TaxTMI 
TaxTMI 
2019 (5) TMI 1262
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....e Act by the Assessing Officer which was confirmed by the CIT(A)-11, Ahmedabad. 3. As all the appeals concerning the group cases involving the identical issue, all the matters were heard together and disposed of by this common order. 4. Briefly stated, a search action under s.132 of the Act was carried out at the premises of the assessee on 17/01/2013. As a consequence of search, the assessee filed return of income declaring Rs. 3,42,73,700/- in the case of Shri Bharat T.Aghara in IT(ss)A No.88/Rjt/2017 for AY 2013-14 which included additional income declared by the assessee and amounting to Rs. 2,61,13,250/- in the course of search. The Assessing Officer assessed the income so declared as such, together with some other small disallowances with which we are not presently concerned with. The Assessing Officer however initiated penalty proceedings under s.271AAA of the Act on the additional income declared amounting to Rs. 2,61,13,250/- in pursuance of search. Subsequently, on receiving objections from the assessee, the Assessing Officer vide corrigendum dated 03/07/2015 to the assessment order, modified the penalty section and substituted the same by section 271AAB and continu....
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....any, without any detection of falsity cannot be equated with the 'undisclosed income' as statutorily defined unite section 271AAB of the Act. To support its contention, the Ld, A.R submitted that for the purposes of penalty, the AO has merely relied upon some ad-hoc declaration made in the statement recorded under section 132(4) of the Act without any making any reference to the particulars of unaccounted money, assets, investments or expenditure etc. giving rise to the disclosure so made. The Ld. AH thereafter referred to the provisions of section 271AAB and submitted that the scope of section 271AAB does not extend beyond the 'undisclosed income' as defined under section 271AAB of the Act. It was contended that in the absence of any findings in the penalty order on the particulars of undisclosed income represented by money, bullion, jewellery etc. etc. as defined, section 271AAB has no application. In reiteration, the Ld. A.R vehemently submitted that an ad-hoc declaration not backed by tangible items specified hi the statutory definition cannot be regarded as 'undisclosed income' for the purposes of section 271AAB of the Act. The Ld. A.R once again restat....
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.... reproduce the relevant operative para of the decision of the Co-ordinate Bench on the issue:- 8. We have carefully considered the rival submissions and perused the orders of the authorities below and material placed on record. The core controversy involved in the present appeal is towards maintainability of imposition of penalty under section 271AAA in the facts and circumstances of the case. 8.1 The case of the assessee is twofold (i) The income declared in the return of income amounting to Rs. 2,25,61,020/- arises out of the regular stream of income from various sources including Rs. 90 lakhs towards ad-hoc declaration and therefore there is no element of 'undisclosed income' as defined in the Explanation below section 271AAA of the Act. (ii) In the alternative, in any event, the incidence of penalty under section 271AAA cannot exceed Rs. 9 lakhs (10% of Rs. 90 lakhs) attributable to ad-hoc income. 8.2 To buttress its point of view, the assesses has strongly harped on the statutory definition of "undisclosed income". It -would therefore be apposite to reproduce section 271AAA of the Act for ready reference:- '271AAA. Penalty where ....
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.... filing the return of income under sub-section (!) of section 139 for such year has not expired before the date of search and the assesses has not furnished the return of income for the previous year before the said date.; or (ii) in which search was conducted. 8.3. perusal of special provisions of section 271AAA, concerning search cases that it is applicable in respect of "undisclosed income" in contrast to "concealed income" relevant for the purposes of penalty proceedings under normal provisions of section 271(1)(c) of the Act. The applicability of penalty under section 271AAA thus revolves within the sphere of "undisclosed income ", 8.4. A plane reading of the aforesaid definition of 'undisclosed income' clearly shows that the undisclosed income should be represented by money, bullion jewellery or other valuable articles or things or any unrecorded entry as per documents found or any false entry recorded in the books of account etc. No such reference or nexus of disclosure to such specified items were made in the assessment order or in the penalty order. In view of the statutory definition of undisclosed income, a disclosure made merely to buy....
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....ence of reference to any incriminating material, imposition of penalty under section 271AAB is without any legal foundation, gets support from the decision of Co-ordinate Bench. 11.4. It is also pertinent to state that the AO imposed penalty in a nonchalant manner and has probably mis-understood the imposition of penalty as an automatic consequence. The income offered has neither been related to specified previous year nor the reference was made any document etc, to cover the declaration within the sphere of 'undisclosed income'. Such summary action of the Assessing Officer functioning in quasi judicial capacity cannot be endorsed. The penalty order is thus vitiated due to non application of mind also. The order of the Assessing Officer dated 16.07.2015 towards imposition of penalty under section 271AAB is therefore set aside and consequently, the Assessing Officer is directed to delete the penalty so imposed." 8. At this stage, we would also like to refer to the decision of Hon'ble Allahabad High Court in the case of Principal Commissioner of Income Tax vs. Sandeep Chandak (2018) 93 taxmann.com 405 (Allahabad) relied upon on behalf of the Revenue to de....