2016 (1) TMI 665 - AT - Income Tax

Penalty under section 271AAA - CIT(A) deleted the penalty holding that the cash seized from the assessee is deemed to be adjusted against the tax due from the assessee - Held that - The basis for penalty levied by AO was that the assessee has not paid full tax alongwith interest on the undisclosed income which is required under section 271AAA(2)(iii) of the Act whereas in the present case the entire amount has already been deposited. Therefore it was rightly held by the CIT(A) that it is not a fit case for penalty under section 271AAA for the reasons that the request for adjustment of seized cash has been made and it is evident from the computation of income filed alongwith the return of income and more particularly when AO has finally made adjustment. Therefore the conditions as stipulated in sub-section (iii) to section 271AAA(2) is also deemed to have been satisfied. Therefore we are of the considered view that the order of the CIT(A) need no interference from our part. - Decided in favour of assessee.

Summary

Issues:
1. Penalty under section 271AAA not leviable despite filing return with due tax.
2. Adjustment of cash seized against tax due from assessee.

Analysis:
1. The appeal was against the CIT(A)'s order concerning penalty under section 271AAA for the assessment year 2009-10. The assessee, a Developer and Builder firm, disclosed income during a search operation and filed a return offering the disclosed income after adjusting cash expenses. The AO initiated penalty proceedings under section 271AAA as conditions were not satisfied. The CIT(A) allowed the appeal and deleted the penalty. The Revenue appealed, arguing that the conditions for penalty under section 271AAA were not met as the tax on the undisclosed income was not paid. The assessee contended that the disclosed income included seized cash, which was adjusted against the tax due. The CIT(A) held that the seized cash was adjusted as tax payment, satisfying the conditions of section 271AAA, and deleted the penalty.

2. The CIT(A) noted that the seized cash was treated as regular tax payment, deposited through a challan. The assessee had requested the seized cash to be adjusted against the tax due on the disclosed income. The AO initially levied the penalty for non-payment of tax on the undisclosed income. However, the CIT(A) found that the conditions of section 271AAA were fulfilled as the seized cash was adjusted against the tax demanded. The Tribunal upheld the CIT(A)'s decision, stating that the adjustment of seized cash against the tax due satisfied the requirements of section 271AAA. The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order.

In conclusion, the Tribunal upheld the CIT(A)'s decision, emphasizing that the adjustment of seized cash against the tax due fulfilled the conditions for penalty under section 271AAA, leading to the dismissal of the Revenue's appeal.