2016 (6) TMI 1303

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....evied by the AO under section 271AAA of the Income Tax Act, 1961 without appreciating that "Trade Advances" is only application and not source of income. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the assessee was not asked in statement u/s. 132(4) to substantiate the manner of deriving income without appreciating that in clause (ii) of Sec. 271AAA(2), there is no reference to section 132(4) and the assessee failed to substantiate the manner of deriving income even during the assessment proceedings. 3. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 4. The appellant craves leave to add, alter or amend any / all of the grounds of appea....

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....assessment completed u/s. on 29.12.2011. ii) It had been explained that the income had been earned out of real estate business conducted by the assessee during the year. iii) That the assessee has already paid the IT on the said income alongwith interest thereon. 2.1 After considering the aforesaid reply filed by the Assessee, AO observed that the assessee had not specified the manner in which the undisclosed income was earned and also failed to substantiate, it and accordingly, he imposed the penalty of Rs. 16,00,000/- on the assessee for such failure by passing an order dated 28.6.2012 u/s. 271AAA of the I.T. Act, 1961. 3. Being aggrieved with the aforesaid penalty order, assessee appealed before the Ld. CIT(A), wh....

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....roduced as under:- "3.3 Decision:- I have considered the penalty order u/s 271AAA, written submission and arguments of Ld. AR during the appellate proceedings. The Assessing Officer has levied the penalty u/s 271AAA on the ground that the conditions contained in Sub-section(2) specifying the conditions for non-levy of penalty under subsection( 1) of sub-section 271AAA are not fulfilled. Precisely, the Assessing Officer has pointed that the manner in which such income was derived was not stated by the appellant. Further, he concluded that appellant also failed to substantiate the manner in which the undisclosed income was derived. During the appellate proceedings, Ld. AR has filed copy of statement of Sh. Balwant S....

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....onsidered all the arguments of Ld. AR and perused the statement recorded U/S 132(4) where income was disclosed. In present case, income as discussed was trade advance, therefore, by virtue of the words "Trade Advance" it is apparent that it is unaccounted business income. The appellant has paid taxes on such undisclosed income, the Assessing Officer has assessed such income as business income without making any additions, therefore, in my view the mannered to earn undisclosed income was there in the statement U/S 132(4). It is not disputed that there was disclosure U/S 132(4) of I.T. Act. and the Assessee has honoured the disclosure and paid tax thereon and filed return to that affect. I have considered the judicial pronouncements relied up....