TaxTMI 
TaxTMI 
2020 (4) TMI 741
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....bad in law. 2.00 IMPOSITION OF PENLATY TO THE TUNE OF Rs. 2,70,377 /- 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 t....
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.... 1. I had filed return of income for A.Y.2012-13 and assessment was completed u/s 143(3) r.w.s. 153A of the Act without making 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 spec....
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....4) of section 132, does not admit the undisclosed income; (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. 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 t....
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....nce or entry in the regular books of accounts maintained by the appellant. However, I am also aware of Jurisdictional Tribunal decision in the case of Balaji Formalin Put. Ltd. dated 8/8/2013 of Hon'ble Ahmedabad Tribunal vide ITA No: 1274/Ahd/2012 has held that the disclosure made by the 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. Therefor....
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.... record. At the outset we note that the explanation (c) to section 271AAB of the Act has a direct bearing on the on the issue on hand which reads as under: "48[Penalty where search has been initiated. 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 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 suc....
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....rojections reflected in the loose sheet is real. No other material was found during the course of search indicating the undisclosed income. There was no money, bullion, jewellery or valuable article or thing or entry in the books of accounts or documents transactions were found during the course of search indicating the assets not recorded in the books of accounts or other documents maintained in the normal course, wholly or partly. 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 ....