TaxTMI 
TaxTMI 
2016 (10) TMI 1404
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....ective ground in the appeal is with regard to deletion of penalty of Rs. 1,81,07,047/- levied under section 271AAA of the Income Tax Act, 1961 (hereinafter referred to as the Act). The facts as narrated by the ld. CIT (A) in para 3 of his order are as under :- "3. The brief facts of the case are that search and seizure operations were carried out on 24.08.2009 at the business and residential premises of the assessee group. Incriminating evidence was gathered during the search operations. A return of income was filed 12.05.2010 declaring income at Rs. 10,16,16,517/-. The assessment u/s 143(3) was completed on 23.11.2011 at total income of Rs. 25,40,53,070/-. The penalty proceedings u/s 271AAA were initiated at the time of completion of assessment proceedings for levy of penalty on undisclosed income and show cause was issued on 23.11.2011 and the penalty of Rs. 1,81,07,047/- was imposed by the AO vide order dated 11.12.2013." The assessee aggrieved by the order of AO, preferred an appeal before ld. CIT (A), who after considering the submissions deleted the penalty. 3. Now the revenue is in appeal before us. 4. The ld. D/R vehemently argued that ld. CIT (A) was not ....
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....ode and manner of earning the said income has been endorsed by the Hon'ble Income Tax Appellate Tribunal, Jaipur Bench, Jaipur vide their decision in ITA No. 829/JP/2013 (Assessee's appeal) and 847/JP/2013 (Departmental Appeal) dated 26.02.2014 at page 34 in para 11.4 by observing as under (APB-111) : After considering carefully above explanation and further considering that the assessee has duly shown the cash found and admitted as his business income from his regular business activities and further having paid tax and explaining the mode and manner of acquisition of such income in his return of income and during the assessment proceedings, the entire addition made on the basis of appreciation of these documents which are mainly on presumption and assumptions without there being any corroborative material on record deserves to be deleted, especially when the AO has neither appreciated the statements of the assessee properly as well as additional income offered by him. Accordingly , we are left with no option but to delete this entire addition which has been found to have been made based on no corroborative material thereby we allow Ground No. 2 to 2.2 of the assessee and ....
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....le 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 other valuable article or thing or any entry in the books of account ....
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....ted above, during the course of search on 24.08.2009, unexplained / undisclosed money found in the form of cash which the assessee otherwise would not declare as income and the same since was found in the year of search conducted thus it is an undisclosed income pertaining to that specified previous year as per the explanation to section 271AAA. With regard to above stated conditions as enumerated in sub-section (2) of section 271AAA, the assessee had fulfilled the same in following manner thus the penalty could not be levied in the present case as: i) It has not been disputed by the Ld. AO that the assessee has admitted the cash found during the course of search as his undisclosed additional income in the statements recorded during the course of search u/s 132(4) which is very much evident from the observations made in para 4.1 to 4.3 at page 2 of the assessment order. Further in the statements recorded u/s 132(4) the assessee has categorically stated the manner in which such additional undisclosed income was derived. The Question No. 19 and its answer as appearing in para 4.1 of the assessment order is reproduced herein below in this regard and ready reference (....
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....25;द पाये गये हैं कृपया उपरोक्त नकद राषि का स्त्रोत स्पष्ट करें। उत्तर 19: मैंने अपने परिवार की विभिन्न व्यावसायिक फर्मों, कम्पनियों एवं प्रोपराइटरषिप कन्सर्न की बै इववो को दिनांक 24.08.2009 तक अपडेट कर लिया है। ऐसे ....
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....2;ोक्त रूपये 10,00,35,045/- को मैं अपनी अघोषित व्यावसायिक गतिविधि से अर्जित आय को मानकर करारोपण हेतु समर्पित करता हूँ। From the perusal of the statements, it is crystal clear that the first condition given in sub clause (i) to sub section (2) of section 271AAA has duly been satisfied by the assessee. However, the Ld. AO failed to properly appreciate the statements of the assessee, which has been remarked even by this Hon'ble Tribunal in its order dated 26.02.2014 wherein, the Tribunal in para 11.4 at page 34 (APB-111) has categorically observed that assessee has declared additional income from his regular business activities. Thus, it is seen that even the Hon'....
