tax thereon has been paid by the assessee. On similar facts, various courts have decided the issue on the same line, and in this regard, further reliance can be placed on the following decisions (i) 29....