TaxTMI 
TaxTMI 
2018 (10) TMI 1591
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....nalty u/s. 271AAA to the extent of amount of sum of Rs. 2,00,000/- by disregarding appellant's contention. 4. The issue raised in the present appeal is against levy of penalty under section 271AAA of the Act. 5. Briefly, in the facts of the case, search and seizure action under section 132 of the Act was conducted in Chaudhari Group of cases, Nashik on 21.03.2012. The assessee pertains to said group of cases. The residential premises of assessee was searched under section 132 of the Act and survey action was also carried out under section 133A of the Act at the business premises of assessee. Certain documents were seized and statements of assessee and his employees were recorded during the course of search. The assessee was in the business of land development and building construction and also derived income from other source. The assessee during the course of search and seizure action had surrendered additional income of Rs. 2.50 crores in different years in the hands of group cases i.e. himself and his wife, who were both carrying on the business. The assessee filed the return of income declaring total income of Rs. 45,62,534/-. The Assessing Officer noted that the assessee....
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....es and his wife Megha P. Chaudhari declared additional income of Rs. 1.73 crores majorly which were on the basis of documents found during the course of search. Further, additional stock of Rs. 20 lakhs was declared by assessee and Rs. 35 lakhs by his wife Megha P. Chaudhari. The said additional income was offered not because of any documents found on account of unaccounted purchases but was offered on account of increased valuation of stock. He further stated that once the assessee had made its offer of additional income, which was made during the course of search, then additional income once added in the hands of assessee could at best attract the levy of penalty under section 271(1)(c) of the Act. However, there was no merit in levy of penalty under section 271AAA of the Act as the offer of additional stock was not on the basis of any documents found during the course of search. He also referred to the definition of 'undisclosed income' as defined in Explanation (a) under section 271AAA of the Act, which talked of undisclosed income found during the course of search represented by some asset, valuable article or thing but additional income offered by assessee does not fall withi....
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.... search has been initiated.-(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, 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. (2) Nothing contained in sub-section (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. (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). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referre....
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....sed income referred to in sub-section (1). Clause (a) of Explanation defines undisclosed income, which means income represented either or partly by any money, bullion, jewellery or other valuable article, thing, or any entry in the books of account or other documents or transactions found during the course of search under section 132 of the Act. In other words, income should be on account of any asset found during search or any entry in the books of account or documents or transactions found in the course of search under section 132 of the Act, which relates to specified previous year i.e. year of search or / and the year which is ended before the date of search but the date of filing the return of income under section 139(1) of the Act has not expired before the date of search and where the assessee has not furnished return of income for the said previous year. 14. Applying the said provisions to the facts of present case, the additional income had been offered by the assessee on account of valuation of stock. It is not case of the Department that any unaccounted stock was found during the course of search or any entry was found in any document or transaction or the books of ac....