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2015 (4) TMI 749 - AT - Income TaxDeletion of penalty levied u/s 271AAA - post search assessment - undisclosed income - disclosure made by the assessee for undisclosed income - Conditions for waiver of penalty fulfilled - AO accepted the disclosed income & Assessee paid the tax with interest - Held that - We find that CIT(A) while deleting the penalty has noted that the conditions provided u/s. 271AAA(2) are required to be fulfilled so as to grant immunity to the asssessee from penalty. He has further noted that all the three conditions have been fulfilled by the assessee and further relying on the decision of Hon ble Gujarat High Court in the case of Mahendra C Shah 2008 (2) TMI 32 - GUJARAT HIGH COURT and Radha Krishna Goel 2005 (4) TMI 47 - ALLAHABAD High Court had held that assessee had made disclosure of unaccounted income while recording statements u/s. 132(4) of the Act and had also paid the tax with interest. He has further given a finding that the AO in the assessment order passed u/s. 143(3) of the Act had accepted the disclosed income declared by the assessee and no addition on account of undisclosed income has been made by the AO. He has further given a finding that AO was satisfied about the disclosed income offered in the return of income and the manner in which the income was derived. We thus find that Ld. CIT(A) by a detailed and reasoned order deleted the penalty, Revenue has not brought any material on record to controvert the findings of the CIT(A) or how the ratio of decisions relied by ld. CIT(A) not applicable to the present facts. In view of the aforesaid facts, we find no reason to interfere with the order of Ld. CIT(A). - Decided against the revenue.
Issues Involved:
1. Legality of the penalty levied under Section 271AAA of the Income Tax Act. 2. Compliance with the conditions prescribed under Section 271AAA(2) for immunity from penalty. Issue-wise Detailed Analysis: 1. Legality of the penalty levied under Section 271AAA of the Income Tax Act: The assessee, a company engaged in dyeing and printing of cloth, was subject to a search under Section 132 of the Income Tax Act. During the search, the assessee disclosed Rs. 2 crores as unaccounted income for the financial year 2007-08. This amount was included in the total income of Rs. 2,25,57,824/- in the return filed on 26-09-2008. The assessment was framed under Section 143(3) and the income returned was accepted without any addition. However, a penalty of Rs. 20,00,000/- was levied under Section 271AAA by the AO. The CIT(A) deleted the penalty, leading to the Revenue's appeal. 2. Compliance with the conditions prescribed under Section 271AAA(2) for immunity from penalty: The CIT(A) noted that for immunity from penalty under Section 271AAA, three conditions must be fulfilled: - Admission of undisclosed income in a statement under Section 132(4) and specification of the manner in which such income was derived. - Substantiation of the manner in which the undisclosed income was derived. - Payment of tax together with interest on the undisclosed income. The CIT(A) found that the key person of the group, Shri Jaiprakash K. Aswani, admitted the undisclosed income in his statement under Section 132(4) and specified that it was from the textile business. This was further substantiated by another director, Shri Ashok K. Aswani, who confirmed the disclosure. The CIT(A) also noted that the tax and interest on the undisclosed income were paid. The CIT(A) relied on the principles laid down by the Hon'ble High Courts in the cases of CIT v. Mahendra C. Shah and CIT v. Radha Krishna Goel, which emphasized that substantial compliance with the requirements of Section 132(4) and payment of tax and interest suffices for immunity from penalty. The CIT(A) concluded that the AO did not record any dissatisfaction with the manner in which the income was derived or any additional undisclosed income, thereby justifying the deletion of the penalty. Conclusion: The Tribunal upheld the CIT(A)'s decision, noting that the Revenue did not provide any material to counter the CIT(A)'s findings or demonstrate the inapplicability of the cited High Court decisions. Consequently, the appeal of the Revenue was dismissed, affirming the deletion of the penalty levied under Section 271AAA. Order: The appeal of the Revenue is dismissed. The order was pronounced in open court.
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