2023 (12) TMI 978

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d any incriminating material during the course of search. The assessee filed his Return of Income on 31.03.2018 declaring total income of Rs. 9,84,720/- (which includes additional income of Rs. 7,50,000/-) and agricultural income of Rs. 2,69,043/-. The return was taken for scrutiny assessment and the returned income of Rs. 9,84,720/- was fully accepted. However in the agricultural income, wherein an addition of Rs. 46,957/- was made by estimating average yield of cotton crops during the year and treated the same as undisclosed cash credit u/s. 68 of the Act. 3. Aggrieved against the appellate order, the assessee filed an appeal before Commissioner of Income Tax (Appeals) who has confirmed the above addition (estimation). It is thereafter the Assessing Officer issued show cause notice u/s. 274 r.w.s. 271AAB that the assessee has inflated his agricultural income, which would have been otherwise offered under any other head of income. In response, the assessee replied that the addition of Rs. 46,957/- was made on account of estimation of yield of cotton crops grown during that period, which by no means can be termed as undisclosed income. There is no nexus between additional income....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the course of assessment proceedings, the AO after considering the details available on record, had made addition of Rs. 46,957/- as unexplained cash credit u/s.68 of the Act. Further, the action of the AO was also upheld by the CIT(A)-4, Ahmedabad by confirming the said addition while passing the appellate order. Therefore, as per the provision of section 271AAB, the AO had rightly levied penalty u/s.271AAB(1)(c) of the Act on the said confirmed addition as the said addition amount was neither admitted by the appellant in the statement recorded nor disclosed the same in the return of income filed. 7.8 In view of above discussion and factual matrix of the case, penalty levied by AO u/s.271AAB(1)(b) for Rs. 1,50,000/- on additional undisclosed Income of Rs. 7,50,000/- and u/s 271AAB(1) (c) for Rs. 14,087/- on confirmed addition of Rs. 46,957/- is confirmed. Thus, the grounds of appeal no. 2, 3, 4 & 5 are dismissed." 5. Aggrieved against the appellate order, the Assessee is in appeal before us raising the following Revised Grounds of Appeal: 1.0 The grounds of appeal mentioned hereunder are without prejudice to one another. 2.0 The learned Commissioner ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....onsideration and perused the materials available on record including the Paper Book and case laws filed by the assessee. It is an undisputed fact that search was carried out at the premises of the assessee on 10.08.2016 which is the "specified previous year" and the due date for filing Return of Income u/s. 139(1) has not expired. The A.O. issued a notice u/s. 142(1) on 28.07.2017 requiring the assessee to file the Return of Income for A.Y. 2017-18. In response, the assessee filed his Return of Income on 31.03.2018 showing total income of Rs. 9,84,720/- which is inclusive of additional income of Rs. 7,50,000/- offered by the assessee. It is seen from the assessment records that there is no seized material relating to any undisclosed income from the assessee. However during the course of assessment proceedings, the Assessing Officer made estimation on the excess receipt of expenses in relation to agricultural income claimed by the assessee and made estimation of Rs. 46,957/- and added as unexplained cash credit u/s. 68 of the Act. 8.1. For adjudicating the levy of penalty is correct in law or otherwise, Section 271AAB is reproduced as follows: Penalty where search has be....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 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) on or before the specified date- (A) pays the tax, together with interest, if any, in respect of the undisclosed income; and (B) furnishes the return of income for the specified previous year declaring such undisclosed income therein; (b) a sum computed at the rate of sixty per cent of the undisclosed income of the specified previous year, if it is not covered under the provisions of clause (a).] (2) No penalty under the provisions of ^56[section 270A or] clause (c) of subsection (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1) ^56a[or sub-section (1A)]. (3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in this section. Explanation.-For the purposes of this section,- (a) "specified date" m....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ey, bullion, jewellery or any other items mentioned in the above definition of "undisclosed income" were mentioned either in the assessment order or in the penalty order by the A.O. The assessee's offer of additional income, which does not amount to undisclosed income as per the above definition. The A.O. has not brought on record any material which points to the "undisclosed income" as defined u/s. 271AAB of the Act. Whereas Ld. CIT(A) in his order refers to the questions stated in the statements recorded u/s. 132(4) of the Act, namely assessee's son marriage expenses. In our considered view, any disclosures made in the course of search and statement recorded u/s. 132(4) itself cannot be construed as "undisclosed income" as per the definition provided in the Act. Further there is no incriminating material found by the Revenue on the alleged additional income offered by the assessee. Thus the levy of penalty u/s. 271AAB is against the provisions and inbuilt definition in the Act. Therefore the same is not sustainable in law. 9. The above view of ours is supported by Co-ordinate Bench of this Tribunal in the case of Shri Jasubhai Arjabhai Vaghasia and Ors. vide order dated 17.05.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... necessary to advert to the alternative plea of the assessee for imposition of penalty with reference to ad-hoc amount of declaration alone. 11. The order of the Assessing Officer towards imposition of penalty under section 271AAA is therefore set aside and the Assessing Officer is directed to delete the penalty so imposed. 12. In the result appeal of the assessee is allowed. 11.3 As noted above, the Co-ordinate Bench has dealt with identical issue and held that in the absence of any reference to tangible material, mere act of acquiesce of ad-hoc income under section 132(4) of the Act cannot be covered within the sweep of "undisclosed income" for the purposes of imposition of penalty under section 271AAB of the Act. In the present case, the penalty has been imposed in terms of the amended provision for imposition of penalty under section 271AAB of the Act. However, the definition of "undisclosed income" under erstwhile section 271AAA and section 271AAB are identical. Therefore, the plea of the assessee that in the absence of reference to any incriminating material, imposition of penalty under section 271AAB is without any legal foundation, gets support fr....