2017 (6) TMI 726 - AT - Income Tax

Penalty u/s. 271AAA - assessee did not specify the manner in which the income has been derived and has also failed to pay tax - Held that - The first two conditions have been fully discharged and the third condition was also fulfilled by paying the taxes along with interest in installments. The assessee had requested for the adjustment of cash seized of ₹ 45 lacs towards payment of tax liability. Also there is no time limit prescribed for the payment of the interest. Considering the fact that the assessee has in fact paid all the tax as per the chart exhibited elsewhere, in our considered opinion, the assessee has fulfilled the third condition also. We, therefore, do not find any merit in the levy of penalty. We, accordingly set aside the findings of the ld. CIT(A) and direct the A.O. to delete the penalty - Decided in favour of assessee.

Summary

Issues:
Penalty under Section 271AAA of the Income Tax Act.

Analysis:
1. The appeal was against the penalty of &8377; 41.20 lacs imposed under Section 271AAA for the assessment year 2010-11.
2. The assessee argued that the penalty was unjust as no specific question was asked during the search proceedings regarding the manner in which the income was derived.
3. The assessee contended that financial constraints led to delayed tax payments, but the Assessing Officer (A.O.) upheld the penalty.
4. The Commissioner of Income Tax (Appeals) also ruled against the assessee, leading to the appeal before the Appellate Tribunal.
5. The assessee cited the decision of the High Court in a similar case to support the argument that the penalty should be deleted due to lack of specific questioning during the search.
6. The Departmental Representative argued in favor of the penalty, emphasizing the non-payment of taxes before the return filing date.
7. The Tribunal noted that the assessee declared income and paid taxes as per the return, with no specific question asked during the search regarding income derivation.
8. Referring to legal precedents, the Tribunal highlighted that the assessee fulfilled the conditions of Section 271AAA, including the payment of taxes and interest, despite no prescribed time limit for such payment.
9. Relying on the Supreme Court's ruling in a related case, the Tribunal concluded that the assessee met all conditions for immunity from penalty under Section 271AAA.
10. Consequently, the Tribunal allowed the appeal, setting aside the penalty of &8377; 41.20 lacs imposed by the A.O.

This detailed analysis of the judgment showcases the legal arguments, precedents cited, and the Tribunal's reasoning leading to the decision to delete the penalty under Section 271AAA of the Income Tax Act.