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2020 (4) TMI 741 - AT - Income TaxPenalty u/s 271AAB - disclosure of additional income in the return of income filed under section 153A - no undisclosed income or the inflation of expenditure during the search/ assessment proceedings - HELD THAT - Unable to accept the contention of the revenue that the loose sheet found during the course of search indicates any undisclosed income or asset or inflation of expenditure. An addition has been made on the basis of loose document, which did not closely prove any concealment or furnishing of inaccurate particulars by the assessee - Penalty u/s 158BFA (2) is not leviable. The facts of the assessee's case shows that there was no undisclosed income found during the course of search and no incriminating material was found, hence we hold that there is no case for imposing penalty u/s 271AAB of the Act, accordingly, we set aside the order of the lower authorities and cancel the penalty u/s 271AAB of the Act.- Decided in favour of assessee.
Issues Involved:
1. Validity of the penalty proceedings under Section 271(1)(c) of the Income Tax Act. 2. Imposition of penalty under Section 271AAB for undisclosed income. Detailed Analysis: 1. Validity of the Penalty Proceedings under Section 271(1)(c): The appellant contended that the initiation of penalty proceedings under Section 271(1)(c) was bad in law. The argument was based on the assertion that the penalty notice was ambiguous, failing to specify whether the penalty was for "concealment of income" or "furnishing inaccurate particulars of income," which are mutually exclusive. The appellant prayed for the penalty proceedings to be treated as invalid. 2. Imposition of Penalty under Section 271AAB: The appellant challenged the imposition of a penalty amounting to ?2,70,377 under Section 271AAB, arguing that the additional income disclosed in the return filed under Section 153A was a voluntary act and did not constitute undisclosed income admitted during the search proceedings. The appellant contended that the penalty should not be levied as the additional income did not have the character of undisclosed income found during the search. Facts of the Case: A search was conducted in the Dhanjimama Group of cases, including the appellant, on 03.07.2012. The appellant disclosed ?27,03,770 as additional income in the return filed in response to the notice under Section 153A. The Assessing Officer (AO) initiated penalty proceedings under Section 271AAB, contending that the disclosed amount was undisclosed income due to the search. The appellant argued that the search was not conducted on them directly, and the additional income declared was voluntary, not due to any specific document found during the search. Lower Authorities' Decisions: The AO levied a penalty of ?2,70,377, which was upheld by the CIT(A). The CIT(A) reasoned that the disclosure made on behalf of the appellant during the search should be treated as if made by the appellant themselves, thus attracting the penalty under Section 271AAB. The CIT(A) referenced a Jurisdictional Tribunal decision in a similar case, which held that disclosure made on behalf of an assessee entitles them to immunity under Section 271AAA. Tribunal's Analysis: The Tribunal examined the relevant records and previous decisions. It noted that in a similar case arising from the same search, the Co-ordinate Bench had granted relief to the assessee, observing that there was no documentary evidence found during the search indicating undisclosed income. The Tribunal emphasized that penalty under Section 271AAB requires the presence of undisclosed income as defined in the Act, which was not evident in the appellant's case. Conclusion: The Tribunal concluded that the penalty imposed under Section 271AAB was not justified as there was no incriminating material found during the search indicating undisclosed income. The Tribunal directed the AO to delete the penalty, aligning with the Co-ordinate Bench's decision in a similar case. Result: The appeal filed by the Assessee was allowed, and the penalty imposed and confirmed by the lower authorities was deleted. The order was pronounced in open court on 18-02-2020.
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