TaxTMI 
TaxTMI 
2019 (1) TMI 1604
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.... paper book. This surrender was made partly on account of unexplained construction in the project, named Kusum Vatika and partly on account of difference in stock as noted by the Assessing Officer. The assessee had also disclosed Rs. 90 lakhs separately in the profit and loss account of Kusum Vatika. The surrender of undisclosed income so made by the assessee was accepted by the Assessing Officer. The Assessing Officer, thereafter, initiated proceedings u/s. 271AAA and imposed a penalty of Rs. 9 lacs equal to 10% of such surrendered undisclosed income, on the premise that the assessee did not specify the manner in which the said undisclosed surrendered income was derived by the assessee. The assessee carried the matter in appeal before the ld. CIT(A) who affirmed the penalty imposed by the Assessing Officer. Aggrieved by the impugned order, the assessee is in appeal before the Tribunal. 3. The ld. AR of the assessee reiterating the submissions made before the ld. authorities below submitted that no surrender was made in the statements recorded u/s. 132(4) of the Act; that the surrender so made was voluntary to purchase peace of mind and to avoid further litigation with condition....
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....Pr. CIT vs. Smt. Ritu Singal (supra) relied by the ld. DR, wherein the Hon'ble Court while deciding the issue in the light of provisions of section 271AAA of the Act has held as under : 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 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 wi....
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....y 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 sub-section (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 referred to in this section. It is also provided that the provisions of section 274 and section 275 shall, so far as may be, apply in relation to the penalty leviable under the new section. 68.2 For the purposes of this section, undisclosed income has been defined to mean- (i) any income of the specified previous years represented, either wholly or partly, by any money, bullion, jewellery or other valuable arti....
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....e 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 no scope for penalty under section 271AAA as was held in Mahendra C. Shah (supra) while interpreting Explanation 5 to Section 271(1)(c). 11. Explanation 5(2) of Section 271(1)(c) was considered by the Supreme Court in Asstt. CIT v. Gebilal Kanhaialal [2012] 25 taxmann.com 214/210 Taxman 244/348 ITR 561. It was held that Explanation 5 (2) to Section 271 (1) (c) ....
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....hich 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 present case, the third condition also stood fulfilled. The assessee has paid tax with interest up to the date of payment. The only condition which was required to be fulfilled for getting the immunity, after the search proceedings got over, was that the assessee had to pay the tax together with interest in respect of such undisclosed income up to the d....
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.... 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 lose sight of its essential purpose which resulted in its enactment. There is a penalty at the rate of 10% of the undisclosed amount declared, if the conditions in Section 271AAA (2) are not met with. This is quite different from the penal provision under Section 271 (1) (c) of the Act, which d....
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....hat when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty. 9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. AO during the course of assessment proceedings has noticed that certain documents comprising of share application forms, bank statements, memorandum of association of companies, affidavits, copies of Income Tax Returns and assessment orders and blank share transfer deeds duly signed, have been impounded in the course of survey proceedings under Section 133A conducted on 16-12-2003, in the case of a sister concern of the assessee.' 16. That the income which was ultimately brought to tax pursuant to the disclosure made, which was voluntary on the part of the assessee is stating the obvious. The assessee merely stated that the sums advanced were undisclosed income. However, she did not specify how she derived that income and what head it fell in (re....
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....nation in this case is :- "as to whether assessee has failed to substantiate the manner in which the undisclosed income of Rs. 21 crores was derived and is liable to be penalized u/s 271AAA of the Act." 7. To proceed further, provisions contained under section 271AAA (2) are reproduced as under for ready perusal :- "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 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....
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....fy the conditions laid down in section 271AAA (2) so as to get the general amnesty u/s 271AAA(2) because the assessee has neither specify the manner nor substantiate the manner in which the undisclosed income was derived. 11. The ld. AR for the assessee relied upon plethora of case laws cited as under :- 1. Pr. CIT Vs. Mukesh Bhai Raman Lal Tax Appeal 434 of2017 2. PCIT Vs. Emirates Technologies Pvt. Ltd. [2017] 399 ITR 189 (Delhi) 3. PCIT V s. Sandeep Gupta (DHC) ITA No. 967-68/2017 dated 13.11.2017 4. PCIT VS. Swapna Enterprise [2018] 401 ITR 488 (Gujrat HC) 5. Smt. Raj Rani Gupta VS. DCIT (Delhi I.T. Trib.) ITA No. 3371/De1/2011 dated 30.03.2012 6. ACIT V s. Shreenarayan Sitaram Mundra [2017] 83 taxmann.com 231 (Ahmedabad- Trib) 7. Neerat Singal Vs. ACIT [2013] 37 Taxmann.Com 189 (Delhi- Trib.) 8. ACIT Vs. Bhavi Chand Jindal (Delhi I.T. Trib.) ITA No. 6810/De1/2015 dated 17.04.2018 9. DCIT Vs. Ashok Nagrath [2015] 57 taxmann.com 15 (Delhi-Trib.) 10. Ashwani Kumar Arora Vs. ACIT [2017] 81 taxmann.com 440 (Delhi-Trib.) 11. Concrete Developers Vs. ACIT [2013] 34 taxmann.com 6....