2014 (3) TMI 1026 - AT - Income Tax

Penalty u/S 271AAA - Held that - Revenue has not asked the assessee to disclose the manner in which such income was earned. In any case once the income is surrendered during the course of search u/s 132(4) it can be safely assumed that during discussion the assessee must have disclosed the manner. In any case we find force in the submissions of the Ld. Counsel for the assessee that if the explanation of the assessee has been accepted for some part then same manner should have been accepted for the whole of the amount. In any case the Ld. CIT(A) has considered all these issues in detail and the D.R. for the Revenue has not referred to any material or decision which can controvert the findings of the CIT(A). In the following cases which have been relied on by the Ld. Counsel for the assessee which was clearly held that penalty is not leviable. - Decided in favour of assessee

Summary

Issues:
Penalty deletion under Sec 271AAA - undisclosed income substantiation.

Analysis:
The appeals challenged the CIT(A)'s order deleting penalties totaling significant amounts without considering the undisclosed income substantiation under Sec 271AAA. Both parties agreed that issues mirrored those in other cases. The Tribunal referred to a previous case where it analyzed the penalty imposition. The CIT(A) emphasized that undisclosed income must be associated with assets or documents found during a search to qualify for penalty under Sec 271AAA. The AO's acceptance that disclosed income was not linked to search findings led to the conclusion that penalty under Sec 271AAA was not applicable. The Tribunal highlighted that the law required disclosing the manner of earning undisclosed income and substantiating it, not necessarily quantifying it. The Tribunal quoted Sec 271AAA, emphasizing the conditions for penalty imposition and the immunity if undisclosed income is admitted during search and taxes are paid. In this case, the assessee declared surrendered income and paid taxes, meeting the immunity criteria. The Revenue disputed whether the manner of earning income was disclosed, but the Tribunal found that the explanation for part of the surrendered income was accepted, indicating disclosure. The Tribunal upheld the CIT(A)'s decision, noting the absence of contrary evidence from the Revenue. The Tribunal cited precedents where penalties were not levied, supporting the decision to dismiss the Revenue's appeals. Consequently, the Tribunal confirmed the CIT(A)'s order, dismissing all Revenue appeals.