TaxTMI 
TaxTMI 
2019 (11) TMI 637
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.... Income Tax Act, 1961. 3. The assessee craves your indulgence and add amend or alter all or any grounds of appeal before or at the time of hearing." 2. The brief facts leading to levy of penalty U/s 271AAB of the Act are that the assessee is an individual and director in various companies engaged in the business of real estate. There was a search and seizure action U/s 132 of the Act on 04.09.2013 on the members of Okay Plus Group-JKD Group and the assessee was also covered by the said search and seizure action. During the course of search and seizure proceedings certain incriminating material was found and seized including some loose papers and diary containing notings of the advance given for land. In the statement recorded U/s 132(4) the assessee admitted and disclosed a sum of Rs. 6,02,85,000/- as undisclosed income from the real estate business. The assessee filed his return of income U/s 139(1) declaring total income of Rs. 6,18,77,850/- including the surrender income of Rs. 6,02,85,000/-. The assessment was completed U/s 143(3) r.w.s. 153(1)(b) of the Act on 30.03.2016 determining the total income at the return income. Subsequently, the AO initiated the penalty p....
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....e of inflow of the funds cannot be treated as income of the assessee and therefore these entries of advance for purchase of land itself cannot be held an undisclosed income. For the purpose of levy U/s 271AAB of the Act it is condition precedent that the income surrender by the assessee shall fall in the definition of undisclosed income provided in the explanation to the said Section therefore, until and unless the entries/notings in the diary represents any money, bullion, jewellery, valuables articles the mere entries cannot be treated as undisclosed income. He has further contended that in the absence of any transaction of actual purchase of the land or acquisition of the said land there will be no asset corresponding to the alleged entries and therefore, it is not falling in the ambit of the undisclosed income. The ld. AR has contended that the Revenue authorities exerted undue and uncalled for pressure to obtain surrender of income otherwise there was no undisclosed income in the hand of the assessee. He has submitted that such confessional statement violates Board's circular F. No. 286/2/2003 dated 10.03.2003 whereby the CBDT has instructed the taxing authority not to obtain ....
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....re is no direct material which leads and establishes that any income received by the assessee has not been declared by the assessee. An addition has been made on the basis of loose document, which did not closely prove any concealment or furnishing of inaccurate particulars by the assessee. 4. On the other hand, the ld. DR has submitted that in the statement recorded U/s 132(4) of the Act the assessee himself explained the nature of entries found recorded in the seized material and has admitted the undisclosed income from the business of real estate during the year under consideration. Once the assessee has failed to explain the source of the investment recorded in the seized material the same falls in the ambit of undisclosed income consequently the provisions of Section 271AAB of the Act are attracted. The surrender made by the assessee itself is self explanatory to the nature of surrender and income therefore, the assessee cannot be permitted to denied the income disclosed during the search being undisclosed income. The ld. DR has further contended that as per explanatory note on Finance Bill, 2012 the provisions of Section 271AAB of the Act are mandatory in nature and the AO....
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....of preceding years. Hence the investment in the real estate itself would not reveal the nature of income and the source of income of the year under consideration. It is a pre-condition for invoking the provisions of section 271AAB that the assessee admitted the undisclosed income in the statement under section 132(4). The definition of 'undisclosed income' is provided in section 271AAB itself and, therefore, the AO in the proceedings under section 271AAB has to examine all the facts of the case and then arrive to the conclusion that the income disclosed by the assessee falls in the definition of undisclosed income as stipulated in the explanation to said section. The first question arises is whether the levy of penalty under section 271AAB is mandatory and consequential to the disclosure of income by the assessee under section 132(4) or the AO has to take a decision whether the given case has satisfied the requirements for levy of penalty under section 271AAB of the Act. In order to consider this issue, the provisions of section 271AAB are to be analyzed. For ready reference, we quote section 271AAB as under :- "271AAB. (1) The Assessing Officer may, notwithstanding anythi....
