TaxTMI 
TaxTMI 
2021 (10) TMI 1250
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.... heard before the appeal was adjudicated in the interest of natural justice and deciding that the appeal was not prosecuted by the appellant. 4. The learned Commissioner of Income-tax, (Appeals)-18, erred in not appreciating the fact that the appellant had voluntarily admitted the additional income in the return of income filed even when no incriminating materials were found or seized by the department. 5. The learned Commissioner of Income-tax, (Appeals)-18, erred in not appreciating the fact that the appellant had not specified the manner in which such income was earned. 6. The learned Commissioner of Income-tax, (Appeals)-18, erred in not appreciating the fact that the additional income admitted by the appellant does not fall under the income as defined in the Explanation (C) to section 271AAB of the Act. 7. The learned Commissioner of Income-tax, (Appeals)-18, erred in not appreciating the fact that the Notice issued by the Assessing officer did not specify whether penalty had been initiated u/s 271AAB(1)(a) or 271AAB(1)(b) or 271AAB(1)(c) and hence the penalty imposed is illegal and bad in law. 8. The learned Commissioner of Income-....
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....d income of Rs. 1.00 crore offered to tax. 5. Being aggrieved by assessment order, the assessee preferred an appeal before learned CIT(A). Before the learned CIT(A), the assessee neither appeared nor filed any written submissions to justify his case. Therefore, the learned CIT(A) decided issue and confirmed penalty levied by the Assessing Officer u/s.271AAB of the Act by following certain judicial precedents, including decision of the Hon'ble Delhi High Court in the case of PCIT Vs Smt. Ritu Singhal (2018) 92 taxmann.com 224 (Del). The relevant findings of the learned CIT(A) are as under:- "4.1 I have gone through the penalty order, grounds of appeal filed by the appellant in this regard. However, during the appellate proceedings it is observed that one has been attending the appellate proceedings . The following chart in tabular form shows the number of opportunities given to the appellant to explain his position in this regard. Sl.No. Date of Notice Date of hearing Response of the appellant 1. 28.10.2019 20.11.2019 No response 2. 22.11.2019 09.12.2019 Sought adjournment vide letter dt 20.11.19 3. 12.12.2019 23.12.2019 So....
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....s of account by the appellant needed to be telescoped against the admission of undisclosed income of Rs. 2.5 or for the FYs. 2011-12, 2012-13 and 2013-14.(needless to say that the appellant had admitted Rs. 1 cr for the FY 2013-14 relevant to AY 2014-15 being the subject matter of appeal). It has been brought on record by the AO that the appellant had pleaded that the investments in gold and diamond jewellery worth Rs. 58.8 lakhs and loan lent by his father in cash to Shri Lakshmanan, Shri Paranthaman and Shri Viswanathan during the FY 2013- 14 besides the cash expenditure incurred outside the books of account were from out of the undisclosed income admitted. 7. At this stage it is apposite to refer to the provisions of Sec.271AAB as it stood at the relevant point in time. Penalty where search has been initiated. 27IAAB. (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, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,- (a) a sum computed at the rate of t....
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....r the previous year before the date of search; or (ii) in which search was conducted; (c) "undisclosed income" means- (i) any income of the specified previous year represented, either wholly or partly, by any moneys 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 the24Principal Chief Commissioner or j Chief Commissioner or 24[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. 8. Section 271AAB provides the procedure for penalty ....
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.... unaccounted income and application thereof fall squarely within the limb of entry in the books of account or other relevant documents / transactions recovered during the course of search and that had not been recorded on or before the date of search in the books of account or other documents that were maintained in the day to day business activity of the appellant. Thus, the undisclosed income admitted falls within the ambit of undisclosed income defined in clause (c) of explanation of the Section. In view of the fact that the appellant had admitted undisclosed income in the course of search but had not furnished the return of income declaring such undisclosed income therein by paying tax together with interest in respect of the undisclosed income before the due date, the appellant's case is hit by Sec. 271AAB(l)(c). 11. Accordingly, as per the provisions of Section 27IAAB the appellant is liable to pay, by way of, penalty in addition to tax, if any, a sum computed @ 30% of undisclosed income of the specified period or previous years, for in this case the appellant in the course of search in a statement u/s 132(4) had admitted the undisclosed income and specified manner i....
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.... "16. That the income which was ultimately brought to tax pursuant to the disclosure made, which was voluntary on the part of the assessee is stating the obvious. The assessee merely stated that the sums advanced were undisclosed income. However, she did not specify how she derived that income and what head it fell in (rent, capital gain, professional or business income out of money lending, source of the money etc). Unless such facts are mentioned with some specificity, it cannot be said that the assessee has fulfilled the requirement that she, in her statement (under Section 132 (4))- substantiates the manner in which the undisclosed income was derived. Such being the case, this court is of opinion that the lower appellate authorities misdirected themselves in holding that the conditions in Section 271AAA (2) were satisfied by the assessee." 13.1 Though this decision has been rendered in the context of S.27IAAA [that is applicable to search conducted from 1.6.2007 to 30.6.2012], the scope and tone & tenor are in accord with S271 AAB [that is applicable in the appellant case on hand. 14. Further, the Hon'ble ITAT ,Kolkata Bench D in the case of ....