TaxTMI 
TaxTMI 
TaxTMI 
2020 (4) TMI 741
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....,377 /- 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. 2,70,377 /- under section 271AAB of the Act by the Id. AO on disclosure of additional income in the return of income filed under section 153A of the Income Tax Act, 1961 . While doing so, the Id. CIT (Appeals) failed to appreciate that the additional income did not have the character of undisclosed income admitted during the course of search proceedings. Additional income declared in the returned income is a voluntary act and therefore appellant cannot be held guilty for levying penalty under section 271AAB of theAct. 2.02 Your appellant prays to hold so now and delete the impugned penalty. 3.00 YOUR APPELLANY CRAVES LEAVE TO ADD, AMEND AND /OR DELETE ALL OR ANY GROUND(S) TAKE HEREINABOVE. 2. Facts of the case as emanated from the penalty order: A search u/s 132 of the Income Tax Act was conducted in the Dhanjimama Group of cases including the case of the assessee on 03.07.2012. In the search proceedings, based on documents found, the assessee's part of d....
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....g any addition to my returned income. However, while passing assessment order for said assessment year, you have mentioned as under: "The assessee in his return of income has offered additional income of Rs. 27,03,770/- which is as per the disclosure of additional income made during the course of search proceedings. This addition income has been offered due to search action and the findings thereof, thus the amount of Rs. 27,03,770/- is undisclosed income of the assessee for the specified year as per section 271AAB of the IT Act, Therefore, penalty proceedings u/s 271AAB are initiated for this default." The said additional income of Rs. 27,03,770/- was earned from profit on sale of /and or building. 2. I further wish to inform you that though I have filed return u/s 153A of the Act and certain amount was declared as additional income in the return, the same does not amount to income being declared under search proceedings. The declaration of additional income in the return was a voluntary act and there is no coronary to any specific document found during search. Therefore said additional income does not have a character of undisclosed found in search proceedings. In view ther....
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....ith interest, if any, in respect of the undisclosed income. As mentioned herein above, I had neither declared any income in a statement u/s 132(4) of the Act during search nor was I have asked to admit any undisclosed income during search therefore the question of levy of penalty u/s 271AAB does not arise. 6. The clause (c) of sub-section (1) of section 271AAB provides that the assesses shall pay by way of penalty, in addition to tax, if any payable by him, 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 year, if it is not covered by clauses (a} and (b). On reading of above clause prima facie the legislative intention behind inserting above clause that in case there is a search and the assessee has made disclosure under statement recorded u/s 132(4) of the Act and said disclosure is not part of income disclosed in the return filed u/s 153A or when no admission of income is made during search though related documents of undisclosed income are found and no additional income is disclosed as part of return u/s 153A of the Act, in such a situation penalty can be levied under clause (c....
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....director of the Appellant company will entitle the assessee company to get immunity from provision of section 271AAA. In other words, the disclosure made on behalf of an assessee, if finally "honoured" by that assessee, is equivalent in law to the disclosure u/s 132(4) made by the assessee for the benefit of immunity u/s 271AAA. In the absence of such benefit, the penalty would become payable. The relevant part of the same is reproduced as under: 9 From the facts and circumstances of the case before us, we are of the considered view that the disclosure made by the director of the appellant company during the search proceedings on behalf of himself, sister concerns and group concerns will entitle the appellant company who is one amongst the group concerns, to claim benefit u/s 271AAA of the Act though its proceedings were completed u/s 133A read with section 143(3) of the Act. Therefore, we hereby delete the penalty levied by the learned AO which was further confirmed by the learned CIT(A). It is thus clear that in law the "disclosure" made on behalf of the appellant only helps the appellant in not falling under clause (b) requiring levy of penalty @ 20% and thus pay only 10% of....
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....ed under section 132 on or after the 1st day of July, 2012 49[but before the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the President50], the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,-- XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (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 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 t....
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.... The revenue did not find any undisclosed asset, any other undisclosed income or the inflation of expenditure during the search/ assessment proceedings. Though a loose sheet of page No.107 of Annexure A/GS/MA/1 was found that does not indicate any suppression of income but it is only projection of profit statement. The amount of Rs. 3571/- mentioned in the projections refers to cost and profit which is approximate sale price but not the cost as stated by the AO in the penalty order. The cost of construction in the projections projected at Rs. 2177/- which is in synch with the statement given by the assessee. The AO was happy with the disclosure given by the 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....