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....ncome 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 declaring such undisclosed income therein; (b) a sum computed at the rate of sixty per cent of the undisclosed income of the specified previous year, if it is not covered under the provisions of clause (a).] (2) No penalty under the provisions of 53[section 270A or] clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1) 52[or sub-section (1A)]. (3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in this section. Explanation.-For the purposes of this section,- (a) "specified date" means the due date of furnishing of return of income under sub-section (1) of section 139 or the date on which the period specified i....
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....sidered by the AO and particularly whether the explanation furnished by the assessee is bonafide and non-compliance of the same is due to the reason beyond the control of the assessee. Therefore, the penalty u/s 271AAB is not a consequential act but the AO has to first initiate proceedings by issuing a show cause notice and after considering the explanation and reply of the assessee has to take a decision. This requirement of giving an opportunity of hearing itself makes it clear that the penalty u/s 271AAB is not mandatory but the AO has to take a decision based on the facts and circumstances of the case otherwise there is no requirement of issuing any notice for initiation of proceedings but the levy of penalty would be consequential and only computation of the quantum was to be done by the AO as in the case of levy of interest and fee u/s 234A to E. Even the quantum of penalty leviable u/s 271AAB is also subject to the condition prescribed under clauses (a) to (c) of sub-section (1) and the AO has to again give a finding for levy of penalty @ 10% or 20% or 30% of the undisclosed income. Thus the AO is bound to take a decision as to what default is committed by the assessee and w....
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....nefit of section 292BB of the Income Tax Act, 1961 because firstly, the assessee has raised no objection before the AO in this regard. Secondly, last line of the notice clearly mentions section 271AAB. Thirdly, the assessee has given reply to said notice which shows that the assessee fully comprehended the implication of the notice that it is for section 271AAB. The assessee has also challenged that the principles of natural justice has not followed by the AO. The detailed submissions of A.R in this regard has already been reproduced above. The A.R did not produce any evidence to show that he was not given proper opportunity of hearing. It is clear from the penalty order that the AO has given penalty notice and which was also replied by the assessee. Therefore, in my opinion, principle of natural justice has not been violated. Thus in view of above discussion penalty imposed by AO u/s 271AAB of the Act is confirmed." Thus it was found by the Hon'ble High Court that the mistake in mentioning the section in the show cause notice is covered under section 292BB and the AO will get the benefit of the same. The said decision will not help the case of the revenue so far ....
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....e of 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) 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 declaring such undisclosed income therein; (b) a sum computed at the rate of twenty 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 sub-section (4_) of section 132, does not admit the undisclosed income; and (ii) on or before the specified date- (A) declares such income in the return of income furnished for the specified previous year; and (B) pays the tax, together with interest, if any, in respect of the undisclosed income; (c) a sum which shall not be less than thirty per cent but which shall not exceed ninety per cent of the undisclosed income of the specified previous ye....
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....s that no order imposing penalty shall be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. Therefore, from plain reading of section 271AAB of the Act, it is evident that the penalty cannot be imposed unless the assessee is given a reasonable opportunity and assessee is being heard. Once the opportunity is given to the assessee, the penalty cannot be mandatory and it is on the basis of the facts and merits placed before the A.O. Once the A.O. is bound by the Act to hear the assessee and to give reasonable opportunity to explain his case, there is no mandatory requirement of imposing penalty, because the opportunity of being heard and reasonable opportunity is not a mere formality but it is to adhere to the principles of natural justice. Hon'ble A.P. High Court in the case of Radhakrishna Vihar in ITTA No.740/2011 while dealing with the penalty u/s 158BFA held that 'we are of the opinion that while the words shall be liable under sub section (1) of section 158BFA of the Act that are entitled to be mandatory, the words may direct in sub section 2 there of intended to directory'. In other words, while payment of interest is mandatory le....
