2017 (9) TMI 1827 - AT - Income Tax

Penalty u/s 271AAB(1)(c) - as alleged assessee has failed to file the return of income within the specified time as prescribed in notice u/s 153A r.w.s 271AAB - inordinate delay of more than one year which cannot be set to be reasonable and also failed to substantiate the manner of deriving the income surrendered during search.- HELD THAT - The assessee has paid the taxes by fully by 15-03-2013 before the filing of the return and also sought for time after allowing of filing of Income Tax Return beyond the date wide letter dated 20-09-2013 as his files were misplaced. Since assessee has paid taxes by 15/03/2013 no benefit is accrued by delaying the return. And hence we find no reason to interfere in the order of the CIT (A) on this issue. Addition on the account of investment made in the jewellery - levied penalty @30% on the undisclosed income - HELD THAT - As the assessee has not disclosed the amount in either during the search or in the return filed CIT (A) confirmed the addition. We have gone through the records before us. The assessee has paid taxes on the amount which includes the surrender made during the search. The total amount of jewellery valued was Rs. 1, 25, 06, 769 and the disclosure on account of search was Rs. 1, 23, 69, 171. The addition of Rs. 1, 37, 598 was made on the difference of amount derived on valuation of jewellery. The difference in the value of 1.3 laks on valuaton of 1.2 crores is not unnatural but can be said to be a case of difference of opinion. In that circumstances it cannot be held to be a case of undisclosed income imposing penalty under section 271AAB(1) of the act. Hence the order of the Assessing Officer do not satisfy the conditions laid down in the section 271AAB (1) of the Act. Hence the penalty upheld by the CIT(A) @ 30% on the amount is hereby deleted. - Decided in favour of assessee.

Summary

Issues involved:
1. Whether the penalty imposed under section 271AAB(1)(c) of the Income Tax Act, 1961 on the assessee should be upheld or deleted.
2. Whether the penalty imposed on undisclosed income related to jewellery investment should be sustained or deleted.

Analysis:

Issue 1: Penalty under section 271AAB(1)(c)
The appeal was filed by the Revenue against the order of the Ld. CIT(A)-5 regarding the deletion of a penalty of Rs. 32,48,000 out of the total penalty of Rs. 49,13,280 imposed under section 271AAB(1)(c) of the Income Tax Act, 1961. The search and seizure operation under section 132 was conducted, and the assessee failed to file the return of income within the specified time after a notice was issued. The Assessing Officer levied a penalty of 30% on the undisclosed income, which included an additional income disclosure of Rs. 1,60,00,000. The Ld. CIT(A) modified the penalty to 10% citing a reasonable cause for the delay in filing the return. The ITAT upheld the decision of the Ld. CIT(A) as the assessee had paid taxes before the specified date and had valid reasons for the delay in filing the return. Therefore, the penalty was deleted.

Issue 2: Penalty on undisclosed jewellery investment
The Assessing Officer made an addition of Rs. 1,37,598 on account of investment in jewellery and imposed a penalty of Rs. 41,280 at 30% on the undisclosed income. The Ld. CIT(A) confirmed the addition, but the ITAT found that the difference in the valuation of jewellery, resulting in the addition, was a case of difference of opinion rather than undisclosed income. As the conditions under section 271AAB(1) were not satisfied, the penalty was deleted. The appeal of the Revenue was dismissed, and the Cross Objection of the assessee was allowed.

In conclusion, the ITAT upheld the decision to delete the penalties imposed on the assessee, considering the circumstances and reasons provided for the delays and discrepancies in income disclosures and investments.