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2017 (10) TMI 1415 - AT - Income TaxPenalty u/s 271AAA - income surrendered consequent to the search and seizure operation - Held that - The search took place on 31.07.2008 and the assessee submitted letters dated 14.12.2010 offering 15, 00, 000/- to tax. Records does not speak that the authorities ever questioned the assessee as to how the surrendered income was derived by the respective assessee. The surrender through letter dated 14.12.2010 was accepted by the AO as it is. Where the assessee having surrender certain income in the course of search filed return wherein the said amount was duly disclosed and the taxes were paid accordingly. Facts of the cases on hand being similar the principle laid down in the decisions relied is applicable and while respectfully following the same we hold the penalty in this matter u/s 271AAA of the Act cannot be sustained. We therefore direct the AO to delete the penalty. See COMMISSIONER OF INCOME TAX VERSUS SUDHIR JAIN 2013 (12) TMI 484 - DELHI HIGH COURT NEERAJ SINGAL VERSUS ACIT CENTRAL CIRCLE-13 NEW DELHI 2015 (3) TMI 680 - ITAT DELHI SRI PRAMOD KUMAR JAIN & OTHERS VERSUS DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 2(1) SAMBALPUR. 2012 (12) TMI 629 - ITAT CUTTACK - Decided in favour of assessee.
Issues:
Challenging penalty under section 271AAA of the Income Tax Act, 1961 for surrendering income during search operations. Analysis: The three appeals before the Appellate Tribunal ITAT Delhi challenged the penalty imposed under section 271AAA of the Income Tax Act, 1961 for surrendering income during search operations in AY 2009-10. The assessees had surrendered a sum of ?15 lacs each following a search and seizure operation in the Rajdarbar Group of cases. The assessees argued that they surrendered the income to buy peace of mind, as no incriminatory material was found during the search. They contended that the surrendered amount was disclosed to avoid procedural battles and gain mental peace, and they had paid taxes on the surrendered amount. The authorities did not question the manner in which the surrendered income was earned. The Revenue argued that the assessees cannot change their stand after including the surrendered amount in their income tax returns. The Tribunal noted that the surrender was accepted by the Assessing Officer without further inquiry into the source of the income. The Tribunal relied on the decision in Devi Dass Garg vs DCIT, where the penalty under section 271AAA was deleted as the assessee had filed a return of income based on the surrendered amount accepted by the AO without raising any queries. Additionally, the Tribunal cited various cases to support the principle that when an assessee surrenders income during a search operation, files a return disclosing the amount, and pays taxes accordingly, the penalty under section 271AAA is not justified. The Tribunal found the facts of the present cases similar to the precedents cited and directed the AO to delete the penalty under section 271AAA. In conclusion, the Appellate Tribunal ITAT Delhi allowed the appeals filed by the assessees, holding that the penalty under section 271AAA of the Income Tax Act, 1961 cannot be sustained in the absence of further inquiry into the source of the surrendered income. The Tribunal's decision was based on the principle that when an assessee discloses surrendered income in the return and pays taxes accordingly, the penalty under section 271AAA is not warranted.
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