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2018 (8) TMI 1311 - AT - Income TaxLevy of penalty u/s 271AAA - additions on account of unaccounted receipts derived from land trading and commission income - onus to prove the manner in which the undisclosed income has been derived and substantiation thereof - Assessee contended that no specific question was asked to the assessee with regard to the manner of deriving income and substantiation thereof while recording the statement under s. 132(4) of the Act or at any later stage in the course of assessment proceedings. The learned AR thus submitted that without being put to query on this subject it was not possible for the assessee to visualize the same. Held that - In the absence of any evidence or record to show that any specific query made to the assessee and in the absence of any query on the manner and substantiation thereof the allegation for non-fulfillment of condition of Section 271AAA(2) of the Act does not survive. In view of the binding precedent delivered by Hon ble Gujarat High Court the onus would shift on the assessee to specify the manner of earning undisclosed income and substantiation thereof only upon requisite inquiry in this regard. In the absence of any inquiry in this regard the assessee cannot be blamed for non-satisfaction of the exit clause provide under s. 271AAA(2) of the Act. - No penalty - Decided against the revenue.
Issues Involved:
1. Imposition of penalty under Section 271AAA of the Income Tax Act, 1961. 2. Compliance with conditions for immunity from penalty under Section 271AAA(2). Issue-wise Detailed Analysis: 1. Imposition of Penalty under Section 271AAA: A search under Section 132 of the Income Tax Act was conducted on 09.08.2011, during which the assessee disclosed an unaccounted income of ?2,41,50,000 from land trading and commission income. The assessee included this undisclosed income in the return and paid taxes. The Assessing Officer (AO) accepted the disclosure and imposed a 10% penalty on the undisclosed income, amounting to ?24,15,000, under Section 271AAA. 2. Compliance with Conditions for Immunity from Penalty under Section 271AAA(2): The assessee appealed against the penalty, and the CIT(A) found merit in the appeal, deleting the penalty. The CIT(A) noted that the assessee disclosed the income during the search under Section 132(4) and provided a bifurcation of the income in a letter to the ADIT. The CIT(A) observed that the AO did not make any further inquiries about the manner of earning the unaccounted income or its substantiation during the assessment proceedings. The CIT(A) concluded that the assessee had discharged the onus of stating the manner of earning the unaccounted income and substantiating it as required by Section 271AAA(2). The CIT(A) relied on judicial precedents, including the Gujarat High Court decision in Mahendra C. Shah, which held that if the income is declared and tax is paid, there is substantial compliance with the requirements of Section 271AAA(2), even if the manner of earning the income is not specified in detail. The CIT(A) also referred to other decisions supporting the view that the onus to ask specific questions about the manner of earning the income lies with the authorized officer during the search. Tribunal's Findings: The Revenue appealed against the CIT(A)'s decision. The Tribunal upheld the CIT(A)'s order, stating that the issue was covered by the Gujarat High Court decision in Mahendra C. Shah. The Tribunal noted that no specific query was made to the assessee regarding the manner of earning the income or its substantiation. Therefore, the assessee could not be blamed for non-satisfaction of the conditions under Section 271AAA(2). The Tribunal concluded that the CIT(A) had correctly appreciated the facts and law, and there was no need to interfere with the CIT(A)'s order. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the penalty imposed under Section 271AAA. The judgment emphasized that the onus to ask specific questions about the manner of earning the unaccounted income lies with the authorized officer, and in the absence of such inquiries, the assessee cannot be penalized for non-compliance with Section 271AAA(2).
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