2020 (4) TMI 19 - AT - Income Tax

Penalty levied u/s 271AAA - assessee has failed to substantiate the manner of undisclosed income derived - HELD THAT - In the statement itself, the assessee has made it very clear that disclosed income is earned from business income. This is further substantiated from the fact that in its profit and loss account, the assessee has shown income from operations/sales at ₹ 18,130 lakhs which included declared business income of ₹ 75 lakhs as per Schedule 1 at page 8 of the paper book. In its reply, filed on 25.04.2011, the assessee once again made it clear that additional income is being offered for A.Y 2011-12 and this income was earned as a result of various business transactions, which were not accounted for in the books of account. This reply was filed before the DIT INV , Panipat and submissions were reiterated before the ACIT, Central Circle, Karnal on 13.02.2013. Considering these facts on record, we are of the considered view that the assessee has fulfilled all the conditions laid down in section 271AAA of the Act. Therefore, no interference is called for. - Decided against revenue

Summary

Issues:
1. Deletion of penalty u/s 271AAA of the Income Tax Act, 1961.

Analysis:
The judgment by the Appellate Tribunal ITAT Delhi involved the appeal by the Revenue against the order of the Commissioner of Income Tax [OSD], Gurgaon for the Assessment Year 2011-12. The primary contention was the deletion of the penalty levied u/s 271AAA of the Income Tax Act, 1961. The case stemmed from search and seizure operations at the premises of certain entities, leading to the disclosure of additional income. The Assessing Officer imposed a penalty of ?75 lakhs on the assessee for failing to explain the manner in which the income was derived, despite declaring and paying taxes on the undisclosed amount.

Upon appeal, the ld. CIT(A) found that the assessee had fulfilled all the mandatory conditions under section 271AAA of the Act. The CIT(A) emphasized that the surrendered amount was admitted in a statement recorded under section 132(4) and that the taxes were duly paid. The CIT(A) referred to various judgments supporting the assessee's position and concluded that the penalty was unjustified. The Tribunal noted that the disclosed income was earned from business transactions outside the books of accounts, as clarified by the assessee in various submissions.

The Tribunal further analyzed the statements made by the assessee, where it voluntarily disclosed additional income earned from business activities. The Tribunal observed that the disclosed income was substantiated by the profit and loss account, which included declared business income. The Tribunal also highlighted that the assessee reiterated the source of additional income in subsequent replies to tax authorities. Based on these facts, the Tribunal concluded that the assessee had fulfilled all conditions under section 271AAA of the Act, warranting no interference.

In the final decision, the Tribunal dismissed the appeal filed by the Revenue, affirming the deletion of the penalty under section 271AAA. The judgment was pronounced on 08.01.2020 by the Appellate Tribunal ITAT Delhi, with detailed reasoning provided to support the decision.