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TMI Blog2017 (9) TMI 1656X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 27-9-2017 - Ms. Sushma Chowla, Judicial Member And Anil Chaturvedi, Accountant Member Ajay Modi for the Appellant. Hari Krishan for the Respondent. ORDER Ms. Sushma Chowla, Judicial Member The appeal filed by the Revenue is against order of CIT (A)-Central, Pune, dated 29.09.2014 relating to assessment year 2011-12 against deletion of penalty levied under section 271 AAA of the Income Tax Act 1961 (in short the 'Act'). 2. The Revenue has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case, the Ld. CIT (A) was not justified in deleting the penalty levied u/s 271AAA of the I.T. Act by holding that the conditions for penalty u/s 271AAA were not satisfied, whereas the conditions for levying of penalty u/s 271AAA were satisfied. 2. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the penalty levied u/s 271AAA of the I.T. Act by holding that additional income on which penalty was imposed does not fall under the definition of undisclosed income in order to attract penalty u/s 271AAA of the I.T. Act, without appreciating the fact that certain movable a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1.25 crores in his statement recorded under section 132(4) of the Act. The assessee was of the view that the conditions provided in sub-section (2) to section 271AAA of the Act were complied with since the amount of undisclosed income was assessed as part of the said disclosure only. In the written submissions filed before the Assessing Officer reproduced at page 4 of the penalty order, the assessee claims that he had already made part payment of assessment dues and was ready to pay the balance tax as early as possible. He then, requested that levy of penalty in addition to the above said tax / interest shall certainly over burden the assessee and cause great hardship and injustice on the taxpayer. The assessee thereafter, has pointed out that he was an uneducated person and did not have any income tax knowledge. Further, there was no conscious breach of law. The assessee thus, claimed that he did not conceal any income or facts and neither functionally furnished any inaccurate particulars of income. In view of the said facts and circumstances, he requested that penalty proceedings initiated under section 271(1)(c) of the Act be dropped. It may be pointed out herein that at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come within the meaning of clause (a) of Explanation to section 271AAA of the Act. The CIT(A) vide para 6.4 observed that there was not a whisper in either of the order about any money, bullion, jewelry or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of search or books of account maintained in the normal course. The CIT (A) observed that the only basis for initiating penalty proceedings and levying the same was that the assessee had disclosed / offered additional income as a consequence of search. The CIT(A) having regard to the definition of undisclosed income in relation to section 271AAA of the Act held that the additional income based on which penalty had been imposed by the Assessing Officer not being income represented by any asset found or any entry in either seized books or regular books, does not fall within the meaning of undisclosed income under section 271AAA of the Act. Accordingly, it was held that the question whether the assessee was entitled to the immunity under sub-section (2) of section 271AAA of the Act or not, does not arise, as threshold limits from brining the case under section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Representative for the assessee on the other hand, referred to the application filed under Rule 27 of the Rules and pointed out that language of immunity as per Explanation 5A to section 271(1)(c) of the Act and as per section 271AAA of the Act was the same. In this regard, he placed reliance on the ratio laid down by the Pune Bench of Tribunal in DCIT V. Smt. Inderchand Surajmal Bothra in [IT Appeal No.139 (PN) of 2010, dated 30-11-2011]. He further pointed out that even if the manner in which the said income was earned was not satisfied but the assessee is entitled to the immunity as per the ratio laid down by the Chandigarh Bench of Tribunal in Asstt. CIT v. Munish Kumar Goyal [2014] 45 taxmann.com 563/[2015] 152 ITD 453. In respect of payment of taxes, he pointed out that the same were paid late, admittedly, but full taxes were paid. Our attention was drawn to the copy of 26AS placed in the Paper Book, wherein the taxes were shown to have paid in June, 2014 i.e. after passing of order levying penalty under section 271AAA of the Act. In this regard, he placed reliance on the ratio laid down by the Hon'ble Supreme Court in Asstt. CIT v. Gebilal Kanhaialal HUF [2012] 25 taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Home Corporation i.e. partnership concern, wherein in answer to question, he stated that approximately ₹ 1.80 crores to ₹ 2.20 crores was contributed as his share capital in the said concern. He further explained that approximately 20 plots out of 34 plots of Manjari property were sold by him. Vide question No.10, search team confronted the assessee with diary No.1 of the seized document and he was asked to explain the contents of page 44 of the diary on which words written were W B. He admitted