TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1195
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.... 3. The facts in brief are that the assessee is a key personal of REI Group of companies. A search and seizure operation u/s 132 of the Act was conducted on 15.06.2011 and subsequent dates on concerns of REI group at various premises in Kolkata and New Delhi. A survey u/s 133A of the Income-tax Act, 1961 (the Act) was also carried out at various places. The assessee being a key person of the group also covered under the said search. During the course of search several books of accounts and other documents were found and impounded. During the course of search, the assessee voluntarily disclosed in the statement recorded u/s 132(4) of the Act an amount of Rs.14,14,51,253/- as his net undisclosed income. The assessee submitted that the undisclosed income was derived from the commodity profit in shares. Pertinent to note that the assessee filed the return of income on 31.07.2012, showing total income of Rs.16,79,80,980/-, which was inclusive of undisclosed amount of Rs.14,40,51,253/-. The assessment was completed u/s 143(3) of the Act vide order dated 27.03.2014, after examining the seized documents and accordingly, the AO accepted the disclosure made by the assessee during the sear....
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....(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." 5.2. A perusal of the above shows that no penalty u/s 271AAA of the Act was imposable where the above three conditions are satisfied. In the present case the assessee during the course of search admitted to undisclosed income and specified manner in which the income was derived and the assessee proved the manner in which the undisclosed income was derived and paid the taxes there on together with interest while filing the return of income, then no penalty is imposable u/s 271AAA of the Act. We have perused the documents furnished by the assessee in the paper book and find that the assessee has stated the manner of earning such income and the source from which the said income was earned and duly paid taxes thereon, which has been acknowledged by the ld. AO in the assessment order as well as by the ld. CIT (A) in the appellate order. Therefore, all the three criteria as envisaged u/s 271AAA(2) of the Act are satisfied and therefore, no penalty is imposable u/s 271AAA of the Act. The case of the assessee i....
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....the nature of the transactions, the parties to the transaction, the period of transaction etc. Nothing can be gathered from the said document. Thus no addition can be made on the said document. He explained the aforesaid seized document that it is apparent that cash expenses of Rs. 13.50 lakh was incurred and paid to Liberty Marine. The same was added by the AO to the income of the assessee disregarding the fact that said sum was already considered in its disclosure petition, wherein Miscellaneous cash expense of Rs. 25,41,155/- was disclosed to have been paid to Liberty Marine. But the assessee accepted the addition just to avoid lingering litigation but this is not subject-matter of penalty u/s 271AAA of the Act 8. Similarly, w.r.t the addition of Rs. 44,17,936/- being cash expenses as per the aforesaid seized document, Ld. counsel for the assessee explained that the said amount was considered in the disclosure petition of the assessee, wherein miscellaneous expenditure of Rs. 101,36,805/- in connection with miscellaneous receipts of Rs. 61 lakh was disclosed by the assessee. He argued that, if for the sake of argument, it is assumed that the aforesaid expenses of Rs. 57....
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....n the course of search and seizure and survey operations do not serve any useful purpose. It is therefore advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before income tax department. Similarly while recording statements during curse of search and seizures and survey operations, no attempt should be made to obtain confession as to undisclosed income. Any action on the contrary will be viewed adversely." In view of the above, Ld. counsel for the assessee argued that the Board recognizes that forced statements are taken by the Authorities from assessee during search admitting or confessing to undisclosed income but according to him, such confession by an oral statements would not suffice unless there is enough evidence to corroborate such confession. In view of these, he argued that no document supporting cash receipt of Rs. 15 lakh was found during the course of search and the entire statement of Shri Bipin Vohra. Accordingly, the penalty levied by the AO cannot be sustained. 10. In respect to addition of Rs. 26.75 lakh, Ld. counsel fo....
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....ssee. Thus no penalty u/s 271AAA can be imposed on the said amount 11. From the above explanation of the assessee in regard to the addition of Rs. 1,13,65,623/-, the same are more or less included in the disclosure petition of Rs. 6.84 crores as against availability of cash. The items outside the disclosure of Rs. 6.84 crores is only the expenses paid to Sampoorna Logistics and allegedly to received back in cash on account of discounts offered by Transport and added on the basis of the statement of Shri Bipin Vohra has never been confronted to the assessee and the statement is without any corroborative evidences. Moreover, the assessee has furnished explanation of the above entries added by the AO during the course of scrutiny proceedings and even in penalty proceedings. This was also explained before CIT(A) during the appellate proceedings qua the levy of penalty. In view of the above, now we have to discuss the case law of coordinate of ITAT Jabalpur Bench in the case of ACIT v. Satyapal Wassan 295 ITR (AT) 352 held that:- "A charge can be levied on the basis of document only when the document is a speaking one. The document should speak either out of itself or ....
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....e authorised officer would arise only when he found such person to be in possession of any undisclosed money or books of accounts. But, in this case, it was admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion or any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were not found to be in possession of any incriminating material, the question of examining them by the authorised officer during the course of each and recording any statement from them by invoking the powers under section 132(4) did not arise. The Explanation to section 132(4) permitting such examination came into effect only from April 1, 1980. Even if it were held that he statement of the managing director fell under the Explanation to section 132(4), the Tribunal had recorded a finding of fact to the effect that the statement of the managing director or that of the other partners had no evidentiary value as th....
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....ad proceed entirely on the basis of the disclosure made by the assessee. The Tribunal had found as a fact that the disclosure had no evidentiary value and was nothing but a scrap of paper and the finding had not been challenged by the revenue as perverse or based on irrelevant evidence or no evidence at all. Therefore, the finding of the Tribunal that the provisions of s. 271(1) were not attracted was not erroneous." Similarly, the Hon'ble Madras High Court in case of CIT vs. M. Pachamuthu 295 ITR 502 (Mad) held:- "Mere addition agreed to by the assessee during the course of survey would not empower the Assessing Officer to levy the penalty under section 271(1)(c) of the Income-tax Act, 1961 ... The fact that the assessee had agreed to additions to income was not proof of concealment." Even Hon'ble Kerala High Court in the case of CIT vs. M. George & Brothers 59 CTR 298 (Kel) held that:- "where the assessee for one reason or the other agrees or surrenders certain amounts for assessment, the imposition of penalty solely on the basis of the assessee's surrender will not be well-founded. Depending upon the facts and circumstances of each cas....