TaxTMI 
TaxTMI 
2025 (11) TMI 2054
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....ice. Accordingly, assessee filed return of income on 30.10.2015 declaring income of Rs.4,01,79,290/-. Accordingly notice under section 143(2) of the Act was issued. During the course of search under section 132(4) of the Act assessee admitted income of Rs. 3 Crores and it was noticed that Rs.3 Crores was offered as income in the return filed for Assessment Year 2015-16. During the course of search it was observed that assessee was offering income @ 5 to 6% in the previous 6 years. However, during the impugned Assessment Year assessee offered net profit of Rs.4,21,01,458/- which is 8.23% of the total turnover. In the Assessment Year 2014-15 assessee has shown profit of Rs.1,91,47,241/- which is only 6.19% of the total turnover. The AO initiated penalty proceedings under section 271AAB of the Act because of the income offered as a result of finding of during the course of search and seizure and would not have been found to be so. Had the search not been conducted, additional income of Rs.3 Crores would not have been offered to tax had the search not taken place. Accordingly, the AO observed that case of the assessee comes under section 271AAB(1) of the Act. Accordingly, penalty of Rs....
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....n the normal course relating to such previous year; or B) otherwise not been disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted. 1.3. In the instant case, the declaration was not related to any entry in books of account or document not recorded before the date of search, or any asset such as money, bullion, jewellery, etc., found and not disclosed in books. However, the appellant states that the declaration was made merely to buy peace and to avoid litigation. 1.4. Hence, there is no incriminating material, document, asset, or entry indicating any undisclosed income found or seized and the alleged income was duly recorded in the regular books of account and disclosed in the return of income. Thus, in absence of any tan....
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....the ld. AR submitted that the revenue authorities had exerted undue pressure and obtained surrender of income from the assessee. It is worthwhile to mention that CBDT Circular F.No.286/2/2003-IT(Inv.) dated 10-03-2003 indicates that practice of confession of additional income during search and seizure operation does not serve any useful purpose and there should be 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 the Income Tax Department. The Bench noted that the Board Circular dated 10-03-2003 (supra) submitted by the ld. AR assessee through its written submission has merit. We have taken into consideration the case laws cited by both the parties and also kept in mind the citations as mentioned by the ld. CIT(A) in his order, however, we find that the recent judgement of ITAT Jaipur Bench in the case of Rajendra Kumar Gupta vs DCIT in ITA No. 359/JP/2017 dated 18-01-2019 finds favour in the case of the assessee as the Bench has discussed the issue in its order very elaborately and judiciously......... Respectfully following the above decision in the case of Rajendra Kumar Gu....
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....h have to be satisfied cumulatively. The three conditions affirmed by the Supreme Court are as under. i. Search action u/ s 132 of the Income Tax Act, 1961 should be initiated u/ s 132 on or after 01.06.2012 ii. The assessee has made disclosure of undisclosed income during the course of search action, has paid the tax together with interest and has filed return of income. iii. The assessee substantiates the manner in which he has earned the undisclosed income. 1.8. It can be seen from the above third condition that the learned assessing officer or CIT(A) has not brought any material on record while substantiating the manner in which the assessee has earned the undisclosed income. In the absence of satisfaction of above conditions, the addition cannot be called as undisclosed income and penalty under Section 271A AB of the Act cannot be levied. 2. Ground No 4: That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in holding that the penalty u/s. 271AAB of the Act is automatic and such finding is perverse as the conditions for levying penalty are not satisfied in the facts of the case. 2.1. Section 271AAB....
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.... because it is lawful to do so. Even if a minimum penalty is prescribed, the authority will be justified in not imposing penalty where the breach is merely technical or is based upon the bona fide belief that a particular provision has been complied with. The Supreme Court stressed the importance of not levying penalty where the assessee acts with "honest and genuine belief". In addition to the written synopsis, learned Counsel submitted that during the course of search proceedings no incriminating documents were found and AO has also not referred to any seized material. Therefore it cannot be said that there was undisclosed income found during the course of search. The admission made by the assessee was to buy peace of mind and to avoid litigation with the department. 5. On the other hand, learned DR relied on the Order of lower authorities and submitted that the penalty imposed by the AO is on the basis of admission made during the course of search statement during the search and seizure proceedings under section 132(4) of the Act. Assessee has declared 5 to 6% income for last 6 years and in this year assessee declared 8.23% net profit only on the basis of search conducted.....
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....declared income is 8.23%. The case of the assessee comes under the definition of undisclosed income as mentioned in section 271AAB of the Act. For the sake of convenience, we are reproducing section 271AAB of the Act as under: (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 July, 2012 but before the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the President, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,- (a) a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year, if such 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 in....
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....rred to in this section. Explanation.-For the purposes of this section,- (a) "specified date" means the due date of furnishing of return of income under sub-section (1) of section-139 or the date on which the period specified in the notice issued under section-153A for furnishing of return of income expires, as the case may be; (b) "specified previous year" means the previous year- (i) which has ended before the date of search, but the date of furnishing the return of income under sub-section (1) of section-139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the date of search; or (ii) in which search was conducted; (c) "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 or other documents or transactions found in the course of a search under section-132, which has- (A) not been recorded on or before the date of search in the books of account or other docume....