TaxTMI 
TaxTMI 
2019 (8) TMI 1267
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....ue involved in all the appeals related to levy of penalty u/s 271AAB of the Act on the income surrendered consequent to search action carried out on Maharaja Group of cases to which all the above assessees belonged. It was stated that consequent to search and seizure operations conducted on the assessees u/s 132(1) of the Act on 27.8.2015,the following incomes had been surrendered by the assessees in the statement recorded u/s 132(4) of the Act as under: 1) Gaurav Jain, ITA No.921/Chd/2018 = Rs. 80 lacs 2) Deepak Kumar, ITA No.923/Chd/2018 = Rs. 75 lacs 3) M/s Big Digs Resorts Ltd., ITA No.1237 & 916/Chd/2018 (A.Y. 2015-16 & 2016-17) = Rs. 150 lacs 3. Penalty proceedings u/s 271AAB of the Act were thereafter initiated, in response to which the assessee submitted that firstly the levy was not mandatory and the assessee having included the surrendered income in its return of income, substantiated the manner of earning such undisclosed income, due taxes alongwith interest having been paid and return filed on time as per the provisions of section 139(1) of the Act, no penalty was leviable. The AO considered the reply of the assessee but did not find it....
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....tion. 10. However,, Ld. Counsel for the assessee has been fair enough to admit that it is not in all the cases that no incriminating material was found. That certain items of jewellery of silver were found / noticed during the search action, the source of income from which as held by the Assessing Officer also stood explained and also the manner of earning of the income was also substantiated. He, therefore, has been fair enough to admit that penalty under the provisions of section 271AAB (1)(a) of the Act was liable to be confirmed to the extent of the property / material found during search action. He, in this respect has given a chart, which for the sake of ready reference, is reproduced as under:- S.No. Particulars Sukhdarshan Kumar Rama Rani Venna Rani R.D. Place Private Limited 1 Jewellery 0 133 54.23 0 2 Silver 0 0 8.40 0 3 Income Declared 230 67 27.37 300 Total 230 200 190 300 11. In the case of Mrs. Rama Rani, (ITA No. 1240/Chd/2018) for assessment year 2016-17, as noted from the above chart, jewellery worth Rs. 1.33 crores was found, whereas, income surrender....
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....iminating material constituted undisclosed income for the purpose of levy of penalty u/s 271AAB of the Act. While the surrender made on account of "Income declared", in the absence of any incriminating material to support it, was held not to be in the nature of undisclosed income and hence not liable to penalty and, therefore, accordingly penalty on the surrender made on account of Income declared in all the cases was deleted by the I.T.A.T. The Ld.Counsel for the assessee thereafter pointed out that the impugned cases related to rest of the assessees/persons belonging to the group searched and the facts were identical with the surrender in the impugned cases also, being made on account of incriminating material found being wrist watches and also on account of income declared. A chart bifurcating the income surrendered as above in each case was filed before us as under: S.No. Particulars Deepak Kumar Gaurav Jain Big Digs Resorts Private Limited 1 Jewellery 0 0 0 2 Silver 0 0 0 3 Wrist Watches 3.42 1.75 0 4 Income declared 71.58 78.25 150 Total 75 80 150 7. The Ld.Counsel for the asse....
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....ooks of accounts of all the f amily members? Ans. Yes, I think so. Q.19. Please explain what do you mean by "I think so"? Ans. Sir, these transactions are not recorded in the regular books of accounts. Q.20. Are these transactions routed through the banking channel? Ans. No sir,l I think these are the transactions related to prof its earned in cash f rom sale and purchase of properties, commodities, bullion etc. Q.21. Do you mean to say that the transactions recorded in the diary annexed as annexure AA-5 are unrecorded transactions and is the undisclosed income of your's and your f amily members? Ans. Yes Sir. Q.22. Please explain the modus operandi of how you and your f amily members have earned these prof its? Ans. Sir, generally there is not a set pattern as such. Sometimes with the help of some known persons, friends we get to know of some good property deals wherein the seller of the properties are in dire need of f unds and are ready to sell the property at much below the real market price. In those cases without getting the properties ac tually registered in our names, we do make f urther sales ....
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....rav Jain 7 6.17 8 Shweta Jain 84.40 9 Saurav Jain 75.35 10 Niti Jain 78.50 Further, your companies/firms have not recorded certain transactions in its regular books of accounts as has been pointed above. I am explaining to you the provisions of section 132(4) of the Act and relevant provisions of penalty u/s 271AAB of the Act. Do you want to say anything in this regard? Ans. As submitted earlier, the prof its earned by the individuals are those derived f rom the unaccounted and undisclosed transactions f rom sale and purchase of properties, bullion and commodity trading etc. during the current f inancial year i.e. FY 2015-16. These also include certain receivables on account of prof its earned f rom the sale of properties etc. Some of these prof its have been utilized to purchase gold jewellery and kept as cash etc. which has been seized earlier by the Income tax department during the course of search from our residential premises and f rom the lockers. Some prof its have been utilized for household expenditure etc. and also as temporary advances, the details of which are not available at this moment. However, in order to avoid any pr....
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....this reason the I.T.A.T. had held that no penalty was leviable on the income declared in those cases u/s 271AAB of the Act. 10. The Ld.Counsel for the assessee, at this juncture rebutted by stating that since no books of account were maintained by the impugned assessees, there was no question of any income not recorded in its books and, therefore, no question of any undisclosed income for the purpose of levy of penalty u/s 271AAB of the Act. He further emphasized his reliance on the decision of the I.T.A.T. in the case of other assessees relating to the group. 11. We have heard the rival contentions, carefully perused the orders of the authorities below and also considered the various documents referred to before us. The issue before us relates to levy of penalty u/s 271AAB of the Act. 12. As per section 271AAB, penalty is levied on the undisclosed income found during search and the quantum of penalty varies from 10% to 30% of the undisclosed income, depending upon fulfillment of certain conditions by the assessee as specified in the section. The term "undisclosed income" has been defined in the Explanation to section 271AAB of the Act, as under: "271AAB ....