2014 (1) TMI 748 - AT - Income Tax

Deletion of Penalty u/s 271AAA of the Act Undisclosed income Held that - Disclosure of Rs. 75 lacs was made and the same was also offered for tax and tax was also paid - Assessee had submitted that the unaccounted income was earned from undisclosed income - CIT(A) by well-reasoned order while deleting the penalty has noted that the bifurcation of disclosure of undisclosed income was admitted by the Assessee and also filed - the authorised officer did not ask any specific question on substantiating the manner in which income was derived - the income was earned by the Assessee and was satisfied about substantiating the manner in which the undisclosed income was earned - the assessee had paid tax along with interest on undisclosed income admitted during the course of search Relying upon CIT vs. Mahendra C. Shah 2008 (2) TMI 32 - GUJARAT HIGH COURT and CIT vs Radha Kishan Goel 2005 (4) TMI 47 - ALLAHABAD High Court - deleted the penalty - Revenue has not brought any material on record to controvert the findings of CIT(A) the order of the CIT(A) upheld Decided against Revenue.

Summary

Issues:
Appeal against deletion of penalty under section 271AAA for assessment year 2009-2010.

Analysis:
1. The appeal was filed by the Revenue against the order of Ld. CIT(A)-II, Ahmedabad dated 28.9.2012, where a penalty of Rs. 7,50,000/- levied by the Assessing Officer under section 271AAA was deleted.
2. Both parties agreed that the facts in both appeals were identical, except for the amount, and that CIT(A) had passed a consolidated order for both assessees.
3. In the case of Rivaa Exports, unrecorded cash of Rs. 6.5 lacs was found during a search, admitted by the Assessee as unrecorded sale for F.Y. 08-09. The Assessing Officer levied a penalty under section 271AAA, which was later deleted by CIT(A).
4. CIT(A) held that the conditions of section 271AAA(2) were not fulfilled by the appellant, focusing on the requirement of admitting undisclosed income, specifying its manner of derivation, substantiating it, and paying the tax with interest.
5. The authorized officer did not ask specific questions on substantiating the manner of income derivation, but the appellant disclosed the income from unaccounted trading. CIT(A) relied on precedents to support the decision.
6. The appellant had paid the tax and interest on the undisclosed income admitted during the search, and the Assessing Officer accepted the returned income without questioning the source or nature of income.
7. The ITAT upheld CIT(A)'s decision, noting that the appellant had substantially discharged the onus of explaining and substantiating the undisclosed income, following relevant legal principles and decisions.
8. In another case involving Shri Hari Kishan Virmani, the facts were found to be identical to the previous case, leading to the dismissal of the Revenue's appeal.
9. The ITAT dismissed both appeals of the Revenue, upholding the decisions of CIT(A) based on the facts and legal principles discussed in the judgments.

This detailed analysis covers the issues involved in the legal judgment regarding the deletion of penalty under section 271AAA for the assessment year 2009-2010.