TaxTMI 
TaxTMI 
2019 (9) TMI 605
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....ogether and are being dealt with by way of this common consolidated order. We shall first be dealing with the facts in the case of Vishal Singal Vs. DCIT in ITA No.935/Chd/2018. ITA No.935/Chd/2018(Vishal Singal): 3. Brief facts relating to the case are that a search u/s 132(1) of the Act was conducted on the assessee on 20.3.2014. During assessment proceedings thereafter, it was found that at the time of search proceedings the assessee had admitted undisclosed income amounting to Rs. 10 lacs in the statement made u/s 132(4) of the Act. Penalty proceedings u/s 271AAB of the Act were therefore initiated and show cause notice u/s 274 r.w.s.271AAB of the Act was issued to the assessee. In response, the assessee submitted that it had filed its return of income disclosing total income of Rs. 9,78,250/, which included surrendered income and which had been accepted as such. It was submitted that the assessee had substantiated the manner in which the undisclosed income had been earned and had also paid taxes on the same. It was further submitted that no valuable items had been found during search. It was thus contended that penalty proceedings initiated be therefore dropped. The A....
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.... maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted.]" 7. Referring to the same, the Ld. counsel for assessee contended that the undisclosed income meant any income which was represented by any asset found during the course of search or any entry in the books of account or other documents, which has not been recorded before the date of search or not disclosed earlier to the Principal, Chief Commissioner or Commissioner of Income Tax Act. The Ld. counsel for assessee contended that some incriminating material representing earlier undisclosed income of the assessee ought to have been found during the course of search which would qualify as "un....
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....ise and is a part and parcel of the same business activity as reflected in the return of income filed with the Department and in order to cover such discrepancies and others, we hereby offer a sum of Rs. 23 crores (Rupees twenty Three Crores Only) as additional income as declared in the return of income already filed with the Department over and above the regular income and the said income has been derived from the same source.. We .had already given an offer of surrender of Twenty Three Crores in the group as a whole and, now, in this letter, the offer remains the same and also persons in whose hands the amount has been offered are also the same but there are some adjustments and, now, the head-wise bifurcation after examination the seized documents, the amount offered as business income from the business activities is as under.- S.No. Name of the Concern/Individual Assessment Year. Amount Surrendered Basis 1. M/s Deepak Builders 2014-15 2013-14 14,02,00,000.00 21,00,000.00 Offered as Business income to cover any discrepancies in the seized documents as found and seized during the course of search and also to cover any kind of discrepan....
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....ak Builders and Rs. 1 Crore in the case of Shri Deepal Singal, Proprietor M/s Deepak Buildcon). The above surrender in the case of M/s Deepak; Builders of Rs. 3 Crores covers all the loose documents or any kind Of implication of income in the seized documents for the Assessment Year 2010-11 as found during the course of search, if any and Rs. 1 Crore in the case of Shri Deepak Singal Proprietor M/s Deepak Buildcon covers the cash received on account of the sale of flats over and above the amount reflected in the books of account for the Assessment Years 2009-010 arid 2010-2011. The assesses Shri Deepak Singal had been earned the income on account of the sale of flats and the same income as offered during the course of survey had been reflected in the cash, recoverable and amount spends in the, construction of flats. The copy of the statement as recorded during the course of survey is being enclosed herewith for your ready reference. 3. The above amount as offered are tentative and subject to change any time during proceeding before your goodself and also filing Of the return U/s 153A but offer will remain the same and covers all the issues as per seized record or any kind ....
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....nd now the case is governed by the provisions of Section 271AAB. For deciding the issue and to have clarity in the matter the provisions of Sections 271AAB which are applicable to the present case under consideration are reproduced below. "271AAB. (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 July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,- (a) a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year, if such assessee- (i) in the course of the search, in a statement under subsection (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) on or before the specified date- (A) pays the tax, together with interest, if any, in respect of the undisclosed income; and (B) furnishes the return of income for the specified previous year declarin....
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....the authorities below. The sole contention of the Ld. Counsel for the assessee, against the levy of penalty under section 271AAB of the Act, is that no incriminating material representing "undisclosed income" of the assessee was found during the course of search. We do not find any merit in this contention of the Ld. Counsel for the assessee. 11. The surrender letter of the assessee, admitting to the discrepancies in the books of account and certain entries not being recorded in the books, as also specific admission to the fact that the assessee had not disclosed the income relating to commission and brokerage, contradicts this contention of the Ld. Counsel for the assessee. In the surrender letter, as reproduced in the earlier part of this order, the assessee has categorically admitted that there were discrepancies in respect of the books of account of the business maintained by him and there were certain entries which had not been recorded in the regular books of account for different Assessment Years and that the said discrepancies related to the same nature of business as reflected in the regular books of account. Further, in the surrender letter the assessee has also specif....
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....d was therefore not in the nature of undisclosed income of the assessee. In the case of Manish Aggarwal(supra),it was noted that the assessee was not engaged in any business or profession and was not required to maintain any books of accounts and the documents found during search disclosing speculative commodity transaction undertaken by the assessee which was surrendered ,was held to be recorded in the "other documents" of the assessee and hence held to be not undisclosed income of the assessee as per the definition of the same in section 271AAB of the Act. In the case of S. Martin (supra) the surrender made by the assessee was found to be not admitted on the basis of any material ,document and was just a general surrender, which therefore was not held to construe undisclosed income for the purposes of levy of penalty. In the case of Rashmi Cement(supra) it was noted that the surrender made was suo moto, general ,to buy piece of mind and not based on any material. In such circumstances it was held that the surrender did not in itself constitute incriminating material/undisclosed income of the assessee. The facts leading to the deletion of penalty in the case of Rasmi Metaliks(supr....