2015 (10) TMI 2310 - HC - Income Tax

Penalty where search has been initiated - whether two out of three conditions prescribed in section 271AAA are not fulfilled as concluded by CIT(A) and ITAT - Held that - Commissioner (Appeals), after duly appreciating the material on record, has recorded a finding of fact to the effect that the assessee had duly satisfied the manner in which the undisclosed income had been derived and that the assessee had further substantiated the manner in which the undisclosed income was derived. Insofar as the third category, namely, payment of tax together with interest in respect of undisclosed income, there is no dispute. The learned counsel is not in a position to point out that the Tribunal has placed reliance upon any irrelevant material or that any relevant material has been ignored, nor is he in a position to dislodge the findings of fact recorded by the Tribunal. The Tribunal having based its conclusion upon the concurrent findings of fact recorded by it after appreciating the evidence on record, in the absence of any perversity in the findings recorded by it, it cannot be said that the impugned order passed by the Tribunal gives rise to any question of law, much less, a question of law, so as to warrant interference. - Decided against revenue.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal under section 260A of Income Tax Act, 1961 regarding penalty under section 271AAA for undisclosed income.

Analysis:
1. The appellant revenue challenged the Tribunal's order regarding penalty imposed under section 271AAA of the Income Tax Act, 1961. The appellant questioned whether the Tribunal was justified in dismissing the departmental appeal when two out of three conditions prescribed in section 271AAA were not fulfilled by the assessee.

2. The case involved a search under section 132 of the Act at the assessee's business premises, where unaccounted income of Rs. 2,00,00,000/- was disclosed for the financial year 2007-08. The Assessing Officer levied a penalty of Rs. 20,00,000/- under section 271AAA, which was set aside by the Commissioner (Appeals) and upheld by the Tribunal.

3. The appellant contended that the assessee did not fulfill the first two conditions of section 271AAA(2), which require admitting the undisclosed income, specifying the manner of derivation, and substantiating it. The appellant argued that the Tribunal failed to appreciate the evidence properly, as per the statements of individuals involved.

4. The High Court examined the submissions and reviewed the orders of the Tribunal and lower authorities.

5. The Commissioner (Appeals) had found that the undisclosed income disclosed by the assessee fell within the definition of undisclosed income under section 271AAA. The Commissioner also noted that the Assessing Officer had not satisfied himself before initiating the penalty. The Commissioner further detailed how the assessee met the conditions of admitting and specifying the undisclosed income.

6. The Tribunal concurred with the findings of the Commissioner (Appeals) after evaluating the evidence on record.

7. The High Court observed that the Commissioner (Appeals) had correctly appreciated the evidence, concluding that the assessee satisfied the conditions of admitting, specifying, and substantiating the undisclosed income. The Court found no perversity in the Tribunal's findings and upheld the decision, stating that no question of law arose for interference.

8. Consequently, the appeal by the appellant revenue was dismissed.