2015 (9) TMI 538 - AT - Income Tax

Eligibility for immunity under provision of Explanation 5 to Section 271(1)(C) - whether the assessee had offered the undisclosed income in the statement recorded u/s. 132(4) during the course of search or in a separate letter filed to the department on 02.08.2006? - CIT(a) allowed immunity - Held that - The only objection of the Revenue that the assessee has not specified in its statement, the manner in which such income has been derived is baseless as it has been categorically observed by the ld. CIT(A) that in answer to question nos. 14 to 17, it has been specifically mentioned the manner, in which the undisclosed income has been derived. Under these facts and circumstances, we do not find any infirmity in the order of the CIT(A) and he has rightly followed the decision of CIT vs. Mahendra C. Shah 2008 (2) TMI 32 - GUJARAT HIGH COURT . Decided against revenue. 6. In the result, the Revenue s appeal is dismissed.

Summary

Issues:
Appeal against deletion of penalty under Section 271(1)(C) of the Income Tax Act.

Analysis:

Issue 1: Deletion of Penalty
The Revenue appealed against the deletion of penalty of Rs. 50,49,000 under Section 271(1)(C) of the Income Tax Act. The CIT(A) had deleted the penalty, holding that the assessee was eligible for immunity under Explanation 5 to Section 271(1)(C) as the undisclosed income of Rs. 1,50,00,000 was offered during a search. The Revenue argued that the immunity conditions were not fulfilled as the manner of earning undisclosed income was not explained. The assessee contended that the penalty was wrongly imposed as the returned income was accepted, and the CIT(A) rightly deleted the penalty based on relevant case laws and decisions. The CIT(A) upheld the deletion of penalty, citing precedents and stating that the appellant was entitled to exemption under Explanation 5. The Revenue's objection regarding the manner of income derivation was dismissed as the CIT(A) found the explanation provided satisfactory.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the penalty under Section 271(1)(C) of the Income Tax Act. The decision was based on the assessee's eligibility for immunity under Explanation 5, supported by case laws and the explanation provided during the proceedings. The Tribunal found no fault in the CIT(A)'s order and upheld the deletion of the penalty.