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TMI Blog2016 (8) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... se, no specific query was raised by the authorized officers during the course of recording of statement u/s 132(4) of the Act about the manner in which the undisclosed income had been derived and about its substantiation. The said query was raised during the course of recording the statement of Sh. Surender Kumar Jain Son of Late Sh. Suraj Parkash Jain partner of the assessee on 21.07.2011, copy of the said statement is placed at page nos. 5 to 7 of the assessee’s paper book. In that statement no query was raised relating to the manner in which the undisclosed income was earned. Therefore, in the absence of any such query raised by the authorized person, the AO was not justified in taking the adverse view and imposing the penalty u/s 271AAA of the Act - Decided in favour of assessee. - ITA No. 5674/Del/2015 - - - Dated:- 28-6-2016 - Sh. N. K. Saini, AM And Smt. Beena Pillai, JM For The Assessee : Sh. Kapil Goel, Adv. For The Revenue : Sh. Sunil Chandra Sharma, CIT DR ORDER Per N. K. Saini, AM: This is an appeal by the assessee against the order dated 07.08.2015 of ld. CIT(A)-XVI, New Delhi. 2. The only grievance of the assessee in this appeal rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained in any other provisions of this Act, direct that, in a case where search has been initiated u/s 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 10% of the undisclosed Income of the specified previous year. b. Nothing contained in sub section (1) shall apply the assessee. i) In the course of search in a statement u/s (4) of section 132 admits the undisclosed income and specifics the manner in which such income has been derived. ii) Substantiates the manner in which the undisclosed income was derived, and pays the tax, together with interest if any in respect of the undisclosed income. iii) No penalty under the provisions of clause (c) of sub section (i) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub section (1). iv) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in the section. 4. From reading the above provision, it is apparent that penalty u/s cannot be imposed if in the course of search in a statement recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosure by furnishing all the related and matching documents during the course of assessment proceedings. 11. That the assessment u/s 143/153A has been completed at the returned income vide order dtd. 28.02.2014 and all the facts provided by the assessee have been accepted. 12. To substantiate the above, reliance is placed on Pradip Kumar Sonthlia, Kolkata Vs Department of Income Tax, Income Tax Appellate Tribunal-Kolkata decided on 13th January 2014. ITA Nos. 1289- 1290/KOL/2012. The Tribunal held as under...... The Ld. DR even though relied on the order of the AO but could not convince us how the assessee fails to get immunity from the penalty u/s 271AAA of the Act. The assesses has declared undisclosed income in the return filed u/s 153A and paid tax along with the interest and the provision of section 271AAA(1) will not be applicable as the assesses complied with the conditions mentioned u/s 271AAA(2) of the Act. The assessee admitted the undisclosed income in the course of search in the statement recorded u/s 132(4) of the Act and also specific manner in which the income has been derived by him. The manner disclosed by the assessee had been accepted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He particularly made reference to the following observation of Hon'ble Supreme Court:- An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi criminal proceedings and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should he imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exorcised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribes, the authority competent to impose the penalty will be justified in refusing to impose penalty 6 ITA No. 3371/Del/11 when there is a technical or venial breach of the provision of the act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. 15. Therefore, the condition for exoneration from penalty u/s 271AAA (2) were satisfied by the assessee. In view of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed form out of books transactions of sales and purchase of bullion/jewelry. This submission cannot be held to tantamount to specify the manner in which such undisclosed Income has been derived not to speak of substantiating the same. The least that is required of the assessee to tantamount to specifying the manner of deriving the undisclosed income is that proximate nature of acquisition is mentioned by the assesses. To bring on record the proximate nature of acquisition, the assessee must at least state the immediate source and transactions that have brought him the undisclosed income. The assessee's submission, reproduced supra, does not, by any stretch of logic, tantamount to specifying the manner obviously the assessee has not substantiated such manner. It is also noted that the conditions envisaged in section 271AAA(2) of the I.T. Act, 1961 are cumulative and have to be fulfilled simultaneously. Thus, mere payment of tax together with interest in respect of the undisclosed income without fulfilling other two conditions at the same time cannot confer upon the assessee the impunity form imposition of penalty envisaged u/s 271AAA(1) of the I.T. Act. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee in his statement recorded in Section 132(4) of the Act surrendered the amount during the course of search. Therefore, the penalty u/s 271AAA of the Act was not leviable. It was further submitted that the AO never asked the manner of deriving the income during the course of search or in the assessment proceedings and the partner of the assessee in reply to the question no. 11 clearly stated the he offered the amount of ₹ 1,24,40,928/- for taxation on account of excess stock found during the search operation. A reference was made to page no. 7 of the assessee s paper book which is the copy of the statement of the partner of the assessee firm recorded on 21.07.2011. The reliance was placed on the decision of the ITAT Delhi Bench G , New Delhi in the case of SVP Builders (India) Pvt. Ltd. Vs DCIT, Circle 7(1), New Delhi in ITA No. 4674/Del/2014 for the assessment year 2009-10 vide order dated 19.02.2015. 9. In his rival submissions, the ld. DR strongly supported the orders of the authorities below and further submitted that the assessee had not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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