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2015 (5) TMI 992 - AT - Income TaxPenalty u/s. 271AAA - CIT(A) deleted the penalty - Held that - In view of the conditions laid down for claiming immunity from levy of penalty under section 271AAA of the Act as prescribed in sub-section (2) to the said section, having been fulfilled, we find no merit in the grounds of appeal raised by the Revenue in this regard. We uphold the order of the CIT(A) in deleting the penalty levied under section 271AAA of the Act in respect of income offered to tax to the extent of ₹ 97,02,632/- and cancelling the penalty to the extent of ₹ 9,70,263/-. - Decided in favour of assessee
Issues Involved:
1. Whether the assessee fulfilled all conditions for immunity from penalty under section 271AAA of the Income Tax Act, 1961. 2. Whether the assessee substantiated the manner in which the undisclosed income was derived. 3. Whether the interest receivable from M/s Nikki Agro was covered by the statement under section 132(4) of the Act. 4. Whether the taxes and interest on the undisclosed income were paid in accordance with the conditions set under section 271AAA. Detailed Analysis: 1. Fulfillment of Conditions for Immunity from Penalty under Section 271AAA: The core issue in this appeal is the deletion of the penalty levied under section 271AAA. The assessee was subjected to a search and seizure operation, during which undisclosed income was declared. The CIT(A) deleted the penalty on the grounds that the assessee had offered the additional income in the return filed and had paid the taxes due. The Revenue contended that the assessee did not substantiate the manner in which the income was derived, a condition necessary for immunity under section 271AAA. However, the Tribunal noted that the assessee had declared the additional income during the search and had specified that it was derived from speculation activities, thus fulfilling the first condition for immunity. 2. Substantiation of the Manner of Deriving Undisclosed Income: The Revenue argued that the assessee failed to substantiate the manner in which the undisclosed income was derived. The CIT(A) noted that the assessee had explained during the search that the additional income was from speculation activities. The Tribunal observed that the Assessing Officer did not question the manner of earning such income during the search. The Tribunal referenced several cases, including ACIT vs. Munish Kumar Goyal and Sudha Gupta vs. DCIT, where it was held that if the assessee admits the undisclosed income and specifies the manner of earning it during the search, the conditions for immunity are considered fulfilled. 3. Interest Receivable from M/s Nikki Agro: The Revenue contended that the interest receivable from M/s Nikki Agro was not offered for taxation. The CIT(A) held that this amount was covered by the statement under section 132(4) and was included in the additional income declared. The Tribunal upheld this view, noting that the CIT(A) had correctly identified that the interest receivable was part of the disclosed income during the search. 4. Payment of Taxes and Interest on Undisclosed Income: The third condition for immunity under section 271AAA is the payment of taxes and interest on the undisclosed income. The Tribunal noted that the assessee had requested the adjustment of seized cash against the tax liability, which was eventually done. The Tribunal referenced the case of DCIT vs. Shri Ravindra Champalal Khinvasara, where it was held that there is no time limit prescribed for the payment of taxes on undisclosed income. Thus, the Tribunal found that the assessee had fulfilled this condition as well. Conclusion: The Tribunal concluded that the assessee had fulfilled all three conditions for immunity from penalty under section 271AAA. The declaration of the additional income during the search, the substantiation of the manner in which it was derived, and the payment of taxes and interest were all adequately addressed. Therefore, the Tribunal upheld the CIT(A)'s order deleting the penalty levied under section 271AAA and dismissed the appeal of the Revenue. Order: The appeal of the Revenue is dismissed. The order was pronounced on the 11th day of May, 2015.
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