TaxTMI 
TaxTMI 
2022 (7) TMI 20
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome of Rs. 70,76,490/- and also filed return in compliance to notice issued u/s 153A of the Act on 15.12.2014 declaring total income of Rs. 4,28,92,020/-. Finally, the assessment u/s 143(3) read with Section 153A of the Act was framed vide order dated 30.03.2015 at total income of Rs. 4,74,16,890/-. Pertinent to mention that the assessee had made a disclosure of Rs. 3,98,15,530/- during the course of search as per details as under: Sl. No. Particulars Total amount 1 Loss of commodities offered as additional income 2,01,46,506/- 2 Loss of sarees offered as additional income 1,56,69,024/- 3 Discrepancies, Technical Adjustments & Misc. income 40,00,000/- Total 3,98,15,530/- As is apparent from the above , the assessee made two absolute disclosures one in respect of loss of loss of commodities of Rs. 2,01,46,506/- and second in respect of loss on sarees of Rs. 1,56,69,024/-. Whereas the third disclosure was made conditionally towards any discrepancy to the tune of Rs. 40,00,000/-which may be found in the books of accounts of the assessee . The assessee filed the return of income after reconciling various documents as seized by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned finality as the assessee has not challenged the order of first appellate authority confirming the quantum addition before the tribunal. The ld DR stated that in view of these facts , the assessee cannot be allowed to agitate the issue at this stage though candidly conceding the fact that similar issue has been decided by the coordinate bench in the assessee's sister concern as stated by the Ld. A.R. which was part of the same search and with similar facts. 6. Having heard the rival parties and perusing the material on record including the decision of the coordinate bench cited before us in the case of Garg Brothers Pvt. Ltd. (supra) which was also covered under same search and similar disclosure was made. We find that the issue is squarely covered in favour of the assessee by the said decision of Co-ordinate bench. The operative part is reproduced as under: "6. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the search operation u/s. 132 of the Act was conducted in Banktesh Group of cases on 29.05.2012. During search Shri Keshaw Kumar Bubna admitted in his statement recorded u/s. 132(4) of the Act additional inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....income after making, inter alia, the addition of Rs. 40 lacs on account of discrepancies, technical adjustment and miscellaneous income which was offered during search and through the disclosure petition but not included in the return of income filed in response to the notice u/s. 153A of the Act. The Ld. CIT(A) found that the AO's action of levying penalty on the entire amount disclosed to the tune of Rs.3.78 cr. was erroneous. According to him, the assessee had fulfilled the condition as laid down in section 271AAA of the Act in respect of the amount of Rs.3,38,57,991/- and, therefore the balance of Rs.40 lacs only would fall in the ken of penalty u/s. 271AAA of the Act and, therefore, he levied 10% of Rs. 40 lacs which comes to Rs. 4 lacs which he upheld. Thus assessee got partial relief. The assessee still being dissatisfied is in appeal before us challenging the confirmation of penalty of Rs. 4 lacs. For adjudicating this issue let us have a look at Section 271AAA of the Act which reads as under: "Penalty where search has been initiated 271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted." 8. From a bare reading of the aforesaid provision it is noted that sub-section (1) of section 271AAA empowers the AO to levy penalty under this sub-section, if search u/s. 132 of the Act has been initiated against an assessee between 01.06.2007 to 01.07.2012. However, it has to be borne in mind that if an assessee satisfies the condition specified in sub-section (2) of section 271AAA of the Act then no penalty u/s. 271AAA of the Act is leviable because the opening words of subsection (2) of section 271AAA of the Act reads "Nothing contained in sub-section (1) shall apply, if assessee" satisfies the conditions stipulated under clause (1), (ii) and (iii) of this sub-section. It is to be noted that it is not mandatory on the part of the AO to levy penalty as per this provision because the Parliament has used the opening words in subsection (1) is "The AO may ......". So, it is not mandatory that AO in every cases of search penalty u/s. 271AAA is leviable but it is discretionary. And as dis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s satisfied and so the AO erred in levying penalty u/s. 271AAA of the Act for the entire amount of Rs.3.,78 cr. when assessee has satisfied the condition in respect of Rs.3.38 cr. So, according to him, only the deficit portion i.e. Rs. 40 lacs is amenable to penalty u/s. 271AAA of the Act. However, according to assessee since all conditions have been satisfied in respect of the entire amount of Rs.3.78 cr. and since assessee has paid the tax together with interest in respect of the undisclosed income of Rs.3,78,57,991/- penalty u/s. 271AAA of the Act was not warranted. 9. The Ld. AR, has submitted an alternate argument that the amount of Rs. 40 lacs cannot be termed as 'undisclosed income' within the meaning of section 271AAA of the Act since it doesn't fall in the definition of 'undisclosed income' given in the Explanation to section 271AAA of the Act. On consideration of this contention of the assessee, we note that in order to qualify as undisclosed income within the meaning of section 271AAA of the Act, [ that is in this case the amount of Rs. 40 lakh] should fall in the ken of the definition given therein (supra). In order to qualify as undisclosed income as per the d....