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2020 (8) TMI 33 - AT - Income TaxPenalty u/s 271AAB - assessee as a result of search has disclosed an income in the return filed in response to the notice issued under section 153A - HELD THAT - Statement furnished by the assessee under section 132(4) of the Act, during the search proceedings and note that even in the statement there was no reference to any such material found during the course of search for the income disclosed by the assessee in response to the notice issued under section 153A. As such the voluntary income was disclosed by the assessee and the addition made by the AO was without having found any incriminating document in the course of search. There was no reference made by the authorities below to the documents of incriminating nature having bearing on the income of the assessee in their respective orders. The ld. DR has not advanced any arguments against the contentions raised by the assessee. There cannot be any penalty under the provisions of section 271AAB of the Act. - Decided in favour of assessee.
Issues Involved:
1. Confirmation of penalty levied under Section 271AAB of the Income Tax Act. 2. Determination of whether the disclosed income qualifies as "undisclosed income." 3. Discretionary versus mandatory nature of penalty imposition under Section 271AAB. Detailed Analysis: 1. Confirmation of Penalty Levied Under Section 271AAB: The primary issue in these appeals is the confirmation of a penalty amounting to ?38,20,160/- levied by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) [CIT(A)] under Section 271AAB of the Income Tax Act. The penalty was imposed following a search operation under Section 132, which led to the disclosure of an income of ?3,82,01,600/- by the assessee. The AO initiated penalty proceedings on the grounds that the disclosed income was based on incriminating materials found during the search, as evidenced by the statement furnished under Section 132(4) of the Act. 2. Determination of Whether the Disclosed Income Qualifies as "Undisclosed Income": The assessee argued that there was no material found during the search suggesting undisclosed income and that the income was disclosed voluntarily to maintain peace of mind. However, the AO and CIT(A) concluded that the disclosed income was indeed "undisclosed income" as defined in Explanation (c) to Section 271AAB. This conclusion was based on the presumption that the disclosure was a consequence of incriminating material unearthed during the search. The CIT(A) noted that the appellant failed to substantiate that the disclosed income was not "undisclosed income" within the meaning of Section 271AAB. The Tribunal, however, found that there were no incriminating materials or documents found during the search that could suggest undisclosed income. The Tribunal emphasized that the penalty under Section 271AAB should be based on actual incriminating material, not merely on the admission made under Section 132(4). 3. Discretionary versus Mandatory Nature of Penalty Imposition Under Section 271AAB: The assessee contended that the imposition of penalty under Section 271AAB is discretionary and not mandatory. The Tribunal supported this view, citing the need for the AO to establish undisclosed income based on incriminating material. The Tribunal referred to the case of ACIT Vs. Marvel Associates, where it was held that penalty under Section 271AAB attracts on undisclosed income but not on mere admission made by the assessee under Section 132(4). The Tribunal concluded that since no incriminating material was found during the search, the penalty under Section 271AAB could not be justified. Conclusion: The Tribunal allowed the appeals of the assessee, setting aside the orders of the lower authorities and directing the AO to delete the penalty levied under Section 271AAB. The Tribunal's decision was influenced by the absence of incriminating materials found during the search and the principle that penalty under Section 271AAB should be based on actual evidence of undisclosed income. The Tribunal also noted that similar penalties in related cases involving the same group had been deleted, further supporting the decision to allow the appeals.
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