TaxTMI 
TaxTMI 
2024 (7) TMI 1561
X X X X Extracts X X X X
X X X X Extracts X X X X
.... facts and circumstances of the case was correct in law in deleting the penalty of INR 1,97,70,670/- imposed by Assessing Officer under Section 271AAA of the Income Tax Act, 1961 ["Act"]? 2. While dealing with the issue of penalty under Section 271AAA of the Act, the ITAT has observed as follows: - "2.4 If the aforesaid judicial pronouncements are analyzed with the facts of the present appeal there is uncontroverted finding in the impugned order and also in the assessment order that in computation of income, attached with the return, the assessee declared the surrendered amount of Rs. 19,77,06,696/- under the head "additional income" which was accepted by the Revenue. It is further noted that while initiating the penalty proceedings the Ld. AO nowhere stated as to why the penalty proceedings were initiated and whether the conditions laid down in the section were satisfied or not. The Ld. AO without assigning any reason and merely on the basis of surrender made by the assessee initiated penalty proceedings. The amount of surrender was made by the assessee on the basis of certain loose papers found and seized during search operation upon tecpro group at Gurgaon. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ence of any specific query having been put to the assessee to disclose the manner in which the undisclosed income had been derived would be fatal, and consequently it could not be said that the provisions of sub-section (2) of Section 271-AAA of the Act had not been adhered to. It is this view which has come to be affirmed by the Tribunal. 5. Section 271-AAA of the Act reads as follows: - "271-AAA. Penalty where search has been initiated.- (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 June, 2007 [but before the 1st day of July, 2012], the assessee 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) substantiat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nal tax burden if it were able to satisfy the preconditions which are prescribed therein. In terms of Section 271-AAA(2), the statute clearly provides that sub-section (1) would not apply provided the assessee admits to the undisclosed income and specifies the manner in which such income had been derived in a statement made and recorded under Section 132(4). That provision then places the additional burden of substantiating the manner in which the undisclosed income was derived upon the searched assessee. It is only thereafter that in terms of clause (iii) of sub-section (2), a payment of tax together with interest in respect of undisclosed income is contemplated. 7. As we read clauses (i) and (ii) of sub-section (2), it becomes evident that there is a statutory obligation placed upon the assessee to not only "specify" the manner in which the undisclosed income had been derived but also to "substantiate" the statement that may be made under Section 132(4). We also bear in mind the indubitable position that for the purposes of being absolved from the additional tax burden which stands constructed in terms of Section 271-AAA(1), the burden is placed upon the assessee to establish ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s that the assessee must make a statement under section 132(4) in the course of search stating that the unaccounted assets and incriminating documents found from his possession during the search have been acquired out of his income, which has not been disclosed in the return of income to be furnished before expiry of time specified in section 139(1). Such statement was made by the karta during the search which concluded on August 1, 1987. It is not in dispute that condition No. 1 was fulfilled. The second condition for availing of the immunity from penalty under section 271(1)(c) was that the assessee should specify, in his statement under section 132(4), the manner in which such income stood derived. Admittedly, the second condition, in the present case also stood satisfied. According to the Department, the assessee was not entitled to immunity under clause (2) as he did not satisfy the third condition for availing of the benefit of waiver of penalty under section 271(1)(c) as the assessee failed to file his return of income on July 31, 1987, and pay tax thereon particularly when the assessee conceded on August 1, 1987 that there was concealment of income. The third condi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pulated in the third condition was for the assessee to "pay tax together with interest". It was held in Gebilal Kanhaialal (supra) that the third condition was also fulfilled as the assessee paid tax with interest up to the date of payment. The only condition which was required to be fulfilled for securing the immunity, after the search proceedings got over, was that the assessee had to pay the tax together with interest in respect of such undisclosed income up to the date of payment. Explanation 5(2) did not prescribe the time-limit within which the assessee should pay tax on income disclosed in the statement under section 132(4). 13. In the present case, during the course of the statement made by the assessee, during the course of the search on March 4, 2010, that she had lent Rs. 16 crores in aggregate to three individuals during the financial year 2009-10. This was in response to a query by the Revenue officials during the course of search when the basis of page 81 of Exhibit A-3 was sought to be questioned. To the next question, the assessee replied that the said amount of "Rs. 16 crores is my unaccounted income for the financial year 2009-10 relevant for the assessme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... show otherwise, by cogent and reliable evidence. When the initial onus placed by the Explanation, has been discharged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise. The assessee has only stated that he had surrendered the additional sum of Rs. 40,74,000 with a view to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the Income-tax Department. The statute does not recognize those types of defences under Explanation 1 to section 271(1)(c) of the Act. It is trite law that the voluntary disclosure does not release the appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the Assessing Officer in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was ....