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2019 (6) TMI 287 - AT - Income TaxPenalty u/s 271AAB - search and seizure operation u/s 132(1) conducted and unaccounted cash was found in the office premises and the entire cash was seized - notice u/s 153A was issued and in response to which the assessee filed return of income declaring total income - HELD THAT - There is no dispute in owning the cash seized during the course of search and seizure operation as undisclosed income of the assessee which is out of his professional income. There is no dispute that the assessee offering the same for taxation. There is no dispute in respect of payment of tax together with interest in respect of undisclosed income. There is no dispute in respect of filing of return of income to the specified previous year declaring such undisclosed income. Therefore in our opinion the facts and circumstances in the present case fulfils the conditions as contemplated clause (a) in sub-section (1) of section 271AAB to impose penalty. Therefore we find no infirmity in the order of CIT(A) and confirming the penalty imposed by the AO u/s 271AAB(i)(a). Further as per finding of Hon ble Court of Allahabad in the case of Sandeep Chandak 2017 (12) TMI 70 - ALLAHABAD HIGH COURT that the provisions of Section 271AAB automatically attracts and the proceedings are to be carried out/completed where a search and seizure operation is carried out in which the assessee have surrendered the amount u/s 132(4) statement of undisclosed income specify the manner in which this income was derived filed return of income admit the same and had paid taxes and interest on the same we find no infirmity in the order of CIT(A) and it is justified. Thus ground no-1 raised by the assessee is dismissed.
Issues Involved:
1. Justification of penalty imposed under Section 271AAB of the Income Tax Act, 1961. 2. Validity of the penalty notice issued under Section 271AAB. 3. Applicability of Section 271AAB for undisclosed income during a search operation. Issue-wise Detailed Analysis: 1. Justification of Penalty Imposed under Section 271AAB of the Income Tax Act, 1961: The core issue was whether the CIT(A) was justified in confirming the penalty imposed by the AO under Section 271AAB of the Income Tax Act, 1961. The facts of the case revealed that a search and seizure operation under Section 132(1) was conducted on 24.04.2014, where cash amounting to ?66,18,900/- was found and seized from the office premises. The assessee admitted that the entire seized cash was his undisclosed income and offered it for taxation. The AO, considering the same, assessed the income and initiated penalty proceedings under Section 271AAB. The AO imposed a penalty @ 10% of the undisclosed income amounting to ?6,61,890/-. The CIT(A) confirmed the penalty, emphasizing that the assessee did not maintain books of account and could not substantiate the seized cash with documentary evidence. The Tribunal upheld the CIT(A)'s order, finding no infirmity in the imposition of the penalty under Section 271AAB(i)(a) as the conditions for imposing the penalty were fulfilled. 2. Validity of the Penalty Notice Issued under Section 271AAB: The assessee contended that the penalty notice issued by the AO was defective as it initially referred to Section 271AAA instead of Section 271AAB. However, the Tribunal noted that the main body of the notice clearly mentioned Section 271AAB, and the assessee had responded to the notice and participated in the penalty proceedings. The Tribunal, relying on the principle that quoting a wrong provision does not invalidate an order if the authority had the requisite jurisdiction, rejected the assessee’s contention. The Tribunal also referred to various case laws, including the decision in the case of Galaxy Nirman Private Limited, to support the view that mentioning the wrong provision does not vitiate the exercise of power if the authority had the jurisdiction. 3. Applicability of Section 271AAB for Undisclosed Income During a Search Operation: The Tribunal examined whether the provisions of Section 271AAB were applicable in the given circumstances. It was noted that the assessee admitted the undisclosed income during the search operation, specified the manner in which the income was derived, paid the tax along with interest, and filed the return of income declaring the undisclosed income. The Tribunal referred to the decision in the case of Ganpati Industrial Pvt. Ltd. & Jekay International Pvt. Ltd. vs DCIT, where it was held that the provisions of Section 271AAB automatically attract when the conditions specified in the section are fulfilled. The Tribunal also cited the decision of the Hon’ble High Court of Allahabad in the case of Sandip Chandak, which upheld the applicability of Section 271AAB in similar circumstances. Based on these precedents, the Tribunal concluded that the penalty under Section 271AAB was rightly imposed as the conditions for its application were satisfied. Conclusion: The Tribunal dismissed the appeal of the assessee, confirming the penalty imposed under Section 271AAB of the Income Tax Act, 1961. The Tribunal found that the conditions for imposing the penalty were met, the penalty notice was valid despite the initial reference to the wrong section, and the provisions of Section 271AAB were applicable to the undisclosed income admitted during the search operation. The order was pronounced in the open court on 31.05.2019.
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