2015 (11) TMI 1618 - AT - Income Tax

Levy of penalty under section 271AAA - surrender of income during the course of search and seizure operation - Held that - As held in the case of Pramod Kumar Jain v. Dy. CIT 2012 (12) TMI 629 - ITAT CUTTACK that the disclosure of income under section 132(4) during the search having been made and the assessee having surrendered certain income for the relevant assessment years in the statements during the course of search and filed returns declaring the same pursuant to notice under section 153A and which returns have been accepted by the AO levy of penalty under section 271 AAA was not justified on the ground that the assessee has though made disclosure but failed to specify the manner in which such income had been derived. Hon ble Tribunal further held that no definition could be given to the specified manner and there is no prescribed method given in the statute to indicate the manner in which income was generated. The assessee has specified and substantiated the manner of earning the income and has not violated any of the conditions specified u/s 271AAA(2) for granting immunity from penalty. We therefore hold that no penalty u/s 271AAA could be levied in the present case. Accordingly we uphold the order of the Ld. CIT(A) deleting the penalty. - Decided in favour of assessee

Summary

Issues:
Levy of penalty under section 271AAA of the Income Tax Act, 1961.

Analysis:
The case involves multiple assesses appealing against orders of the Commissioner of Income Tax (Appeals)-3, Gurgaon regarding the levy of penalty under section 271AAA. The facts in all cases being identical, the appeals were heard together. The main issue is whether the penalty under section 271AAA was rightly deleted by the Ld. CIT(A) and if the conditions for granting immunity from penalty were fulfilled. The appellant argued that the surrendered income was not undisclosed as it was derived from speculative commodity trading, and no undisclosed income related to assets or documents was found during the search. The Ld. CIT(A) deleted the penalty based on various decisions of Hon'ble ITAT supporting the appellant's contentions.

The Revenue contended that the appellant did not fulfill the conditions for immunity under section 271AAA as the manner in which the income was derived was not specified or substantiated. The Revenue argued that details of real estate transactions were not provided, rendering the claim unsubstantiated. The appellant, on the other hand, maintained that all conditions for immunity were met as the surrendered income was admitted and disclosed, taxes were paid, and the manner of earning the income was explained. The appellant argued that since the surrendered income did not relate to any asset or document found during the search, it could not be considered undisclosed income, thus no penalty should be levied.

The Tribunal found that the appellant had specified and substantiated the manner of earning the income, meeting the conditions specified under section 271AAA(2) for immunity from penalty. Citing judicial precedents, the Tribunal concluded that the appellant did not violate any conditions for granting immunity and upheld the Ld. CIT(A)'s decision to delete the penalty. Consequently, the appeal of the Revenue was dismissed, and all appeals filed by the Revenue were also dismissed.