2024 (1) TMI 597 - AT - Income Tax

Penalty u/s. 271AAB - undisclosed income representing their tuition fee in various educational institutions - HELD THAT - As come on record that this is indeed an instance of both these assessees having derived their undisclosed income in above terms u/sec. 271AAB Explanation-(c) (i)(A) of the Act representing their tuition fee in various educational institutions. And also that the department had come across the corresponding seized material during the course of search herein dated 05.08.2015 which made these assessees to admit additional income of Rs. 41 lakhs 2 coming to Rs. 20.50 lakhs each which stood declared in their respective returns. The assessees sole substantive grievance appears to be that the AO s corresponding show cause notices dated 29.12.2017 (supra) had not been validly issued. We find no merit in the assessees stand once it has come on record that the impugned penalty has been levied @ 10% since falling in the first and foremost limb u/sec. 271AAB(1)(a)(i) to (iii) of the Act in the specified circumstances. Their identical contention therefore, that the AO ought to have specified corresponding limb(s) to this effect fails to cut any ice before us. Faced with the situation and primarily for the reason that these assessees have been found to have derived their undisclosed income as per the seized incriminating material followed by their search admission(s), we find no reason to interfere with the learned lower authorities action invoking sec. 271AAB penalties in their respective cases. These assessees fail in their respective grounds therefore.

Summary

Issues Involved:
The judgment involves twin assessees' appeals against the CIT(A)'s orders for assessment year 2016-17, relating to proceedings under section 271AAB of the Income Tax Act, 1961.

Delay Condonation:
The appeals suffered from a delay of 223 days, falling within the Covid-19 pandemic outbreak period as per directions from the Supreme Court. The delay was condoned in both appeals.

Substantive Grievance - Penalty Imposition:
The assessees contended that the authorities erred in levying penalties under section 271AAB. It was found that the assessees derived undisclosed income through tuition fees in educational institutions, based on seized material during a search. The penalties were upheld as the assessees failed to prove that the show cause notices were invalidly issued. The penalties were imposed at 10% of the undisclosed income as per the specified circumstances in the Act.

Judgment:
The appeals were dismissed as the assessees failed to demonstrate any valid reasons to interfere with the lower authorities' actions in imposing penalties under section 271AAB. The assessees' grounds were found to lack merit, and the penalties were upheld in both cases.

Separate Judgment:
No separate judgment was delivered by the judges in this case.