9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (10) TMI 1591 - AT - Income TaxPenalty levied u/s 271AAA - undisclosed income - assessee had failed to furnish details as to the source of earning such additional income - rejection of assessee s contention of assessee that additional income was on account of under-valuation of stock and there were no changes in purchases, hence no merit in levy of penalty - Held that - The additional income had been offered by the assessee on account of valuation of stock. It is not case of the Department that any unaccounted stock was found during the course of search or any entry was found in any document or transaction or the books of account, during the course of search, which depicts the said stock. The assessee on the other hand, had not modified the quantity of stock but had declared additional income on account of valuation of stock, which had been recorded in books of account. Such disclosure made by assessee in the return of income filed for the search year was not on account of any surrender made at the time of assessment and at best was additional income offered on appraisal of totality of facts of the case. The basic condition of additional income being offered on the basis of seized document during the course of search had not been fulfilled in the present case. We find support from the ratio laid down by the Delhi Bench of Tribunal in Mahavir Prasad Jaipuria Vs. ACIT 2017 (10) TMI 875 - ITAT DELHI wherein it was held that where the amount was not surrendered at the time of search but was surrendered subsequently during course of assessment proceedings; as per specific provisions of section 271AAA of the Act, said amount did not specifically fall under definition of undisclosed income found during course of search, thus, levy of penalty was not justified. - Decided in favour of assessee.
Issues Involved:
1. Levy of penalty under section 271AAA of the Income-tax Act, 1961. 2. Definition and applicability of "undisclosed income" under section 271AAA. 3. Conditions for immunity from penalty under section 271AAA. Detailed Analysis: 1. Levy of penalty under section 271AAA of the Income-tax Act, 1961: The primary issue in the appeals was the levy of penalty under section 271AAA of the Act. The search and seizure action under section 132 was conducted in the Chaudhari Group of cases, and the assessee was part of this group. During the search, the assessee surrendered additional income. The Assessing Officer (AO) levied a penalty of ?2 lakhs, which was 10% of the undisclosed income of ?20 lakhs, under section 271AAA. 2. Definition and applicability of "undisclosed income" under section 271AAA: The assessee argued that the additional income was declared due to increased valuation of stock and not due to any unaccounted purchases or documents found during the search. The AO contended that the additional income declared was a result of the search action, thus justifying the penalty under section 271AAA. The definition of "undisclosed income" under section 271AAA includes income represented by any money, bullion, jewellery, or other valuable articles found during the search, which was not recorded in the books of account before the search. 3. Conditions for immunity from penalty under section 271AAA: For immunity from penalty under section 271AAA, the assessee must: - Admit the undisclosed income in a statement under section 132(4) during the search. - Specify and substantiate the manner in which the income was derived. - Pay the tax and interest on the undisclosed income. The CIT(A) upheld the penalty, noting that the assessee failed to provide details on the source of the additional income and did not substantiate the manner of earning it. However, the Tribunal found that the additional income was offered on account of stock valuation and not based on any seized document or unaccounted stock found during the search. The Tribunal referenced the case of Mahavir Prasad Jaipuria Vs. ACIT, where it was held that income not surrendered at the time of search but during assessment proceedings did not fall under the definition of "undisclosed income" for penalty under section 271AAA. The Tribunal concluded that the conditions of section 271AAA were not met as the additional income was not based on any asset or document found during the search. Consequently, the penalty under section 271AAA was not justified. The Tribunal directed the AO to delete the penalty. Conclusion: The Tribunal allowed the appeals, holding that the assessee was not liable for the penalty under section 271AAA as the additional income did not meet the definition of "undisclosed income" found during the search. The decision in ITA No.741/PUN/2016 was applied mutatis mutandis to ITA No.748/PUN/2016.
|
