2017 (10) TMI 875 - AT - Income Tax

Penalty u/s 271AAA - undisclosed income which was surrendered by the assessee during the course of assessment proceedings - Held that - The amount was found during the course of search which the assessee claimed to be his wife s savings/pin money. This amount was not surrendered at the time of search but was surrendered subsequently during the course of assessment proceedings by assessee surrendering the same in his own hands in the computation of income. Therefore, as per the specific provisions of section 271AAA, this amount does not specifically fall under the definition of undisclosed income found during the course of search. It is also noteworthy that the assessing officer accepted this surrender without any questions asked. Even if for the sake of argument, the same is accepted as to be cash found during the course of search, it is undisputed that the assessee has paid tax due thereon. The assessee has already explained the source that is savings/pin money of his wife and as far as the substantiation is concerned, it would be relevant to mention here that given the fact that it is a search case, the question of specifying and substantiating the manner in which the undisclosed income has been derived can be somewhat general and omnibus and no precise calculations or computations can be done with reference thereto. Thus we are of the considered view that the levy of penalty u/s 271AAA in the instant case - Decided in favour of assessee.

Summary

Issues:
Imposition of penalty under section 271AAA of the Income Tax Act, 1961 for AY 2012-13.

Analysis:
The appellant, belonging to the Jaipuria group, was subjected to a search and seizure action under section 132 of the Income Tax Act, 1961. The appellant's son offered undisclosed income, and subsequently, the appellant revised the income in the return. The assessing officer imposed a penalty of ?30,000 under section 271AAA, which the appellant contested. The appellant argued that the penalty was unjust as there was no undisclosed income as per section 271AAA. The appellant voluntarily added an amount with the hope of avoiding penalty, based on his son's disclosure. The appellant's wife's cash found during the search was explained as savings/pin money. The assessing officer and CIT (Appeals) upheld the penalty, leading the appellant to appeal to the ITAT.

The ITAT examined section 271AAA, which pertains to penalty on undisclosed income found during a search. The cash in question was claimed to be the wife's savings, not undisclosed income during the search. Even if considered undisclosed income, the appellant paid the tax due on it. The ITAT cited precedents where acceptance of surrendered income by the assessing officer fulfills the requirement of specifying and substantiating the undisclosed income. Therefore, the ITAT concluded that the penalty under section 271AAA was not justified in this case. Consequently, the penalty imposed was canceled, and the appeal of the assessee was allowed.

In conclusion, the ITAT ruled in favor of the appellant, canceling the penalty imposed under section 271AAA for the relevant assessment year.