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TMI Blog2015 (7) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... 4), addition was made in the hands of the assessees. The details of income returned by the assessees, income assessed, income disclosed and penalty levied u/s. 271AAA are as under: ITA No. Income Return Income Disclosed u/s. 132(4) Income Assessed Penalty u/s. 271AAA 1436/PN/2013 Rs.68,05,574/- Rs.50,00,000/- Rs.68,95,959/- Rs.5,00,000/- 1438/PN/2013 Rs.1,46,85,821/- Rs.1,40,10,384/- Rs.1,46,89,938/- Rs.13,48,625/- 1440/PN/2013 Rs.1,56,64,772/- Rs.1,38,85,272/- Rs.1,57,89,770/- Rs.13,48,625/- 3. The Assessing Officer held that the assessees have not substantiated the income declared at the time of search. Therefore, they are liable for penalty u/s. 271AAA. Accordingly, penalty was levied vide separate orders dated 28-06-2012 in the case of each assessee. Aggrieved by the penalty order u/s. 271AAA, the assessees preferred appeals before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) vide impugned order cancelled the levy of penalty u/s. 271AAA in the case of respective assessees. Now, the Revenue has come in appeal before the Tribunal assailing the findings of the First Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions: i. Neerat Singal Vs. ACIT; 146 ITD 152 (Delhi Trib.). ii. ACIT Vs. Munish Kumar Goyal; 45 taxmann.com 563 (Chandigarh Trib.). iii. DCIT Vs. Rajendra Prasad Dokania in ITA No. 525/Ahd/2012 decided on 04-05-2012. 6. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below. We have also examined the decisions on which the ld. AR of the assessee has placed reliance. The penalty u/s. 271AAA has been levied on the ground that the assessees have not been able to substantiate the manner in which the undisclosed income is derived. Before we proceed with the issue, it would be appropriate to first examine the relevant provisions of section 271AAA of the Act. The same are reproduced as under: "271AAA. (1) The Assessing 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 [but before the 1st day of July, 2012], 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arun Shrikishan Agrawal 3.50 Crores 3. Shri Anil Nandkishor Goyal 3.50 Crores 4. Shri Naresh Banarasidas Jindal 3.50 Crores Total 14 Crores The said income of Rs. 14 Crs. Was earned by the members of the group, by unaccounted transactions in their businesses like steel, cotton, trading in land and plot, cloth trading, scrap trading etc. which may be used or the purpose of investing in the businesses. The said disclosure is to cover up the all discrepancies, difference in the books of A/c, difference in the stock, and difference of opinion in regards to the issues raised by as above and also in relation to personal balance sheet discrepancies of partners, directors or any other assessee of this group." 9. To show that the undisclosed income was substantiated, the ld. AR referred to Q. No. 10 and Q. No. 13 of the statement recorded u/s. 131 of the Act. The same reads as under: "Q. No. 10. I am showing you the chit seized from your residential premises, during the course of search action and inventoried as Annexure - A/4, page No. 6 (back page). Please go through the contents of this page and explain the entries there in. Ans. I have gone through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bifurcation and source of income, declared in the hands of various members of the group. The same is reproduced as under: Name of the appellant Hundi, petty loans, sales receivable Rs. Badla income Rs. Total Rs. 1) Sunil Goyal 1,13,58,750 21,27,500 1,34,86,250 2) Nandkishor Goyal 50,00,000 - 50,00,000 3) Narendra Agrawal 1,63,88,125 21,27,500 1,85,15,625 4) Jaibhagwan Jindal 1,13,58,750 21,27,500 1,34,86,250 5) Banarasidas Jindal 50,00,000 - 50,00,000 6) Gopal Agrawal 1,63,58,750 - 1,63,58,750 7) Ghandshyamdas Goayl - 21,27,500 21,27,500 Total 6,54,64,375 85,10,000 7,39,74,375 In the statement u/s. 131, the assessee Shri Ghanshyam Chunnilal Goyal has given the details of the income declared, which is as follows: Sr. No. Particulars Amount 1 On account of unaccounted sale as per details mentioned in [Question no. 2 & 3] 2,80,79,844 2 Investment in stock [Question no. 14] 2,55,52,503 3 Unaccounted sale/petty loans in case of Shri Anil R. Goyal [Question no. 6] 10,00,000 4 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e seized papers during the course of search proceedings." 11. Therefore clearly the Revenue has not asked the assessee to disclose the manner in which such income was earned. In any case once the income is surrendered during the course of search u/s. 132(4) it can be safely assumed that during discussion the assessee must have disclosed the manner. In any case we find force in the submissions of the Ld. Counsel for the assessee that if the explanation of the assessee has been accepted for a sum of Rs. 1987500 out of total surrender of Rs. 4 crores then same manner should have been accepted for the whole of the amount. It is not clear f rom the penalty order how explanation for Rs. 1987500 was accepted. In any case the Ld. CIT(A) has considered all these issues in detail and the D.R. for the Revenue has not referred to any material or decision which can controvert the findings of the CIT(A). In the following cases which have been relied on by the Ld. Counsel for the assessee which was clearly held that penalty is not leviable. 12. Further the assessee has relied on the following decisions: Kanakia Spaces (P.) Ltd. (supra) A.N. Annamalaisamy (HUF) (supra) Pramod Kumar Jain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the setting in which such statement is being recorded. Secondly, considering the social environment it is not possible to expect from an assessee, whether literate or illiterate, to be specific and to the point regarding the conditions stipulated in the second exception while making statement under section 132(4). Even if the statement does not specify the manner in which the income is derived, if the income is declared and tax thereon paid, there would be substantial compliance not warranting any further denial of the benefit." 4.1 In this case, the assessee was asked to explain the entries in the 'work-in-progress sheet' and assessee in the course of statement offered the income with a plea not to initiate penalty proceedings. The assessee was not asked about the manner in which such income was earned and also to substantiate the manner in which undisclosed income was derived. The provision of clause-2 of Explanation-V appended to section 271(1)(c) are similar to section 271AAA(2). The scope and meaning has been lucidly explained by the Hon'ble Allahabad High Court in the case of CIT vs. Radha Kishan Goel (2005) 278 ITR 454 (All.), which was followed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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