2018 (10) TMI 1698 - AT - Income Tax

Penalty imposed u/s 271AAA - as alleged assessee has not satisfied the conditions laid down in section 271AAA(2)(ii) and 271AAA(2)(iii) - unaccounted income received by the assessee undisclosed - onus on the assessee to admit specify and substantiate the undisclosed income and pay tax and interest thereon - CIT-A deleted the addition - HELD THAT - Admittedly the appellant has offered the total of unaccounted income for AY 2011- 12 in the statement recorded during the search and seizure operation u/s. 132(4) - This declaration/surrender was based on the notes in the diary/note book market as Annexure-BS-2 which clearly mentions the date-wise receipts of on money or unaccounted receipts in the name of the appellant company as well as in the name of the other concerns of the appellant group. From the notings on the pages of said diary/note book Annexure-BS-2 there was clear mentioning of the date/months and unaccounted income received by the assessee during the said period which was offered to tax during statement u/s. 132 of the Act. From the copy of the statement of Shri Karshanbhai M. Prjapati recorded u/s. 132(4) we observe that replying to Q. Nos.5 6 7 the assessee clearly stated the manner of earning such undisclosed income of Rs. 9.29 crores as derived from construction business of the appellant company in the projects namely Swastik Universal which was a residential complex. Then the condition provided in sub s. (i) of s. 271AAA(2) of the Act is satisfied as the manner of earning of undisclosed income has been clearly stated by the assessee in the statement of director of assessee company recorded u/s. 132(4) of the Act. It is also not in dispute that the assessee has shown surrendered income in the return filed in response to notice u/s. 153A of the Act and has paid all due taxes etc. thereon and thus another required condition has also been fulfilled by the assessee. See M /S GEETA PRINTS PVT. LTD. 2015 (10) TMI 2310 - GUJARAT HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271AAA of the Income Tax Act, 1961 for Assessment Year 2011-12.

Analysis:
1. The Revenue contended that the Commissioner of Income Tax (Appeals) erred in law by deleting the penalty of Rs. 92,90,000 imposed under section 271AAA, as the assessee did not satisfy the conditions laid down in the Act. The Revenue argued that the onus was on the assessee to admit, specify, and substantiate the undisclosed income, and pay tax and interest, not on the Assessing officer to establish the source of unaccounted income.

2. The Assessee, on the other hand, supported the first appellate order, stating that the CIT(A) rightly granted relief after considering all facts and circumstances, citing relevant legal precedents. The Assessee argued that the conditions of section 271AAA were fulfilled, and hence, the penalty should be deleted.

3. The CIT(A) granted relief to the assessee based on findings that the undisclosed income was derived from the construction business of the appellant company, as stated during the search operation. The CIT(A) concluded that the conditions of section 271AAA were satisfied, and hence, the penalty was not justified.

4. The Tribunal observed that the appellant had offered the total unaccounted income for the relevant assessment year, based on clear evidence and statements. The Tribunal further noted that the manner of earning undisclosed income was explained by the assessee during the search operation, fulfilling the conditions of the Act.

5. The Tribunal upheld the CIT(A)'s decision to cancel the penalty, citing legal precedents and the requirement for the Assessing officer to specifically ask the assessee to explain the undisclosed income's derivation. Since the AO did not follow this procedure, the penalty under section 271AAA was deemed unjustified.

6. The Tribunal dismissed the Revenue's appeal and the Assessee's Cross Objection, upholding the CIT(A)'s decision to cancel the penalty under section 271AAA. The order was pronounced on October 29, 2018.