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.... AO by merely alleging (though wrongfully) that the assessee has failed to explain the manner of deriving the undisclosed income and substantiation thereof has also not be done by assessee. It is submitted that merely by observing so, the protection under clause (2) of section 271AAA cannot be denied to the assessee, given that in the circumstances of the present case, the assessee has made due disclosure of undisclosed income and even the manner of deriving such income has been explained by assessee in his statements recorded u/s 132(4), to which, kind attention of the Hon'ble Bench has already been brought in the previous paras. It may kindly be noted that the Hon'ble ITAT, Mumbai Bench, Mumbai in the case of ACIT Vs. Kanakia Spaces Pvt. Ltd. ITA No. 6763/Mum/2011, in an appeal filed by department, has made the following observations: 3.1 Ld. CIT(A) after considering the submission deleted the penalty by stating as under: I have carefully considered the submissions made by the appellant in respect of the penalty levied by the ld.AO. It is seen that the ld.AO has written two sentences at para- 8 to conclude that the appellant has not been able to substan....
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....nsidering the social environment it is not possible to expect from an assessee, whether literate or illiterate, to be specific and to the point regarding the conditions stipulated in the second exception while making statement under section 132(4). Even if the statement does not specify the manner in which the income is derived, if the income is declared and tax thereon paid, there would be substantial compliance not warranting any further denial of the benefit. 4.1 In this case, the assessee was asked to explain the entries in the work-in progress sheet and assessee in the course of statement offered the income with a plea not to initiate penalty proceedings. The assessee was not asked about the manner in which such income was earned and also to substantiate the manner in which undisclosed income was derived. The provision of clause -2 of Explanation-V appended to section 271(1)(c) are similar to section 271AAA(2). The scope and meaning has been lucidly explained by the Hon'ble Allahabad High Court in the case of CIT v. Radha Kishan Goel (2005) 278 ITR 454 (All), which was followed by the Honb'le Gujarat High Court in the above referred case. In view of the above principl....
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....orded during search u/s 132(4). * All the tax due on such additional undisclosed income was paid by the assessee. * No adverse inference was drawn and such additional income was accepted and assessed as such. Thus, all the three conditions laid down under sub-section (2) to section 271AAA stand satisfied and therefore the immunity under the said sub-section is available to the assessee, thus, the penalty on the additional income declared in the return of income filed cannot be levied in the facts and circumstances of the present case, more particularly in view of the judicial pronouncements set out as above wherein it has specifically been held that mere non-statement of manner of deriving undisclosed income does not make assessee liable for penal action u/s 271AAA, though in the case in hand assessee has duly stated and proved the manner of deriving such undisclosed income. Reliance is also placed on the following ITAT decisions: 155 TTJ 98 Asstt. CIT Vs. A.N. Annamalaisamy (HUF) (Chennai 'C') Penalty u/s 271AAA - Conditions precedent - Disclosure of income in revised return - Assessee having offered the whole of undisclosed in....
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....sed business of financing and brokerage. Once he has given a finding regarding the source from which the undisclosed income was derived and the fact that the substantiating evidence of deriving this income was with the Department by way of seized documents, he cannot take a contrary stand while imposing the penalty u/s 271AAA by denying the immunity under its sub sec. 2. During the course of his statement u/s 132(4) as noted above, the appellant has mentioned that cash found in the locker was related to documents which could be found at his office cum residence which were duly found and annexurized as AS-1. These documents contained specific notings regarding names or persons and amounts advanced or received. Given this evidence found during course of search and admitted to by the assessee u/s 132(4), it cannot be said that information was not available with the Department regarding specific transactions, names of persons etc. to whom the amounts related. Therefore, in absence of any specific finding or evidence with reference to the seized material or lacuna in these statements with reference to the specific information in the seized documents it cannot be said that the manner of ....