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2022 (9) TMI 1316 - AT - Income TaxPenalty imposed u/s. 271AAA - voluntary admission towards undisclosed income - HELD THAT - From the perusal of the provisions of section 271AAA(2), we note that upon complying with the three conditions mentioned therein, penalty under section 271AAA(1) is not imposable. The first condition requires that the assessee admitted in the course of search in the statement recorded under section 132(4) of the Act, the undisclosed income and specifies the manner in which such income has been derived. The second condition requires that the assessee substantiates the manner in which the undisclosed income was derived. From the statement recorded of the assessee reproduced above, it is evident that both these conditions had been complied by the assessee. The third condition requires that the assessee pays the tax together with interest in respect of the undisclosed income. Fulfilment of this condition has also been evidently demonstrated by the Ld. Counsel by pointing out that assessment was completed with a tax effect of ₹ 19.50 lakhs which was adjusted with the seized amount of cash and the remaining amount was returned to the assessee. We find ourselves convinced with the conspectus of above factual matrix and the submissions made by the assessee and accordingly have no hesitation in directing the AO to delete the penalty imposed under section 271AAA of the Act in the sum - Accordingly, grounds raised by the assessee are allowed.
Issues Involved:
1. Legality of the penalty imposed under section 271AAA of the Income-tax Act, 1961. 2. Compliance with the conditions for immunity under section 271AAA(2) of the Act. 3. Validity of the assessment and penalty proceedings. Issue-wise Detailed Analysis: 1. Legality of the Penalty Imposed under Section 271AAA: The primary issue in this case concerns the legality of the penalty imposed under section 271AAA of the Income-tax Act, 1961. The assessee challenged the penalty order dated 30.09.2013, which was confirmed by the Commissioner of Income-tax (Appeals). The penalty was imposed following a search and seizure operation conducted under section 132 of the Act at the Netaji Subhash Chandra Bose International Airport, Kolkata, where the assessee was found carrying Rs. 51.19 lakhs and £20,000. The assessee admitted that the cash was the sale proceeds of ancestral land. The Assessing Officer (AO) completed the assessment by adopting the sale consideration of the property at Rs. 76.50 lakhs and imposed a penalty of Rs. 7,00,650/- under section 271AAA, which was later revised to Rs. 4,15,050/- after the first appellate proceedings. 2. Compliance with the Conditions for Immunity under Section 271AAA(2): The assessee argued that all conditions for availing immunity under section 271AAA(2) were satisfied, and therefore, the penalty should be deleted. The conditions under section 271AAA(2) are: - Admission of undisclosed income in the course of the search and specification of the manner in which such income was derived. - Substantiation of the manner in which the undisclosed income was derived. - Payment of tax, together with interest, in respect of the undisclosed income. The Tribunal noted that the assessee admitted the income and specified the manner in which it was earned during the search. The income was substantiated with documentary evidence and the report of the ADIT (Inv.), Jalandhar. The taxes on the assessed income were paid, and the seized amount was adjusted against the tax liability. Thus, the Tribunal concluded that all three conditions under section 271AAA(2) were met, and the penalty was not imposable. 3. Validity of the Assessment and Penalty Proceedings: The Tribunal examined the facts of the case, including the statement recorded during the search, the enquiry conducted by the ADIT (Inv.), Jalandhar, and the assessment order. It was noted that the assessee had no other income chargeable under the Act other than the long-term capital gain from the sale of ancestral land. The total income was assessed at Rs. 41,50,500/- after the first appeal effect, and the penalty was imposed at 10% of this amount. The Tribunal found that the assessee had complied with all necessary conditions for immunity from penalty under section 271AAA(2) and directed the AO to delete the penalty of Rs. 4,15,050/-. Conclusion: The Tribunal allowed the appeal of the assessee, concluding that the penalty under section 271AAA was not imposable as all conditions for immunity were satisfied. The order was pronounced on 26 September 2022.
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