2016 (11) TMI 882 - AT - Income Tax

Penalty u/s.271AAA - cash amount surrendered during course of search for which due taxes were deposited with interest - Held that - The amount of ₹ 4 crore which was surrendered during search has been declared by the assessee in the return and taxes have been paid accordingly. Therefore the assessee is normally entitled for the immunity provided in section 271AAA itself. However, the revenue has raised further dispute that whether the assessee has disclosed the manner in which income has been earned. Once the income is surrendered during the course of search under section 132(4) it can be safely assumed that during discussion the assessee must have disclosed the manner. - Decided in favour of assessee

Summary

Issues:
Appeal against CIT(A) order for penalty under section 271AAA of the IT Act.

Analysis:
1. The appeal was filed against the order of CIT(A) for the assessment year 2011-12 regarding a penalty of ?1.00 lakh imposed under section 271AAA of the IT Act.
2. The grounds taken by the assessee included challenging the confirmation of penalty by CIT(A) and arguing that the decisions cited were distinguishable from the case.
3. The assessee declared and offered ?10,00,000 cash and valuables worth ?75,110 during a search on the premises, which was admitted during assessment proceedings.
4. CIT(A) deleted the penalty for jewellery but confirmed it for the cash surrendered during the search, which was explained and accepted by the AO.
5. The Tribunal in a related case confirmed the deletion of penalty, citing principles from various High Courts regarding disclosures made under section 132(4) and granting immunity under section 271AAA.
6. Orders from different ITAT benches and High Court decisions were cited to support the deletion of penalties imposed for amounts surrendered during searches.
7. The Tribunal concluded that the penalty imposed by the AO under section 271AAA lacked merit and directed the AO to delete it, ultimately allowing the appeal of the assessee.