2012 (12) TMI 1096 - AT - Income Tax

Penalty u/s. 271AAA - undisclosed income during the course of search - Held that - when undisclosed income admitted by the assessee has been offered for tax in the return of income and the tax thereof duly paid penalty cannot be levied - assessee made disclosure of 95 lacs in respect of unexplained jewellery unexplained cash and on-money payment for Akola land during the course of search which has been accepted by the A.O. during the assessment proceeding - that all the tax including interest had been paid by the appellant - thus penalty cannot be levied by AO u/s 271AA - Decided in favor of assessee

Summary

Issues:
Appeal against deletion of penalty under section 271AAA of the IT Act for assessment year 2009-2010.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad involved the deletion of a penalty of Rs. 9,50,000 under section 271AAA of the IT Act for the assessment year 2009-2010. The Assessing Officer (A.O.) initiated penalty proceedings due to the assessee's disclosure of Rs. 95 lacs in unexplained jewellery, cash, and on-money payment for land. The A.O. issued show cause notices, and upon considering the appellant's reply, imposed a penalty at 10% of the undisclosed income. The A.O. contended that the conditions for non-applicability of section 271AAA were not satisfied, as the disclosure made by the Father-in-law of the assessee did not amount to admission of disclosure by the assessee. The CIT(A) deleted the penalty, stating that all conditions under section 271AAA were fulfilled by the appellant, including payment of taxes. The Revenue challenged this decision.

The Senior D.R. argued that the A.O. correctly imposed the penalty, highlighting discrepancies between the disclosure made during the search and in the return. On the other hand, the appellant's counsel argued that all conditions of section 271AAA were met, citing a similar case where the penalty was deleted. The Tribunal reviewed the orders of the authorities and a similar case, where the penalty was deleted based on voluntary disclosure, payment of taxes, and lack of specific queries regarding the undisclosed income. The Tribunal found that the appellant disclosed Rs. 95 lacs during the search, which was accepted by the A.O., and all taxes were paid without any query on the manner of income derived. Therefore, the Tribunal dismissed the Revenue's appeal and allowed the assessee's Cross-Objection.

In conclusion, the Appellate Tribunal upheld the decision of the CIT(A) to delete the penalty under section 271AAA, as the appellant had fulfilled all conditions, including voluntary disclosure and payment of taxes, leading to the dismissal of the Revenue's appeal and allowance of the assessee's Cross-Objection.