2019 (2) TMI 1673 - AT - Income Tax

Penalty u/s 271AAA - assessee had surrendered additional income - diversified views - HELD THAT - When two views are possible on an issue the view which is favourable to the assessee has to be accepted in view of the decision of the Hon ble Apex Court in the case of vegetable products Ltd 1973 (1) TMI 1 - SUPREME COURT . The Tribunal further noted that since the assessee had surrendered additional income by paying the taxes due thereon and no specific query was raised by the search party at the time of search following the decision of the Hon ble Gujarat High Court and various other decisions relied upon by the Ld. CIT(A) the penalty cannot be sustained. - Decided against revenue.

Summary

Issues:
Challenging deletion of penalty under section 271 AAA of the Act by Ld. CIT(A) for assessment years 2011-12.

Analysis:
1. The appeal was filed by the Revenue against the order of the Ld. CIT(A) deleting the penalty levied by the assessing officer under section 271 AAA of the Act for the assessment years 2011-12.

2. The case involved the assessee deriving income from business, subjected to search and seizure operations under section 132(1) of the Act. The assessee filed a return of income declaring an income of &8377; 23,22,78,376/- after surrendering an amount of &8377; 23 crores. The assessing officer initiated penalty proceedings under section 271 AAA and levied a penalty of &8377; 2.30 crores.

3. The assessee appealed against the penalty order, and the Ld. CIT(A) accepted the contentions, directing the deletion of the penalty. The Revenue contended that the basic requirements of section 271 AAA were not fulfilled by the assessee, and thus, the penalty should not have been deleted.

4. The Ld. AR argued that the facts of the case were similar to another case involving the brother of the assessee, where the penalty was deleted by the Ld. CIT(A) and upheld by a coordinate Bench of the Tribunal. The AR relied on the reasoning and conclusions of the previous case to support the deletion of penalty in the current case as well.

5. The Ld. DR, on the other hand, relied on the assessing officer's orders and cited a decision of the Delhi High Court to support the contention that the penalty should not have been deleted as the assessee did not specify how the undisclosed income was derived during the search proceedings.

6. The Ld. CIT(A) considered the facts of the case and relied on various decisions of the Tribunal to direct the deletion of the penalty, noting that the surrendered amount was admitted under section 132(4) of the Act, and the assessee fulfilled the conditions under section 271 AAA.

7. The Tribunal reviewed the facts and previous decisions, concluding that since the assessee had surrendered additional income, paid due taxes, and no specific queries were raised during the search, the penalty could not be sustained. The Tribunal followed the decision of a coordinate Bench in a similar case involving the brother of the assessee.

8. Given the identical facts to a previous case involving the brother of the assessee, the Tribunal held that the penalty could not be sustained. The Tribunal found no merit in the Revenue's appeal and dismissed it accordingly.

9. The Tribunal based its decision on the principle that when two views are possible on an issue, the view favorable to the assessee should be accepted. Following this principle and previous decisions, the Tribunal upheld the deletion of the penalty by the Ld. CIT(A).

10. Ultimately, the Tribunal dismissed the Revenue's appeal, affirming the deletion of the penalty by the Ld. CIT(A) for the assessment years 2011-12.