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TMI Blog2014 (10) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... ch income was derived were asked to assessee and she had replied to that - the penalty provisions on search and seizure were contained in section 271(1)(c) and immunity was granted to the assessee vide clause (2) of explanation 5 appended to section 271(1)(c). Provisions of clause (2) of explanation 5 appended to section 271(1)(c) are similar to immunity granted to assessee under clause (2) of section 271AAA – thus, the order of the CIT(A) is to be set aside – Decided in favour of assessee. - ITA No. 5445/Del/2012 - - - Dated:- 22-8-2014 - SHRI R.S. SYAL AND SHRI C.M. GARG, JJ For the Appellant by : Shri Chandra Shekhar, CA For the Respondent by : Shri G.S. Sema, Sr. DR ORDER PER C.M. GARG, J.M. This appeal has been preferred by the assessee against the order of the CIT(Appeals)-XXXI, New Delhi, dated 28/08/2012 in appeal no. 78/2010-11 for A.Y. 2008-09 by which penalty order of the AO passed u/s 271AAA of the Income Tax Act,1961 (for short The Act) dated 28/06/2010 has been upheld. 2. The grounds raised by the assessee read as under: 1. That on the facts and the circumstances of the case, the judgment of the Hon ble Allahabad High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y as are income from undisclosed sources. The AO noted that as the assessee did not specify the manner in which undisclosed income was derived and also did not substantiate the same, therefore, penalty proceedings u/s 271AAA of the Act were initiated issuing notice against the assessee dated 31/12/2009. In response to the notice the assessee filed a reply stating following submissions: 1. Assessee has admitted the additional income of ₹ 20 lacs; 2. The officer who was taking the oath did not ask the manner in which such income was derived; 3. The Officer did not put the question or explain to the assessee that if you substantiate the manner in which you have derived the income you will not be liable to pay further penalty u/s 271AAA; 4. The assessee was denied an opportunity to explain the manner in which such income was derived; 5. At the time of Oath no professional person was present on behalf of the assesse and it becomes the duty of the oath administrator to explain the provision of the law or the consequences of non declaration of certain information; 6. Framing of the questions were not in the scope of the assessee; 7. Assessee has answered only t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, therefore, the AO levied penalty of ₹ 2 lakh which is equal to 10% of undisclosed income i.e. ₹ 20 lakhs. 4.1 The aggrieved assessee preferred appeal before ld. CIT(A) which was also dismissed by the impugned order. The relevant determination and conclusion of CIT(A) read as under: The instant appeal has been filed against the order of imposition of penalty u/s 271AAA. I have perused the penalty order and rival submissions made in this regard. The AO has imposed the penalty on the undisclosed income surrendered by the appellant at the time of search. The AO has stated that the appellant had failed to specify the manner in which undisclosed income had been derived and as such is liable to pay penalty as per provisions of section 271AAA of the I.T. Act. The appellant has stated that the order is bad in law and contrary to the principle of natural justice because the income which relates to FY 2007-08 cannot be termed as undisclosed income on the date of search i.e. 29.08.2007. It is further contested that no proper opportunity was provided to the appellant to specify and substantiate the manner in which income was derived. On perusal of penalty order it is obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the penalty shall not be levied ordinarily where the assessee is not at fault or guilty of misconduct. The ld. AR further pointed out that the assessee has to specify and substantiate the manner of deriving the undisclosed income only at the time of statement recorded u/s 132(4) of the Act and not otherwise as mentioned by the AO. The AO vehemently contended that the entire recording of oath statement did not provide any opportunity to the assessee to specify and substantiate the manner in which such income was derived, therefore, it is the duty of Oath Administrator to put question in appropriate form, and to inform the utility and purpose of the statement recorded u/s 132(4) of the Act and disclosure of facts as per provisions of the Act. The AO also contended that the assessee has deemed to be fulfilled all the four necessary conditions as stipulated in section 271AAA of the Act of which penalty cannot be levied hence the action of the AO was not justified which was upheld by CIT(A) without any cogent and solid basis. 6.1 The AR also contended that the CIT(A) and the AO erred by considering that the assessee fails to fulfill the conditions of section 271AAA of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi in the case of Mrs. Raj Rani Gupta in ITA No. 3371/Del/2011 dated 30/03/2012, wherein penalty imposed u/s 271AAA of the Act was deleted. The AR also pointed out the decision of ITAT Delhi in assessee s own case in ITA No. 3372/Del/2011 dated 12/10/2012, wherein the penalty has been deleted by following decision of Hon ble Gujarat High Court in the case of CIT vs. Mahendra C Shah, 299 ITR 305 (Guj.), wherein it was held that if the statement of the assessee recorded u/s 132(4) of the Act does not specify the manner in which the income is derived, if the income is declared and tax thereon has been paid, there would be substantial compliance not warranting any further denial of the benefit under exception no. 2 in Explanation 5 attached to section 271(1) of the Act. 12. In view of the above, we come to a conclusion that the statement being recorded u/s 132(4) of the Act in the question and answer form and there would be no occasion of the assessee to state and make averment in the exact format stipulated by the provisions of the Act considering the setting in which such statement is being recorded. In the present case, the statement of the assessee was recorded in question and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no question of hiding the information which is in the interest of the assessee. It is again reiterated that there is no error or omissionon part of the assessee. Assessee has faithfully and truly disclosed the facts asked for. If appropriate question was put forward before the assessee then there was no question of hiding the information. In view of the above, it is humbly prayed that kindly drop the penalty proceeding and oblige as it seems to be unintentional mistake of the search party as well as assessee. 14. From careful perusal of decision of ITAT E Bench, vide dated 12.10.2012 in ITA No. 3372/D/2011 for A.Y. 2008-09 in the case of Mothers Pride Education Personna P. Ltd. vs. DCIT. We observe that the Tribunal deleted the penalty imposed u/s 271AAA of the Act by allowing appeal of the assessee by following decisions of the Hon ble Allahabad High Court in the case of Radh Krishan Goel (supra) and decision of Hon ble Gujarat High Court in the case of CIT vs. Mahendra C. Saha (supra) and also following the decision of coordinate bench of the ITAT F Bench, New Delhi vide dated 30.03.2012 in ITA No. 3371/D/2011 for A.Y. 2008-09 in the case of Mrs. Rajrani Gupta vs. D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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