2023 (8) TMI 769 - HC - Income Tax

Penalty u/s 271AAA - income surrendered during search - Tribunal held that in the case of surrender, except the seized documents, otherwise nothing was found during the search action, which would construe undisclosed income of the assessee, thus deleted the penalty levy - HELD THAT - After going through the impugned order, we are of the view that appeal filed by the revenue, on this issue, has been rightly dismissed. The impugned order has been passed after appreciating the facts in the right perspective and no ground is made out to interfere therein. No substantial question of law arises for consideration.

Summary

Issues involved:
The judgment involves the surrender of income, penalty imposition, and undisclosed income u/s 271AAA of the Income Tax Act.

Surrender of Income:
The appellant had come up in appeals against the common order passed by the Income Tax Appellate Tribunal, where the appeal filed by the revenue was dismissed, and the appeal of the assessee was allowed. The appellant surrendered an income to cover discrepancies in seized documents, out of which a specific amount was surrendered as unaccounted cash profit earned from trading in Crude Menthol Oil. The penalty on the surrendered amount was confirmed based on the lack of representation by any specific asset or entry in the books of account, leading to the imposition of penalty under Section 271AAA of the Income Tax Act.

Penalty Imposition:
The Tribunal observed that the surrendered amount did not relate to any information obtained from the seized documents, falling within the definition of undisclosed income as per Section 271AA of the Act. The Tribunal held that the amount would be considered undisclosed income as it was not recorded in the books of account or disclosed before the search. The Tribunal allowed the appeal filed by the assessee based on these findings.

Undisclosed Income u/s 271AAA:
The Tribunal found that the surrendered amount would fall under the category of undisclosed income as per the definition of Section 271AAA of the Act. The penalty was rightly deleted by the Tribunal concerning the surrendering of the amount. The penalty imposed on the unaccounted cash profit earned from trading in Crude Menthol Oil was not upheld, as it was surrendered based on the discrepancies found during the search action.

Conclusion:
After reviewing the impugned order, the High Court held that the appeal filed by the revenue was rightly dismissed. The order was passed after appreciating the facts correctly, and no substantial question of law arose for consideration. Consequently, the present appeals were dismissed for lack of merits.