AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (9) TMI 622
X X X X Extracts X X X X
X X X X Extracts X X X X
....nting to Rs. 1.5 crores, thereby sustaining the penalty of Rs. 96,00,000/- against penalty of Rs. 2,41,50,000/- levied by the AO on total surrender. 3. Under the facts and circumstances of the case the ld. CIT(A) has erred in confirming the penalty on income of Rs. 3.2 crores which was not undisclosed income of the specified year of the assessee. ITA No. 881/JP/2019 -REVENUE ''1. Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) was right in deleting the penalty of Rs. 1,45,50,000/- imposed by the AO u/s 271AAB of the I.T. Act, 1961 ignoring the fact that had the search not been conducted, the assessee would not have shown this income of Rs. 4.85 crores. 2. Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) was right in deleting the penalty on undisclosed income of Rs. 4.85 crores on amount of advances. 3. Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) is justified in holding that alleged income was found recorded is other documents maintained by the assessee in normal course as per clause (c) of sub-section (1) to explanation of Section 271....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itted that the cash found at the residence of the assessee belong to entire family members of the assessee because it was found and seized from the individual rooms of individual members and therefore, without considering the availability of the cash as per the drawings of all the members of the family of more than 20 persons, the same cannot be considered as undisclosed income of the assessee. The detailed drawings of the various members of the assessee's family are enclosed herewith and it is clear that for the last 5-6 years i.e. financial years 2009-10 to 2014-15, 6 members of the assessee have declared the income of several crores in each hand. Even the withdrawals as per their Balance Sheets are also in crores of rupees during last five years and it was 9.27 crore rupees.(Details enclosed) Therefore, the cash of Rs. 1,50,00,000/- found at the residence of a family of about 20 members, out of which 13 members are tax payers and declared income of crores of rupees, then the said amount of cash cannot be treated as undisclosed income of the assessee. The issue is squarely covered by the decision of Shri Gopal Das Sokhiya in ITA No. 306/JP/2018 dated 11.04.2019 wherein i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecorded under section 132(4), it would not ipso facto be regarded as undisclosed income of the assessee in the absence of the fact or any other material to establish that the entire jewellery found at the time of search and seizure action was only acquired by the assessee and belong to the assessee alone. We find that in the Indian family most of the jewellery belong to the women of the family. It is also customary in Indian society that the women and particularly the married women used to receive the jewellery from the relatives and friends on various occasions including marriage, birth of child as well as other auspicious occasions like anniversaries etc. The department has not made any effort to find out the fact whether the jewellery was acquired during the year under consideration or it is old jewellery. Therefore, once the jewellery was not found to be purchased during the year under consideration, then the same cannot be treated as an undisclosed income for the year under consideration which is specified previous year. The jewellery belong to the family members of the assessee and found at the residence was old jewellery and, therefore, the valuation of the jewellery for the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....year under consideration and it was also submitted by the ld. DR that since the assessee could not explain the source of jewellery found during the course of search, therefore, in view of the provisions of Section 69A of the Act, the same was rightly treated as income of the assessee for the year under consideration. 3.9 We have heard the ld. counsels for both the parties and we have also perused the materials placed on record, deliberated upon the judgements cited by the parties as well as the orders of the Revenue authorities. From the records, we noticed that the cash found during the course of search, according to the assessee was savings of all the family members for the last several years. The said fact was also disclosed by the assessee in the statement recorded u/s 132(4) of the Act. It was categorically submitted by the assessee that cash found at the residence belongs to the entire family members and it was found and seized from the individual rooms of the individual members. In this respect, the assessee also placed on record the drawings of all the members of the family of 20 persons. From the records, we also noticed that for the last 5/6 years i.e. F.Y. 2009-10 to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....recorded under section 132(4), it would not ipso facto be regarded as undisclosed income of the assessee in the absence of the fact or any other material to establish that the entire jewellery found at the time of search and seizure action was only acquired by the assessee and belong to the assessee alone. We find that in the Indian family most of the jewellery belong to the women of the family. It is also customary in Indian society that the women and particularly the married women used to receive the jewellery from the relatives and friends on various occasions including marriage, birth of child as well as other auspicious occasions like anniversaries etc. The department has not made any effort to find out the fact whether the jewellery was acquired during the year under consideration or it is old jewellery. Therefore, once the jewellery