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....ing income under the head income from salary received from M/s JKD Plus India Developer Pvt. Ltd. income from house property, capital gain and income from other sources. Only for the year under consideration the undisclosed income as surrendered by the assessee during the search is the alleged business income. There is no material on record that either in the past or in the subsequent year the assessee has carried out any business in his individual capacity in real estate. Further, entries as recorded in the diary on account of advance for land or very vague and showing only the rate and the amount paid without giving the particulars of the person to whom the alleged amount was paid for purchase of land or even without giving the details of the land for which these advances were paid by the assessee. It is also pertinent to note that the first entry is regarding the land on Tok Road upto 31th December, 2013 whereas the search was conducted on 04.09.2013 therefore, how the entry can be made upto 31.12.2013 prior to the date of search. Without going into the controversy whether these entries are artificial or actual payment made by the assessee when there was no asset actually acquir....
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....see recorded u/s 132(4) during the course of search, falls in the definition of "undisclosed income" which has been specifically laid down in terms of clause (c) of explanation to section 271AAB which reads as under: "(c) "undisclosed income" means- (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents 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....
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....tments which are found either not recorded or found recorded at a lesser value in the books of accounts, and such investments are deemed to be income of the assessee of the year in which such investments have been made, cannot be extended and applied automatically in context of section 271AAB. It is a well-settled legal proposition that the deeming provisions are limited for the purposes that have been brought on the statute book and have therefore to be applied in the context of provisions wherein they have been brought on the statue book and not otherwise. In the instant case, the deeming provisions are contained in section 69 and section 69B and therefore, the same have to be applied in the context of bringing to tax such investments to tax in the quantum proceedings. The same 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....
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....ा गया है, इनमें दरà¥à¤œ विवरण की जानकारी दें- उतà¥à¤¤à¤° मैनें पिछले 4 महीनों में जमीन खरीदने हेतॠविà¤à¤¿à¤¨à¥à¤¨ लोगों को अगà¥à¤°à¤¿à¤® राशि दी है, जो दस पà¥à¤°à¤•à¤¾à¤° है. = पेज नं. नाम 1 लालचनà¥à¤¦ तिथि राशि 10.11.2013 8,00,000/- 234 रामधन यादव 18.11.2013 12,00,000/- सीताराम शरà¥à¤®à¤¾ 02.12.2013 16,00,000/- रामजीलाल सà¤....
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....¤¹ मेरी अघोषित आय में से किया गया निवेश है। मैं इस रूपये 1,41,00,000/- को चालू वितà¥à¤¤ वरà¥à¤· की अघोषित आय के रूप में सà¥à¤µà¥€à¤•à¤¾à¤° करते हà¥à¤ जो à¤à¥€ आयकर होगा चà¥à¤•à¤¾ दूंगा। पà¥à¤°à¤¶à¥à¤¨-18. आपने पूरà¥à¤µ में बताया कि आपके निवास सà¥à¤¥à¤¾à¤¨ 26-। संगà¥à¤°à¤¾à¤® कॉलोनी, जयपà¥à¤° के निरà¥à¤®....
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....¤¾ पà¥à¤¸à¥à¤¤à¤•à¥‹à¤‚ में दिखाया हà¥à¤† है। मैं यह मानता हूठकि मैनें अपनी अघोषित आय में से à¤à¥€ मकान निरà¥à¤®à¤¾à¤£ में निवेश किया है। जैसा कि मैनें बताया कि कà¥à¤² निरà¥à¤®à¤¾à¤£ लागत 80 से 90 लाख रूपये है। मैं निरà¥à¤®à¤¾à¤£ लागत लगà¤à¤— 85 लाख रूपये मानते हà¥à¤ रूपये 3177000/- के निवेà¤....
