2018 (10) TMI 1164 - AT - Income Tax

Levy of penalty u/s.271AAB - filing of return declaring undisclosed income - Delay in filing return income - Held that - For an income to be undisclosed, it should be represented either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books, which was not recorded in the books before the date of search. Here admittedly, assessee was not maintaining any books. There was thus no question of recording any money, bullion, jewellery or any entry in any books. It is not disputed that assessee had not disclosed any receipts from bill trading before the date of search to the Revenue. Assessee had in the statement recorded u/s.132(4) of the Act accepted accommodation bill trading done by it with M/s. BGR Energy Systems Ltd and earning of 0.25% commission. Claim of the assessee is that such commission was accepted for purchasing peace from Department. This claim, in our opinion cannot be accepted since there is no alleviating clause in Section 273AAB of the Act. That apart, assessee has not filed its return within the time allowed u/s.139(1) of the Act but only after issue of notice u/s.142(1). Thus what was returned by the assessee fell within the definition of the term undisclosed income coming under Explanation (c) to Section 271AAB. As to the contention of the assessee that, if at all penalty is levied u/s. 271AAB then such levy should be under clause (a) of Sub Section (1), what we find is that for applying the said clause, it is a necessary pre-condition that assessee should have furnished the return of income before the specified date. Specified date is the due date for furnishing returned income u/s.139(1). Assessee had filed returned income after such date. Hence, assessee cannot take advantage of clause (a) of Sub Section(1) of Section 271AAB. Penalty was rightly levied and confirmed by the CIT (Appeals). - Decided against assessee.

Summary

Issues:
Levy of penalty under Section 271AAB of the Income Tax Act, 1961 on undisclosed income.

Detailed Analysis:
1. The appeal was filed by the assessee against the penalty of A96,780/- imposed under Section 271AAB of the Income Tax Act, 1961. The assessee argued that the penalty should be restricted to 10% of the alleged undisclosed income as per the provisions of the Act.
2. The facts of the case included a search conducted under section 132A, where it was found that the assessee was providing bogus bills to a company and receiving a commission on such transactions. The assessee did not file a return within the allowed time, but later admitted an income of A3,22,600/-.
3. The assessee contended that the returned income was accepted by the Department, and there was no concealment or inaccurate particulars furnished. However, the Assessing Officer considered the commission received on bill trading as undisclosed income under Section 271AAB and levied a penalty of 30%.
4. The assessee appealed to the Commissioner of Income Tax (Appeals), arguing that the returned income was not based on the search conducted and was an estimated figure to avoid conflict with the Department. The Commissioner upheld the penalty, stating that the assessee admitted the income only after the detection of issuing bogus bills.
5. During the tribunal hearing, the Authorized Representative argued that there were no records found during the search to prove commission receipts or bill trading. The Departmental Representative countered, stating that the assessee admitted to receiving a commission on accommodation bills only after the search.
6. The tribunal analyzed Section 271AAB of the Act, which deals with penalties on undisclosed income. The definition of undisclosed income includes any money or entry not recorded before the search. The tribunal found that the assessee did not maintain books and had not disclosed the bill trading receipts before the search.
7. The tribunal concluded that the penalty was rightly levied as the assessee did not file the return within the specified date and admitted the commission income only after the search. The tribunal upheld the decision of the lower authorities and dismissed the appeal.

This detailed analysis covers the issues involved in the legal judgment comprehensively, providing insights into the arguments presented by the parties and the tribunal's reasoning for upholding the penalty under Section 271AAB of the Income Tax Act, 1961.