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2023 (5) TMI 953 - AT - Income TaxPenalty u/s 271 AAA - assessee has not furnished any explanation in respect of surrendered income u/s 132(4) either at the time of assessment proceedings or during the course of penalty proceedings - HELD THAT - In case of Bhagirath Aggarwal 2013 (2) TMI 48 - DELHI HIGH COURT has held that if an assessee voluntarily makes a surrender, the officials of the income tax department are bound to record that statement u/s 132(4) and such a statement, voluntarily made, is relevant and admissible and is liable to be used as evidence . Thus where no statement u/s 132(2) of the Act is recorded or specific query is made during assessment, for the purpose of Section 271AAA of the Act, then no inference can be drawn that assessee failed to specify the manner in which such income has been derived or substantiates the manner in which the undisclosed income was derived, so as to levy the penalty. At the same time, the order in Rajendra Aggarwal 2019 (1) TMI 1208 - ITAT DELHI is also relevant where it is held that the initiation of penalty u/s 271AAA cannot be on the basis of surrendered amount which cannot be termed as undisclosed income for the purpose of Section 271AAA of the Act. Appeal of assessee allowed.
Issues Involved:
The appeal against the order dated 31.07.2014 of CIT(A)-XXXI, New Delhi, arising from an order dated 27.09.2013 passed u/s 271AAA of the Income Tax Act, 1961 by the DCIT, Circle-11, New Delhi. Grounds Raised by Assessee: 1. The order passed is illegal, invalid, and bad in law. 2. The Penalty levied at Rs. 42,65,000/- is unjustified and unwarranted. 3. The penalty shall not be levied where the assessee is not at fault or guilty of misconduct. The penalty is uncalled for and without any basis. 4. The appellant truly disclosed all facts during the search, hence the penalty is against the law and should be deleted. 5. The judgment of Hon'ble Supreme Court in Hindustan Steel v. State of Orissa (1972) is applicable to the appellant's case, making the penalty unjustified. 6. The above grounds are without prejudice to one another. 7. The assessee reserves the right to add, amend, alter, or forgo any grounds at the time of or before the hearing. Details of the Judgment: The appeal was heard by the ITAT Delhi where the Assessee did not appear, and it was reported that the assessee had left. The appeal was earlier disposed of for non-appearance, but later recalled due to the company being ordered to be wound up by the Delhi High Court. The arguments presented by the Ld. DR supported the findings of the Tax Authorities below. The penalty in question was imposed under Section 271AAA of the Income Tax Act. The Ld. CIT(A) observed that no statement u/s 132(4) was recorded, while the Ld. AO mentioned that the assessee did not furnish any explanation regarding the surrendered income u/s 132(4) during assessment or penalty proceedings. Section 271AAA of the Act allows for penalties in cases where search has been initiated. The surrendered income was offered in the return, and it was established that no statement u/s 132(4) was recorded. The absence of such a statement means that no inference can be drawn that the assessee failed to specify the manner in which the income was derived, as required by the Act. A previous judgment by a Co-ordinate Bench at Delhi is cited, stating that the initiation of penalty under Section 271AAA cannot be based on a surrendered amount that does not qualify as undisclosed income. In light of these factors, the grounds raised by the assessee are sustained, and the appeal is allowed. Separate Judgment: None mentioned. Date of Order: 16th May, 2023.
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