2018 (11) TMI 1636 - AT - Income Tax

Levy of penalty u/s.271AAB - Admission of undisclosed income in search operation carried out u/s 132 - HELD THAT - It is not in dispute that the assessee admitted additional income of ₹ 4,30,435/- suotomo to buy peace of mind. Further, neither the Investigation Wing in the post search nor during the course of assessment proceedings, the Assessing Officer found any incriminating evidence of undisclosed income otherwise the submission of the assessee for making the addition of ₹ 4,30,435/- . Therefore, the decision in the case of Sri Kanwar Sain Gupta 2018 (6) TMI 1559 - ITAT KOLKATA squarely applies to the facts of the present case. Hence, we delete the penalty and allow ground of appeal of the assessee.

Summary

Issues:
Levy of penalty u/s.271AAB of the Act of ?86,000/-

Analysis:
The appeal was filed against the order of the CIT(A)-3, Patna, for the assessment year 2013-14, concerning the levy of penalty u/s.271AAB of the Act amounting to ?86,000. The Assessing Officer observed that during a search operation at the premises of Mica Mod Group, the assessee admitted undisclosed income of ?5,00,000, and in the relevant year, declared income of ?5,56,360, which was accepted. Consequently, the Assessing Officer imposed a penalty of ?1,29,130, being 30% of the undisclosed income of ?4,30,435. On appeal, the CIT(A) reduced the penalty to 20% of the undisclosed income.

The assessee contended that a similar penalty was deleted in a case before the Kolkata Bench of the Tribunal, citing identical facts. The Departmental Representative failed to counter this submission. The Tribunal in the Kolkata case held that the penalty cannot be solely based on the statement of the assessee without corroborating evidence, especially when it is unclear which undisclosed income pertains to which specified previous year. As no incriminating evidence was found during the search or assessment proceedings, the penalty was unjustified.

In the present case, the assessee admitted additional income suo moto to buy peace of mind, but no incriminating evidence was found by the Investigation Wing or the Assessing Officer. Following the precedent set in the Kolkata case, the penalty of ?86,000 was deleted, and the appeal of the assessee was allowed.

Therefore, the Tribunal, following the principles established in the Kolkata case, deleted the penalty imposed under section 271AAB of the Act, as there was no concrete evidence of undisclosed income found during the search or assessment proceedings. The decision was made based on the lack of incriminating evidence and the strict interpretation of the penalty provision in the tax statute.