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2016 (12) TMI 752 - AT - Income TaxLevy of penalty under section 271AAA - taxes due on the surrendered/undisclosed income had not been paid before the date of filing of the return of income - Held that - For the purpose of claiming immunity from penalty there is no requirement of paying taxes on the undisclosed income before the due date of return of income under section 139(1) of the Act. Further it is not disputed that the assessee had paid taxes on the undisclosed income surrendered in the statement made under section 132(4) of the Act. The manner of earning the income and its substantiation thereof has also been accepted by the Ld. CIT(A) and is not the matter of dispute. The assessee therefore has fulfilled all the conditions required for claiming immunity from the levy of penalty under the provisions of section 271 AAA of the Act. Moreover we find that in the case of other assessees belonging to the same group, the Ld. CIT(A) accepted the contentions of the assessee, wherein besides other pleadings made, the assessee relied upon the aforestated apex court decision in the case of Gebilal Kanhaiyalal (2012 (9) TMI 297 - SUPREME COURT) on the impugned issue, and deleted the penalty levied. Further, admittedly, no appeal has been filed by the Revenue against the said orders of the CIT(A). - Decided in favour of assessee.
Issues Involved:
1. Levy of penalty under section 271AAA of the Income Tax Act, 1961. Issue-Wise Detailed Analysis: Levy of Penalty under Section 271AAA: The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-3, Gurgaon, confirming the levy of penalty under section 271AAA of the Income Tax Act, 1961. Background and Facts: A search and seizure operation was conducted at the premises of the Manohar Singh group on 8.9.2011. During the operation, various documents and discrepancies were found, leading to a voluntary disclosure of ?13 crores by Shri Taraninder Singh, Director of the group. The assessee, M/s. Manohar Infrastructure and Construction Pvt. Ltd., was one of the entities involved, with ?6.5 crores surrendered in its name. The assessee disclosed ?2,40,51,920/- for assessment year 2011-12 and ?4,09,48,080/- for assessment year 2012-13, with total taxes due amounting to ?1.31 crores. The Assessing Officer (AO) initiated penalty proceedings under section 271AAA, stating that the manner of earning the income was not specified, and full taxes were not paid at the time of filing the return. Penalty Proceedings: During the penalty proceedings, the assessee argued that all conditions under section 271AA for immunity from penalty were met, including the disclosure of income and payment of taxes. However, the AO rejected this, stating the basis of earning the income was not substantiated and full taxes were not paid at the time of filing the return, leading to a penalty of ?24,05,192/-. Appeal to CIT (Appeals): The assessee reiterated its compliance with the conditions for immunity, but the CIT (Appeals) upheld the penalty, citing non-payment of taxes before the due date of filing the return. The CIT (Appeals) referenced the Punjab and Haryana High Court's decision in Ashok Kumar Gupta vs. CIT, which required immediate payment of tax on surrendered income for immunity. Appeal to ITAT: The assessee contended that the Supreme Court in ACIT, Udaipur vs. M/s. Gebilal Kanhaiyalal HUF had ruled no specific time limit for tax payment on disclosed income for penalty immunity. The ITAT acknowledged that the only reason for upholding the penalty was the delayed tax payment. However, it noted that all taxes were paid before the assessment and initiation of penalty proceedings. The Supreme Court's ruling in Gebilal Kanhaiyalal HUF confirmed no prescribed time limit for tax payment under section 132(4) for penalty immunity. ITAT Decision: The ITAT concluded that the assessee met all conditions for immunity from penalty under section 271AAA, including tax payment. It referenced a similar case, Shri Satish Goyal vs. DCIT, where penalty was deleted under identical circumstances. The ITAT set aside the CIT (Appeals)' order and deleted the penalty of ?24,05,192/-, allowing the assessee's appeal. Conclusion: The appeal of the assessee was allowed, and the penalty levied under section 271AAA amounting to ?24,05,192/- was deleted.
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