was not found to be purchased during the year under consideration, then the same cannot be treated as an undisclosed income for the year under consideration which is specified previous year. The jewellery belong to the family members of the assessee and found at the residence was old jewellery and, therefore, the valuation of the jewellery for th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....statement recorded u/s 132(4), it would not ipso facto be regarded as undisclosed income of the assessee in the absence of the facts or any other material to establish that entire jewellery found at the time of search and seizure action was only acquired by the assessee and belongs to the assessee alone. We are also of the view that in Indian in family most of the jewellery belong to the women of the family and it is also customary in the Indian society that women and particularly the married women used to receive the jewellery from the relatives and friends on various occasions including marriage, birth of child as well as other auspicious occasions like anniversaries etc. The Department has not made any efforts to find out the fact whether the jewellery was acquired during the year under consideration or it is old jewellery. Therefore, once the jewellery was not found to be purchased during the year under consideration then the same cannot be treated as undisclosed income of the assessee for the year under consideration which is specified previous year. The jewellery belong to the family members of the assessee and found at the residence was old jewellery and therefore, the valua....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s as well as the orders passed by the Revenue authorities. Before, we decide the merit of these grounds raised by the Revenue, it is necessary to evaluate the order passed by the ld. CIT(A). While deciding these grounds, the ld. CIT(A) has dealt with these grounds in para 3 to 6 of his order. However, the relevant portion is contained in para no 5.5 to 6.3 which is reproduced below. ''5.5 The appellant was subjected to search and seizure on 23-05-2013. During the course of search certain loose paper were found and seized marked annexure AS 1, Exhibit 1 & 2, which contained list of advances given for land purchased totaling to 4.85 Crores. These pages are filed before me in paper book pager 43-46. The appellant owned these advance given as his undisclosed income u/s 132(4) of the act and paid taxed there in the returned filed on 31-01-2015. The nature of these transactions was described by the appellant in the statement u/s 132(4) of the Act as advance given for the purchase of land in Q/A 21 & 22 of the statement. Same was accepted as such by the AO in the assessment order. The AO imposed penalty on 8.05 Crores. 5.6 I have carefully perused the order relied upon. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as income in absence of satisfactory explanation. In our view, the deeming fiction so envisaged under Section 69 and Section 69B 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 contained in section 69 and section 69B could have been applied in the context of bringing to tax such investments to tax in the quantum proceedings, though the fact of the matter is that the AO has not even invoked the said deeming provisions in the quantum proceedings. Therefore, even on this account, the deeming fiction 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lty u/s 271(1)(c) of the Act ? (B) Whether on the facts and circumstances of the case and in law, the Ld. ITAT has erred in not appreciating the facts that the specific charge 'have in a statement under sub section 4 of section 132 during the course of search and seizure operation admitted undisclosed income' was mentioned in the notice ? (c) Whether the benefit of Section 292BB was correctly denied to the AO/appellant by the ITAT?" 6.2 Clearly the issue of what constitute the 'undisclosed income within the definition provided in the section u/s 271AAB was never a subject matter before the Hon'ble High Court of Allahabad. Even otherwise this aspect is discussed elaborately in the order of Niraj Mathur delivered by Hon'ble ITAT Jaipur. Thus, following the decision of the Hon'ble ITAT Jaipur Bench discussed supra, the penalty levied by the AO on the advances of 4.85 Crores is untenable. The various other cases of ITAT Jaipur bench referred by the Ld. AR also support his case. 6.3 Thus following the decision of the Hon'ble ITAT Jaipur Bench discussed supra, the penalty levied by the AO on the advances of Rs. 4.85 Cro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le or thing. Whether it can then be said that such undisclosed cash advances represents income by way of any entry in the books of account or other documents or transactions found in the course of a search under section 132. A cash advance per se represents an outflow of funds from the assessee's hand and an income per se represents an inflow of funds in the hands of the assessee. Therefore, once there is an inflow of funds by way of income, there can be subsequent outflow by way of an advance to any third party. Giving an advance and income thus connotes different meaning and connotation and thus cannot be used inter-changeably. In the definition of undisclosed income, where it talks about "income by way of any entry in the books of account or other documents or transactions found in the course of a search under section 132", what perhaps has been envisaged by the legislature is an inflow of funds in the hands of the assessee which has been found by way of any entry in the books of accounts or other documents, and which has not been recorded before the date of search in the books of accounts or other documents maintained by the assessee in the normal course and not vice-versa. We ....