TaxTMI 
TaxTMI 
2019 (8) TMI 1196
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....nd in law, the ld. AO has erred in treating the declared income during the course of search as 'undisclosed income' within the meaning as defined in section 271AAB. Action of the ld. AO is illegal. Relief may please be granted by quashing the penalty order." 3. It was submitted by the AR that the additional ground is only a legal ground and relevant facts are available on record, no new facts are required to be evaluated nor any further enquiry is needed. The provisions of law are to be applied on the facts already available on record. In support, the reliance was placed on the Hon'ble Supreme High Court decision in case of National Thermal Power Co. Ltd. [1998] 229 ITR 383 (SC). After hearing both the parties, the additional ground being purely a legal ground, the same is admitted for adjudication. 4. The ld. AR submitted that the assessee is a salaried person and is a senior citizen. He is director in K. G. Petrochem Ltd. He is not carrying out any business. Search operations u/s 132 were carried out at the residential premise of the assessee on 18.07.2012 and the during the course of search, a document (A-2 page 42) containing a receipt of payment of Rs. 54,00,000/- by fol....
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....4) of the Act. During the course of search, a diary has been found wherein there are notings relating to advance given to various persons towards purchase of land. Therefore, what has been found during the course of search is certain entries relating to undisclosed investment in purchase of land. Besides the said entries, there are no other documents/material in terms of any agreement to sell, the description of the property etc, which has been found during the course of search. As per the definition of undisclosed income u/s 271AAB, the undisclosed investment in so called purchase of land cannot be stated to be income which is represented by any money, bullion, jewellery or other valuable article or thing. Whether it can then be said that such undisclosed investment represents income by way of any entry in the books of account or other documents or transactions found in the course of a search under section 132. An investment per se represents an outflow of funds from the assessee's hand and an income per se represents an inflow of funds in the hands of the assessee. Therefore, once there is an inflow of funds by way of income, there could be subsequent outflow by way of investment....
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..... Therefore, even on this account, the deeming fiction cannot be extended to the penalty proceedings which are separate and distinct from the assessment proceedings and more so, where the provisions of section 271AAB provide for a specific definition of undisclosed income. Where a specific definition of undisclosed income has been provided in Section 271AAB, being a penal provision, the same must be strictly construed and in light of satisfaction of conditions specified therein and it is not expected to examine other provisions where the same has been defined or deemed for the purposes of bringing the amount to tax. 44. In light of above discussions and in the entirety of facts and circumstances of the case, the penalty U/s 271AAB is directed to be deleted on amount of surrender made during the course of search in absence of the same qualifying as undisclosed income as so defined under section 271AAB of the Act." 5. Regarding cash found during the course of search amounting to Rs. 9 lacs, the ld. AR submitted that undisputedly, the assessee is not required to maintain any books of accounts or other documents in the regular course. Further, the assessee being a senior ci....
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.... Rs. 36,83,406/- issued by the assessee from his saving bank account maintained with Bank of Baroda was also found, besides physical cash of Rs. 9 lacs. Therefore, it is an admitted position that the the assessee has made total payment of Rs. 54 lacs towards purchase of Villa at Suncity Township at Sikar Road, Jaipur and as far as the cheque payment is concerned, the same has not been disputed by the Revenue and has been taken as disclosed investment by the assessee. However, as far as the cash payment of Rs. 17,16,594/- and cash of Rs. 9 lacs which was found during the course of search, the same has been taken as undisclosed income by the assessee. During the course of search, in his statement recorded u/s 132(4), the assessee has surrendered the said amount and subsequently, offered the same in his return of income. The question that arises for consideration is whether the cash payment towards purchase of Villa at Suncity Township at Sikar Road, Jaipur and cash of Rs. 9 lacs found in possession of the assessee can be termed as undisclosed income within the meaning as defined in section 271AAB as undisclosed income under explanation (c) of section 271AAB of the Act. In this regard....