2023 (5) TMI 314 - AT - Income Tax

Penalty u/s 271AAB(1A) - amount disclosed by the appellant during the search - HELD THAT - Once the income was found to be undisclosed income within the meaning of clause (c) of the Explanation, then the AO is required to impose penalty as provided under section 271AAB(1)(a) of the Act. In the present case, the search and seizure action was carried out in the premises of group of M/s. Moksha Infracon Pvt. Ltd and M/s. Kaveri Erstwhile M/s. K V R Rail Infra Projects Pvt. Ltd on 09.08.2019 and notice u/s 153A was issued and in response to the notice, the assessee had admitted an income AO had mentioned that the assessee in the sworn statement had admitted an amount of Rs.1 crore as undisclosed income for various assessment years and the above said aspect was accepted by the assessee in the affidavit filed on 27.08.2019. The above said fact of admitting the undisclosed income of various assessment years was not a stand alone admission of income but the admission of income was supported by the loose sheets etc., which were found during the course of search. Admittedly, once the document which has the characteristics of undisclosed income found and recovered during the course of search and based on such document, the assessee made the declaration and thereafter, filed return of income, then in that eventuality, in our view, the said income would partake the characteristics of undisclosed income . Hence, the action on the part of the Assessing Officer imposing penalty under section 271AAB(1A) and thereafter, confirming by the ld.CIT(A) cannot be faulted with. Accordingly, the appeal of the assessee is dismissed.

Summary

Issues involved:
The appeal challenges the penalty order under section 271AAC(1) of the Income Tax Act, 1961 based on the disclosure of additional income during a search and seizure operation.

Issue 1: Confirmation of penalty under section 271AAC(1) by CIT(A)
The appellant contested the penalty order passed under section 271AAC, arguing that the disclosure of income during the search did not warrant the penalty. The CIT(A) upheld the penalty, stating that the appellant's admission of income during the search operation was not voluntary, as it was prompted by incriminating material and evidence uncovered during the search.

Issue 2: Interpretation of undisclosed income and penalty under section 271AAB
The Assessing Officer imposed a penalty under section 271AAB(1A) based on the undisclosed income admitted during the search. The appellant argued that since the income was disclosed and included in the revised return, it should not attract the penalty under section 271AAB(1A). The definition of 'undisclosed income' under section 271AAB was crucial in determining the applicability of the penalty.

Judgment:
The Tribunal dismissed the appeal, affirming the penalty imposed under section 271AAC(1) by the CIT(A). It was held that the appellant's admission of undisclosed income during the search, supported by evidence found, qualified as undisclosed income under section 271AAB. Therefore, the penalty under section 271AAB(1A) was justified, as the disclosed income retained the characteristics of undisclosed income. The Tribunal found no fault in the Assessing Officer's decision to impose the penalty and upheld the CIT(A)'s confirmation of the penalty.

Separate Judgment:
A separate judgment was not delivered by the judges in this case.