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2014 (5) TMI 1179 - AT - Income TaxPenalty levied u/s 271AAA - conditions laid down in sub-section(2) of section 271AAA not been fulfilled by the assessee - surrender of income consequent to search - assessee could not explain the manner in which the undisclosed income had been derived by him - Held that - The transactions which could not be verified from the regular books of account of assessee s business were surrendered by him. It is a fact that the A.O. has admitted this surrender on the basis of assessee s business activity being carried on by him. There is no specific finding or evidence with reference to the seized material or in the statement from which contrary view can be taken. On similar facts the Cuttack Bench of the ITAT while deciding the case of Pramod Kumar Jain reported in 2012 (12) TMI 629 - ITAT CUTTACK as relied upon by the ld. CIT(A) has taken a view that there is no prescribed method to indicate the manner in which income was generated when the definition of undisclosed income has been defined in the Act itself when no income of the specified previous year represented either wholly or partly which onus lay upon the assessee stood discharged. Therefore levy of penalty u/s 271AAA of the Act has been correctly deleted by the ld. CIT(A). - decided in favour of assessee.
Issues Involved:
Deletion of penalty under section 271AAA of the Income-tax Act, 1961 for Assessment Year 2009-2010. Analysis: Issue 1: Deletion of Penalty The appeal was filed by the revenue against the deletion of a penalty of Rs. 46,00,000 under section 271AAA of the Income-tax Act, 1961. The penalty was imposed by the Assessing Officer (A.O) as the conditions laid down in sub-section(2) of section 271AAA were not fulfilled by the assessee. The search and seizure operation conducted at the business and residential premises of the assessee led to the gathering of incriminating evidence. The assessee filed a return declaring total income, and subsequently, the penalty was initiated and imposed. The CIT(A) deleted the penalty, leading to the revenue's appeal before the Appellate Tribunal. Issue 2: Applicability of Penalty Provision The Tribunal noted that during the search, the assessee made statements under relevant sections of the Act and surrendered undisclosed income, which was accepted by the department. However, the penalty was imposed as the assessee could not explain the manner in which the undisclosed income was derived. The Tribunal observed that the A.O admitted the surrender based on the assessee's business activity. The Tribunal referred to a decision by the Cuttack Bench of the ITAT, which stated that there is no prescribed method to indicate the manner in which income was generated when the definition of 'undisclosed income' is defined in the Act. The Tribunal held that the levy of penalty under section 271AAA was correctly deleted by the CIT(A). Issue 3: Precedent and Case Law The Tribunal further referenced a case decided by the ITAT Jodhpur Bench, where it was held that the assessee disclosed the entire undisclosed income and explained the modus of earning the income, which led to the conclusion that the penalty under section 271AAA could not be imposed. The Tribunal highlighted that the Act does not provide a specific manner of disclosing undisclosed income. The Tribunal also noted that the authorized officer did not specifically inquire about the manner in which the undisclosed income was earned during the proceedings. The Tribunal dismissed the revenue's appeal by following the precedent and confirmed the findings of the CIT(A). In conclusion, the Tribunal dismissed the revenue's appeal, upholding the deletion of the penalty under section 271AAA of the Income-tax Act, 1961 for the Assessment Year 2009-2010.
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