2020 (4) TMI 682

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....pellant therefore prays Your Honour to hold so now and treat the penalty proceedings as bad in law. 2.00 IMPOSITION OF PENLATY TO THE TUNE OF Rs. 7, 54,231/-ON ADDITION MADE ON ACCOUNT OF UNDISCLOSED INCOME. 2.01 On the facts and circumstances of appellant's case and in law, the Id. CIT (Appeals) has erred in confirming the levy of penalty to the tune of Rs. 7,54,231 /- under section 271 (1)( c) of the Act by the Id. AO on addition made on account of disclosure of additional income while filing return as part of search proceedings. While doing so, the Id. CIT (Appeals) failed to appreciate that there was no addition made by the Id. AO during the course of assessment proceedings u/s 143(3) r.w.s 153A of the Act to the returned income under section 153A of the Act, and therefore appellant cannot be treated to be assessee concealing income. 2.02 Your appellant prays to hold so now and delete the impugned penalty. 2. Facts of the case as emanated from the penalty order: "An action u/s. 132 was carried out on Dhanji Mama Group of Baroda on 3/7/2012, which also included the assessee-appellant. It has been noted by the AO that there is upward revision in the income disclose....

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....ed up the issue in para 5-6 of the penalty order, and held that on facts, Explanation 5A to section 271(l)(c) is applicable and therefore, he has levied the minimum penalty at 100% of the tax sought to be evaded amounting to Rs. 7,54,231/-." 3. Against the imposition of penalty, assessee preferred first statutory appeal before the ld. CIT(A) who confirmed the action of the ld. A.O. 4. Now assessee has come before us. 5. In this case, a search /survey u/s 132/133A was conducted in the Dhanjimama Group of cases on 03.07.2012. In the search/survey proceedings, based on documents found, the partner of the assessee firm on behalf of the firm has disclosed an amount of Rs. 07,54,231/- for the year under consideration. 6. The revenue contention is that the disclosure of Rs. 07,54,231/-was made due to search and survey at the premises of Dhanjimama Group were assessee is partner of the firm. 7. On the other hand, ld. A.R. contention is that no search and survey has taken place at the premises of the assessee and assessee has voluntarily disclosed the income of the department. Thus, in such case, penalty cannot be imposed. 8. And further stated that in a recent decision of Supreme Cou....

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....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 54[Principal Chief Commissioner or] Chief Commissioner or 54[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.]" From the above provision, it is clear that the penalty shall be imposed under section 271AAB of the Act where there is undisclosed income within the meaning of the explanation (c) to 271AAB of the Act. However, we note that there was no documentary evidence found by the search team suggesting that there was any undisclosed income of the assessee. As such the income disclosed by the assessee was voluntarily without having found any document in the course of search. We also note that there no reference made by the authorities bel....

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....assessee and did not verify the factual position with the books of accounts and projections and bring the evidence to unearth the undisclosed income. Neither the A.O. nor the investigation wing linked the cost of profit or cost of asset to the entries in the books of accounts or to the sales conducted by the assessee to the sale deeds. Therefore, we are unable to accept the contention of the revenue that the loose sheet found during the course of search indicates any undisclosed income or asset or inflation of expenditure. The Hon'ble ITAT Delhi Bench in the case of Ajay Sharma v. Dy.CIT [2013] 30 taxmann.com 109 held that with respect to the addition on account of alleged receivables as per seized paper, there 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. Hence penalty u/s 158BFA (2) of the Act is not leviable. The facts of the assessee's case shows that there was no undisclosed income found during the course of search and no incrimin....