TaxTMI 
TaxTMI 
2022 (3) TMI 1076
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....ment of Undisclosed Income Sl. No. Particulars Document Reference FY 11-12 Total Amount 1 Loss of commodities offered as additional income Pg 33 of BSL/06 2,06,99,150.00 2,06,99,150.00 2 Loss of sarees offered as additional income Pg 30 to 32 of BSL/05 1,31,58,841.00 1,31,58,841.00 3 Discrepancies, Technical Adjustments & Misc. Income 40,00,000.00 Total 3,38,57,991.00 3,78,57,991.00 4. From the aforesaid details of the disclosure made by the assessee it can be seen that the assessee's total disclosure u/s 132 (4) of the Act at the time of search was to the tune of Rs. 3,78,57,991/- which comprised of false claim made by the assessee regarding loss of commodities to the tune of Rs. 2,06,99,150/- and false loss of sarees of Rs. 1,31,58,841/- which was found during search and marked BSL/05 & BSL/06. After making this disclosure still, the assessee found that there was a deficit/difference of Rs. 40,00,000/- (Rs. 3,78,57,991/- - Rs. 3,38,57,991/- ) so, it made a conditional offer of Rs. 40,00,000/- to cover any contingency/discrepancies/technical adjustments/miscellaneous income wh....
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....this total Rs. 34 crores, an amount of Rs. 3,78,57,991/- was offered on behalf of assessee as its undisclosed income for taxation for AY 2012-13. Thereafter, the AO initiated assessment proceedings u/s. 153A of the Act against the assessee from AYs 2007-08 to 2012-13. Pursuant to the notice u/s. 153A of the Act, the assessee filed return declaring total income of Rs. 3,63,19,410/-. The assessment was completed u/s. 153A/143(3) of the Act on 30.03.2015 at an assessed income of Rs. 4,05,53,450/- after making an addition of Rs. 42.54 lacs on account of disallowance of discrepancy, technical adjustment and miscellaneous income to the tune of Rs. 40 lakhs and certain disallowance under section 14A, amortization of capital issue expenditure. Thus, it is noted that the total undisclosed income of Rs. 3,78,57,991/- which was offered as undisclosed income of assessee u/s. 132(4) of the Act was taxed by AO. 7. Thereafter, the AO had initiated the penalty proceedings u/s. 271AAA of the Act on the additional income admitted by the assessee in its statement u/s. 132(4) of the Act and which was declared in the return of income. Even though the assessee pleaded that the penalty as contemplated....
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....ssee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) Nothing contained in sub-section (1) shall apply if the assessee,- (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income. (3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation.-For the purposes of this section,- (a) "undisclosed income" means- (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or ot....
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....ns stipulated under sub-section (2) of section 271AAA of the Act are not satisfied then the AO may levy penalty as per sub-section (1) of section 271AAA of the Act. And when we said that levy of penalty u/s. 271AAA of the Act is discretionary, we mean that is should be judicial discretion. With the aforesaid understanding let us examine whether the penalty as sustained by Ld. CIT(A) in respect of Rs. 40 lakhs (10% of it ie,Rs. 4 lakhs) is legally sustainable. After examination of the facts, we note that the assessee in this case has satisfied the condition laid down in clause (i) of sub-section (2) since in the course of search in the statement under sub-section (4) of section 132 of the Act, Shri Bubna on behalf of assessee has admitted the undisclosed income of Rs. 3.78 cr. (out of total disclosure of Rs. 34 cr. for the whole group) and had specified the manner in which such income has been derived which is evident from page 6 of the paper book (disclosure petition dated 25.07.2012 filed before the DDIT (Inv.) (refer page 2 to 10 of paper book); coming to clause (ii) the assessee has substantiated the manner in which the undisclosed income was derived i.e. by producing the schedu....
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....uring search in the form of undisclosed money, bullion, jewelry or valuable article or thing or any entry in the books of account or other documents or transactions found in the course of search and which (i.e, the undisclosed facts as discovered), (A) has not been recorded on or before the date of search in the books of account or other documents maintained in the course relating to such previous year; or (B) otherwise not disclosed to the PCIT before date of search. Here (B) is not relevant. What is relevant is whether Rs. 40 lakhs (out of Rs. 3.78 cr.) has been discovered during search in any description given hereinabove viz. money, jewellery, transaction which has not been recorded in the books before search. Here in order to appreciate the contention of assessee that this Rs. 40 lakhs would not fall in the definition of 'undisclosed income' one has to see the surrounding facts and circumstances during search in assessee's premises. It is an admitted fact that Shri Bubna during search has disclosed Rs. 34 crores as undisclosed income for the whole group, out of which Rs. 3.78 cr. was on behalf of assessee. Pursuant thereto assessee had filed the disclosure petition and had giv....