2018 (6) TMI 1559 - AT - Income Tax

Penalty u/s 271AAB(1)(a) - undisclosed income as per specific requirement - Held that - We first of all make it clear that section 271AAB of the Act applies in relation to the impugned penalty @10% of the undisclosed income as stood defined in Explanation (c) thereto. There is no material in the case file to indicate that the assessee s undisclosed income represents any money, bullion, jewellery or valuable article or any entry in the books or other documents therein. We are dealing with a penalty provision in tax statute which is to be strictly interpreted. CIT(A) has rightly deleted the impugned penalty as the assessee s search statement nowhere indicated the corresponding undisclosed income as per specific requirement in the Act. CIT(A) s findings under challenge deleting penalty in question are accordingly confirmed. - Revenue s appeal is dismissed.

Summary

Issues Involved:
Appeal against penalty imposed under section 271AAB of the Income Tax Act, 1961 for Assessment Year 2013-14.

Analysis:

Issue 1: Imposition of Penalty under section 271AAB
The case involved an appeal against the penalty imposed by the Assessing Officer under section 271AAB of the Income Tax Act, 1961. The penalty was imposed on the assessee for undisclosed income offered for taxation during a search and seizure operation. The CIT(A) reversed the Assessing Officer's decision to impose the penalty based on the lack of incriminating evidence found during the search. The CIT(A) highlighted that the penalty under section 271AAB requires two essential elements: undisclosed income and a specified previous year. The CIT(A) emphasized that the penalty cannot be solely based on the statement of the assessee without corroborating evidence. Relying on the Supreme Court's decision, the CIT(A) directed the Assessing Officer to delete the penalty under section 271AAB(1)(a).

Issue 2: Interpretation of Section 271AAB
The Tribunal analyzed the provisions of section 271AAB of the Income Tax Act, which allows for the imposition of a penalty at the rate of ten percent of the undisclosed income. The Tribunal emphasized the strict interpretation required for penalty provisions in tax statutes. It was noted that the undisclosed income must meet the specific requirements outlined in Explanation (c) of section 271AAB. The Tribunal found that there was no evidence to indicate that the undisclosed income of the assessee constituted money, bullion, jewellery, or any entry in the books or documents. Therefore, the Tribunal agreed with the CIT(A)'s decision to delete the penalty as the assessee's search statement did not specify the corresponding undisclosed income as required by the Act.

Conclusion:
The Tribunal dismissed the Revenue's appeal against the deletion of the penalty imposed under section 271AAB. The decision was based on the lack of incriminating evidence found during the search operation and the failure to meet the specific requirements for imposing the penalty as outlined in the Income Tax Act. The Tribunal upheld the CIT(A)'s decision and confirmed the deletion of the penalty.