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TMI Blog2013 (11) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... search. It was explained that the independent income is to be assessed under the head business income and the AO has accepted this contention of the assessee as the assessment has been completed by taking the disclosed income under the head business income - It cannot be said that the assessee has not specified the manner or could not substantiate the manner in which the income was derived as the assessee has explained that this is an unexplained income of the assessee relates to firm which was doing only business activities - Except Rs.67 lakhs, no asset or material was found, however, the assessee has disclosed a sum of Rs.1.53 crores further for the reason that certain loose papers, which were found during the course of search and discrepancies in those papers could not be explained by the assessee, therefore, the assessee came forward to disclosed the total amount of Rs.2.21 crore, subject to non levy of penalty - Assessee has requested to cover his case under the exception clause of sub-section (2) of Section 271AAA of the Act - Assessee has satisfied the conditions for not levying the penalty under Section 271AAA – Reliance has been placed upon the judgment in the case of DC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to the AO for his remand report and remand report was received. Thereafter reply in response to remand report was also received from the assessee. The remand report as well as reply received from the assessee is also incorporated in the order of the learned CIT(A) in para 4 to 6 of his order. Reliance was placed on various case laws. After considering the submission and perusing the material on record, learned CIT(A) held that the assessee has not fulfilled the conditions for not levying the penalty, therefore, the AO was justified in levying the penalty. It was also submitted before the CIT(A) that to substantiate the disclosure no specific query was made, whereas, learned CIT(A) found that the query was made and in response to that, a reply was filed, however, that is not in consonance with the condition laid down under section 271AAA for not levying penalty. Accordingly, he confirmed the order of the AO for levying penalty. 5. Now, the assessee is in appeal here before the Tribunal. 6. The contentions raised before the lower authorities were reiterated here before the Tribunal by the learned AR of the assessee. The attention of the Bench was drawn on various details plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) Nothing contained in sub-section (1) shall apply if the assessee,- (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income. (3) No penalty under the provision of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation- For the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t disclosed before the search. It was explained that the independent income is to be assessed under the head business income and the AO has accepted this contention of the assessee as the assessment has been completed by taking the disclosed income under the head business income. Copy of the assessment order is placed on record. Therefore, it cannot be said that the assessee has not specified the manner or could not substantiate the manner in which the income was derived as the assessee has explained that this is an unexplained income of the assessee relates to firm which was doing only business activities. Except Rs.67 lakhs, no asset or material was found, however, the assessee has disclosed a sum of Rs.1.53 crores further for the reason that certain loose papers, which were found during the course of search and discrepancies in those papers could not be explained by the assessee, therefore, the assessee came forward to disclosed the total amount of Rs.2.21 crore, subject to non levy of penalty. Copy of the statement is placed at pages 1 to 3 and in the last para of the statement, it has been stated that the above disclosure is voluntarily given during the course of search procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be seen in the light of the facts of the present case. Suppose, the assessee technically could not explain the manner of earning of income and could not substantiate the manner of earning of undisclosed income but the substantial justice should not be defeated. Not substantiating the manner at the time of search is nothing but a technical default. The assessee has declared that this is undisclosed income and the same is disclosed under Section 132(4), subject to taking the condition for not levying the penalty under Section 271AAA are satisfied. 9.5 In case of Ashok Kumar Sharma v. Dy. CIT [2012] 77 DTR 241 (Ctk.), on similar facts, the penalty levied by the AO has been deleted by the Tribunal. The Tribunal has held that the assessee having disclosed the concealed income while giving statement under Section 132(4) during the course of search and paid the tax thereon and the income from business which has been accepted by the department, the penalty under Section 271AAA is not leviable. While holding so, the Tribunal has further held that the case of the assessee falls exactly within the purview of sub-section (2) of Section 271AAA. Accordingly, the penalty is not leviable. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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