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2020 (12) TMI 587 - AT - Income TaxPenalty levied u/sec. 271AAB - additional income admitted in search - HELD THAT - Though search u/sec. 132 was conducted, no such evidence was found by the department in the hands of the assessee. Thus, it is established that the additional income admitted by the assessee was purely on estimation and not supported by any evidence. For the purpose of undisclosed income as provided in section 271AAB there must be money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions which required to be found during the course of search. In the instant case there was no such evidences were found evidencing undisclosed income. We are unable accept the contention of the AO that the penalty is liveable irrespective of unearthing any evidence of earning undisclosed income which fits in to the definition of undisclosed income. Since, the undisclosed is defined in the act for the purpose of penalty u/s. 271AAB, it is incumbent up on the department to show that the impugned addition falls under the definition of undisclosed income. In the instant case the department failed to establish that the additional income admitted represents the undisclosed income. Therefore, as rightly held by the ld. CIT(A), the additional income admitted by the assessee does not fall under the definition of undisclosed income hence, there is no case for levy of penalty u/sec. 271AAB - Decided in favour of assessee.
Issues:
Cancellation of penalty under section 271AAB of the Income Tax Act, 1961 for Assessment Year 2016-17. Analysis: 1. The case involved cross appeals by the Revenue and the assessee against the order of Commissioner of Income Tax (Appeals) related to the cancellation of penalty under section 271AAB of the Income Tax Act, 1961 for the Assessment Year 2016-17. 2. The Assessing Officer initiated penalty proceedings under section 271AAB after the assessee admitted additional income of ?2,62,62,954 for FY 2015-16 & 2016-17 during a search operation. The assessee claimed the additional income was to settle with the department on an estimation basis, as no undisclosed income was found during the search. However, the Assessing Officer levied a penalty of ?52,78,600 under section 271AAB. 3. The ld. CIT(A) canceled the penalty, stating that the additional income admitted by the assessee did not qualify as 'undisclosed income' as there was no evidence of excess stock or incriminating material found during the search. The department appealed this decision. 4. During the appeal hearing, the Revenue argued that the excess purification loss claimed by the assessee, admitted during the search, fell under the definition of undisclosed income as per section 271AAB, justifying the penalty. The Revenue requested the cancellation of the CIT(A)'s order. 5. The assessee contended that the additional income admission was to avoid litigation and peace with the department, as no undisclosed assets or entries were found during the search. The assessee requested the dismissal of the Revenue's appeal. 6. The Tribunal found that the additional income admitted by the assessee was based on estimation and not supported by evidence of undisclosed assets or entries. As per section 271AAB, undisclosed income must be represented by money, bullion, jewelry, or entries in books found during the search, which was lacking in this case. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal. 7. In a separate issue, the assessee challenged the initiation of penalty proceedings for not recording the satisfaction note and specifying grounds for the show-cause notice. The Tribunal found no defects in the notice issued by the department, and the assessee did not press the grounds raised, resulting in the dismissal of the assessee's cross-appeal. 8. Consequently, both appeals filed by the Revenue and the assessee were dismissed by the Tribunal.
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