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....¤£à¥à¤¡ जैमà¥à¤¸ à¤à¤•à¥à¤¸à¤ªà¥‹à¤°à¥à¤Ÿ का सà¥à¤Ÿà¥‰à¤• निवास सà¥à¤¥à¤¾à¤¨ की बेसमेनà¥à¤Ÿ और उसीठचमेली मारà¥à¤•à¥‡à¤Ÿ, जयपà¥à¤° में à¤à¤• साथ रखा हà¥à¤† है। और इसको अलग-अलग नहीं किया जा सकता है। हमारे निवास की बेसमेनà¥à¤Ÿ और दूकान उसीठचमेली मारà¥à¤•à¥‡à¤Ÿ जयपà¥à¤° में निमà¥à¤¨ सà¥à¤Ÿà¥‰à¤• पाया गया ह....
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....¤¤à¥à¤°à¤¾ मूलà¥à¤¯ 1. सिलà¥à¤šà¤° à¤à¤£à¥à¤¡ जैमà¥à¤¸ à¤à¤•à¤¸à¤ªà¥‹à¤Ÿ Document 4 सिलà¥à¤µà¤° जà¥à¤µà¥ˆà¤²à¤°à¥€ सिलà¥à¤µà¤° 153.564 Kgs 732950 38.406 Kgs 504335 सेमी पà¥à¤°à¥€à¤¸à¤¿à¤¯à¤¸ सà¥à¤Ÿà¥‰à¤¨ 9.190 Kgs 124872 2. सिलवर पà¥à¤°à¤¿à¤¨à¥à¤¸ 3. कà¥à¤² योग सिलà¥à¤µà¤° जà¥à¤µà¥ˆà¤²à¤°à¥€ सिलà¥à¤µà¤° 291.563 Kgs 1925364 6.663 Kgs 136163 सेमी पà¥à¤°à¥€à¤¸à¤¿à¤¯à¤¸ सà¥à¤Ÿà¥‰à¤¨ 8.022 Kgs 108548 मिकà¥à¤¸ सिलà¥à¤µà¤° जà¥à¤µà¥ˆà¤²à¤°à¥€ 445.127 Kgs 2658314 सिलà¥à¤µà¤° 45.039 Kgs 640498 सेमी पà¥à¤°à¥€à¤....
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....à¥à¤µà¤° जà¥à¤µà¥ˆà¤²à¤°à¥€ 80.625 Kg (mix Jewellery) आज अपà¥à¤°à¥‚वà¥à¤¡ वैलà¥à¤¯à¥‚र ने सरà¥à¤š / सरà¥à¤µà¥‡ के दौरान जो वैलयूशन कही है उनसे उपरोकà¥à¤¤ आईटम का अवरेज रेट इस पà¥à¤°à¤•à¤¾à¤° है - मैटल जà¥à¤µà¥ˆà¤²à¤°à¥€ 357867/102.262 =3499.51 सेमी पà¥à¤°à¤¿à¤¸à¤¿à¤¯à¤¸ सà¥à¤Ÿà¥‰à¤• = 4904164/727.834 =6738.03 Document 5 सिलà¥à¤µà¤° जà¥à¤µà¥ˆà¤²à¤°à¥€ 22390316/525.752 =42587.22 उपरोकà¥à¤¤ रेट के हिसाब से जो अधिक....
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....ˆ? उतà¥à¤¤à¤° आपने आपने बयानों में बताया है कि अधिक पाये गये सà¥à¤Ÿà¥‰à¤• में, मकान के निरà¥à¤®à¤¾à¤£ में और विà¤à¤¿à¤¨à¥à¤¨ वà¥à¤¯à¤•à¥à¤¤à¤¿à¤¯à¥‹à¤‚ को जमीन पेटे दिये गये à¤à¤¡à¤µà¤¾à¤‚स में जो अदà¥à¤¯à¥‹à¤·à¤¿à¤¤ आय का उजागर किया है, कृपया इसके सà¥à¤¤à¥à¤°à¥‹à¤¤ का उजागर कीजिये । उपरोकà¥à¤¤ समसà¥à¤¤ à....