2019 (3) TMI 1462 - AT - Income Tax

Levy of penalty u/s 271AAA - additional income offered to tax by the assessee as his undisclosed income - search and seizure action u/s 132 - Assessment order u/s 153A - HELD THAT - The issue is covered in favour of the assessee by order of ITAT Delhi F Bench in the case of Mahavir Prasad Jaipuria 2017 (10) TMI 875 - ITAT DELHI who is also connected with the same search and connected with the group. On identical facts, the similar penalty has been cancelled by the Tribunal. In the case of the assessee also, assessee declared additional income at the assessment proceedings vide letter dated 04.03.2014 in a sum of ₹ 3,64,602/-. Further, the assessee has explained the items which have been surrendered at the assessment proceedings. Therefore, no penalty is leviable. - Decided in favour of assessee.

Summary

Issues involved:
1. Challenge against the levy of penalty u/s 271AAA of the I.T. Act for AY 2012-13.
2. Interpretation of provisions of section 271AAA regarding undisclosed income and penalty imposition.
3. Comparison of facts and decisions in similar cases to determine penalty applicability.

Detailed analysis:
1. The appeal was filed challenging the penalty imposed under section 271AAA of the I.T. Act for the assessment year 2012-13. The assessee, part of the Jaipuria Group, was subjected to a search and seizure action under section 132 of the Act. The penalty was levied by the Assessing Officer at 10% of the undisclosed income offered by the assessee, amounting to ?3,64,602. The assessee contended that the additional income was disclosed to avoid litigation and that no incriminating material was found during the search, thus penalty imposition was unwarranted.

2. The provisions of section 271AAA were analyzed in detail during the proceedings. The assessee's submission highlighted that the undisclosed income was offered with the understanding of immunity from penalty and prosecution. The CIT(A) noted discrepancies in the explanation provided by the assessee regarding the source of additional income, leading to the confirmation of the penalty. However, the ITAT Delhi 'F' Bench decision in a similar case involving Shri Mahavir Prasad Jaipuria provided a basis for canceling the penalty. The Tribunal emphasized the importance of substantiating the undisclosed income and held that the penalty was not justified in the absence of concrete evidence.

3. The comparison with the case of Shri Mahavir Prasad Jaipuria played a crucial role in the final decision. The ITAT referred to the identical facts and the cancellation of penalty in that case, which influenced the decision in the present appeal. The Tribunal found similarities in the declaration of additional income and the explanations provided by the assessee, leading to the conclusion that no penalty should be levied. Relying on the precedent set by the Mahavir Prasad Jaipuria case, the penalty imposed on the present assessee was canceled, resulting in the allowance of the appeal.

In conclusion, the judgment delved into the intricacies of penalty imposition under section 271AAA, emphasizing the importance of substantiating undisclosed income and drawing parallels with previous decisions to ensure consistency in legal outcomes.