2024 (3) TMI 1377 - HC - Income Tax

Penalty u/s 271AAA - assessee declared the surrendered amount under the head additional income which was accepted by the Revenue - HELD THAT - We prima facie find merit in the submission of revenue that a mere surrender of income would not absolve the assessee from the levy of penalty. We are thus of the considered opinion that the appeal merits further consideration and it shall consequently stand admitted on the aforenoted question of law. Let the appeal be called again on 24.07.2024.

Summary

Issues:
1. Whether the ITAT was correct in law in deleting the penalty imposed under Section 271AAA of the Income Tax Act, 1961?

Detailed Analysis:
The judgment revolves around the issue of whether the Income Tax Appellate Tribunal (ITAT) was justified in deleting the penalty imposed by the Assessing Officer under Section 271AAA of the Income Tax Act, 1961. The ITAT's decision was based on the fact that the assessee had declared a surrendered amount under the head "additional income," which was accepted by the Revenue. The ITAT noted that the penalty proceedings were initiated without the Assessing Officer providing reasons for the initiation or confirming if the conditions under the section were met. The surrender was made based on loose papers found during a search operation, and the assessee surrendered the amount to avoid penal action and litigation with the Department. The ITAT relied on previous judicial decisions and concluded that the penalty deletion was justified.

The judgment also delves into the provisions of Section 271AAA of the Income Tax Act, which deals with penalties in cases where a search has been initiated. The section outlines conditions under which penalties may be imposed, including admitting undisclosed income, specifying how it was derived, and paying the necessary tax and interest. The section specifies that a mere surrender of income does not absolve the assessee from the penalty. The court prima facie agreed with the submission that surrender alone does not exempt the assessee from penalty, indicating that further consideration of the appeal is warranted.

In conclusion, the court found merit in the arguments presented by the appellant's counsel regarding the imposition of the penalty under Section 271AAA. The appeal was admitted for further consideration on the question of law raised, indicating that the issue requires additional examination. The next hearing for the appeal was scheduled for a future date to delve deeper into the legal aspects and implications of the penalty deletion decision made by the ITAT.