2017 (4) TMI 250 - AT - Income Tax

Penalty u/s 271AAA - assessment pursuant to search - Held that - On-money received was offered for taxation in the hands of the assessee. No doubt, sub-clause (ii) of section 271AAA postulates three conditions required to be fulfilled by the assessee in order to absolve herself from the rigours of penalty. This condition has been reproduced by the ld.CIT(A) in the impugned order extracted (supra). The AO did not dispute with regard to fulfillment of conditions under clause (i) and (iii) of sub-section (2). His area of grievance is that the assessee failed to fulfill the conditions mentioned in sub-clause (ii) that is manner of earning such income and also failed to substantiate the manner. A perusal of the statement of Shri Shailesh G. Patel who has made a disclosure would indicate that not only he disclosed the income, but also substantiated the manner of earning income by pointing out that it was on-money; it was received through account payee cheque. This deposition could not be refuted by the Revenue and the assessee does not deserve to be visited with penalty. The ld.CIT(A) has rightly appreciated the facts and rightly deleted the penalty. We do not see any reason to interfere in the order of the ld.CIT(A), hence, the appeal of the Revenue is dismissed.

Summary

Issues:
Appeal against deletion of penalty under section 271AAA of the Income Tax Act, 1961.

Analysis:
1. The Revenue appealed against the deletion of a penalty of &8377; 10,47,500 imposed by the Assessing Officer (AO) under section 271AAA for the assessment year 2009-10. The case involved a search operation at the assessee's premises, resulting in the disclosure of undisclosed income by the assessee's husband, leading to the imposition of the penalty by the AO.

2. The ld.CIT(A) deleted the penalty after considering the facts and submissions. The appellant had declared additional income during the search, specifying the manner in which it was derived. The AO contended that the assessee failed to substantiate the manner of earning the income. However, the ld.CIT(A) found that the conditions of section 271AAA(2) were fulfilled based on the appellant's statement and supporting documents found during the search.

3. The Tribunal noted that the husband of the appellant disclosed the income and substantiated the manner of earning it during the search. The AO did not contest the fulfillment of conditions under clauses (i) and (iii) of section 271AAA(2) but argued that the appellant failed to fulfill the conditions in clause (ii). However, the Tribunal found that the husband's statement adequately substantiated the manner of earning the income, leading to the deletion of the penalty by the ld.CIT(A).

4. Considering the facts and circumstances, the Tribunal upheld the decision of the ld.CIT(A) to delete the penalty, as the appellant had fulfilled the requirements of section 271AAA(2). The Tribunal dismissed the Revenue's appeal, affirming the deletion of the penalty under section 271AAA.

This detailed analysis of the judgment highlights the key issues, arguments, and the reasoning behind the decision to delete the penalty under section 271AAA of the Income Tax Act, 1961.