TaxTMI 
TaxTMI 
2018 (3) TMI 593
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.... Act was issued on 11.02.2011. Subsequently an order under Section 143(3) of the Act was passed 30.12.2011 assessing the total income of Rs. 20,47,14,190/- at the returned income. During assessment proceedings, the AO noticed that the assessee had reported undisclosed income earned during financial year 2009-10 (relevant to AY 2010-11) to the extent of Rs. 20 crores during the course of search and after the search proceedings, relating to material found and seized during search. The AO also noticed that provisions of section 271AAA of the Act, was applicable in respect to the undisclosed income found during the course of search and declared by the assessee in her return of income for AY 2010-11. He therefore initiated the penalty proceedings under Section 271AAA during assessment proceedings on the ground that assessee had not specified the manner in which the undisclosed income was earned and failed to substantiate it. The penalty of Rs. 2 crore was issued on the assessee by order dated 27.06.2012 under Section 271AAA. Being aggrieved with the aforesaid penalty order, assessee appealed before the CIT (A), who by impugned order dated 05.07.2013 deleted the penalty and allowed the a....
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....ellant cannot be said to have fulfilled the condition in section 271AAA(2)(ii) so as to provide evidence to support or prove the truth of the claim made by the appellant. The amount of Rs. 35 crore does not appear in the statement given by the appellant u/s. 132(4). It is to be noted that a cardinal principle of law in India is that no person can be forced to give evidence against himself. Therefore, both the legality and the efficacy of this clause are questionable. However, the law is to be implemented as it exists and passed by the Parliament in its wisdom. As rightly held by the AO, all the conditionalities imposed u/s. 271AAA, which are inclusive and not exclusive of each other, are not fulfilled in the case. Accordingly, I hold that the AO was correct in imposing the penalty u/s. 271AAA of 10% of the income sought to be evaded of Rs. 125 crore. The appeal of the appellant is according dismissed." 3.4. However, Ld. AR now points out that subsequently, in that case, the Hon'ble ITAT (Delhi) has held as under:- "In view of above facts of the present case wherefrom it is evident that during the course of search proceedings the authorized officer of the department had not r....
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....bunal was justified in the circumstances of the case, given that the assessee had made the appropriate disclosures. He relied on the judgment of the Gujarat High Court in Commissioner of Income Tax v. Mahendra C. Shah [2008] 299 ITR 305; Commissioner of Income Tax v. Radha Kishan Goel [2005] 278 ITR 454 [2006] 152 Taxman 290 (All.) and the tribunal's bench decision in Mothers Pride Education Personnel (P.) Ltd. v. Dy. Commissioner of Income Tax (ITA Appeal No. 3372 (Delhi) of 2011, dated 12-10-2012) and Neeraj Singal vs. Assistant Commissioner of Income Tax, (decided on 24.06.2013 - ITAT Delhi). It was also urged that the disclosure made by the assessee was common to the one made and considered in other connected/related parties' cases. Analysis and conclusions 7. Section 271AAA, which is involved in the present case, reads as follows: "Penalty where search has been initiated. 271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007 but before the 1st day of July, 2012, the assessee shall pay by way of penalty, in a....
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....e and effect was explained by Circular of the Central Board of Direct Taxes (CBDT) dated 12.03.2008 (Circular No.3) in the following terms: "68. Provision for penalty for concealment in search and seizure cases.-68.1 A new section 271AAA has also been inserted so as to provide that, in a case where search has been initiated under section 132 on or after 1st June, 2007, the assessee shall be liable to 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. However, provisions of this section shall not be applicable if the assessee- (i) in a statement under subsection (4) of section132 in the course of the search, 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. It is further provided that no penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be levied or imposed upon the assessee in respect of the undisclosed income referr....
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....n 132(4A). These were introduced simultaneously with the omission of Explanation 5 to Section 271(1)(c) on the one hand and insertion of Explanation 5A as well as Section 292C. The provision applies to income of the specified period, i.e. period for which return had not yet become due and the broken periods starting from the beginning of the financial years till the date of the search. It provides for 10% penalty of such income through a statutory inference or presumption that such amount or income was not intended to be disclosed as they were not reflected in the books, soon at the time of the search. 10. One of the conditions that results in the inapplicability of Section 271AA is payment of tax. Since the assessability and quantification of the amount of undisclosed income can be legitimately computed only at the stage of assessment, it was held by the Tribunal concurring with the first appellate authority, that the outer time limit for payment of tax is not prior to the conclusion of assessment proceedings. Where there was a short payment by way of self-assessment tax but made good in response to the notice of demand on completion of the assessment it was held that there was n....
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....e specified in Section 139(1). Such statement was made by the Karta during the search which concluded on 1-8-1987. It is not in dispute that condition No. 1 was fulfilled. The second condition for availing of the immunity from penalty under Section 271(1)(c) was that the assessee should specify, in his statement under Section 132(4), the manner in which such income stood derived. Admittedly, the second condition, in the present case also stood satisfied. According to the Department, the assessee was not entitled to immunity under clause (2) as he did not satisfy the third condition for availing the benefit of waiver of penalty under Section 271(1)(c) as the assessee failed to file his return of income on July 31, 1987, and pay tax thereon particularly when the assessee conceded on August 1, 1987 that there was concealment of income. The third condition under clause (2) was that the assessee had to pay the tax together with interest, if any, in respect of such undisclosed income. However, no time limit for payment of such tax stood prescribed under clause (2). The only requirement stipulated in the third condition was for the assessee to "pay tax together with interest". In the pres....
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....assessee had to pay the tax together with interest in respect of such undisclosed income upto the date of payment. Explanation 5 (2) did not prescribe the time-limit within which the assessee should pay tax on income disclosed in the statement under Section 132(4). 13. In the present case, during the course of the statement made by the assessee, during the course of the search on 4 March, 2010, that she had lent Rs. 16 crores in aggregate to three individuals during financial year 2009-2010. This was in response to a query by the revenue officials during the course of search when the basis of Page 81 of Exhibit A-3 was sought to be questioned. To the next question, the assessee replied that the said amount of "Rs.16 crores is my unaccounted income for the Financial Year 2009-2010 relevant for AY 2010-2011". However, the requirement of the assessee having to "(ii) substantiates the manner in which the undisclosed income was derived" was satisfied. Although a general statement that the undisclosed income was the source of Rs. 16 crores was disclosed, no "substantiation" of the "manner" of deriving such undisclosed income was revealed. 14. In construing Section 271AAA one must not l....