that the contents of said page were for land purchase from Pritam Sanas and his family for consideration of ₹ 3.03 crores, which was actual payment made by all of them jointly. He also admitted that purchase consideration shown in the purchase agreement was ₹ 2.32 crores and he further admitted that the words written 'W' means payment in white i.e. by cheque or accounted for and the word 'B' means payments made in cash. He was asked to explain the contents of page 5 and the words written in W B. He admitted that the same also relates to the Sanas deal. Then page 42 of diary No.1 was also confronted and pages 39 and 40. Vide question No.14, he was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lfilled the conditions as mentioned in clause (iii) of sub-section (2) of section 271AAA of the Act and hence, he was held to have defaulted and penalty of ₹ 12,53,999/- was levied under section 271AAA of the Act. The said penalty levied by the Assessing Officer was deleted by the CIT (A) on the ground that the additional income, based on which penalty was imposed by the Assessing Officer was not the income represented by any asset found or any entry in either seized books or regular books and hence, does not fall within the definition of undisclosed income in order to attract levy of penalty. The CIT (A) thereafter, holds that there is no need to go into the clauses of immunity provided under section 271AAA(2) of the Act as the threshold conditions for bringing the case under section 271AAA were not met with. 13. In order to adjudicate the issue, first we shall refer to Explanation under section 271AAA of the Act, which defines 'undisclosed income'. Undisclosed income means any income of specified previous year represented either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Coming to the order levying penalty under section 271AAA of the Act. Vide para 8, it is clearly mentioned that where the assessee had disclosed the income in the statement recorded under section 132(4) of the Act but taxes on the undisclosed income were not paid, that the assessee had not fulfilled the conditions of clause (iii) of sub-section (2) of section 271AAA of the Act. Hence, the Assessing Officer talks about the 'undisclosed income' which was basis for levying penalty under section 271AAA of the Act. Hence, the order levying penalty merits to be upheld in case the assessee has not fulfilled the conditions laid down in sub-section (2) of said section. In this regard, reliance was placed upon by the assessee on the Pune Bench of Tribunal in Shri Vikas Bapurao Takawane (supra) is misplaced, where satisfaction was for initiating penalty for concealment of income and furnishing of inaccurate particulars of income and the order levying penalty was also for concealment of income. The Tribunal notes that there was no reference of undisclosed income either in the assessment order or the order levying penalty under section 271AAA of the Act and where the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t page 2 of the assessment order. The assessee in assessment years 2005-06 to 2011-12 in all, declared sum of ₹ 2.39 crores as his additional income out of which sum of ₹ 1.02 crores related to assessment year 2011-12. In the absence of assessee having satisfied the manner in which the income was derived and also specifying the manner, clause (i)(part) and clause (ii) under sub-section (2) of section 271AAA of the Act are not fulfilled. 18. The assessee in this regard has placed reliance on the decision of Chandigarh Bench of Tribunal in Munish Kumar Goyal (supra) and pointed out that where the assessee had furnished income in the course of search and filed the return of income and taxes were paid, there was sufficient compliance of provisions of section 271AAA(2) of the Act and it was held that the impugned penalty order deserves to be set aside. Reference is made to para 10 of the said order, wherein questions asked to the assessee during the course of search proceedings have been extracted. The question which was put to the assessee was do you want to say anything more. He replied that he voluntarily surrenders sum of ₹ 4 crores for assessment year 2010-11 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had placed reliance on the ratio laid down by the Hon'ble Supreme Court in Gebilal Kanhaialal HUF (supra), wherein it has been held that while levying penalty under section 271(1)(c) of the Act, Explanation 5 is attracted in cases of search proceedings. The Hon'ble Supreme Court held that to grant immunity from payment of penalty, no time limit for payment of taxes is prescribed under clause (ii) of Explanation 5 to section 271(1)(c) of the Act. In the facts of said case, the apex court noted that the assessee had paid taxes with interest upto the date of payment and hence, three conditions stood fulfilled. The issue before the Hon'ble Supreme Court was with regard to return filed in response to notice under section 158BC of the Act, which was in addition to the regular returns of income for respective years of search period. On the other hand, penalty under section 271AAA of the Act is leviable in respect of regular return of income of search year. In the facts of present case before us, the assessee has not paid the taxes due on returned income (not additional income under section 158BC of the Act) till the date of passing the assessment order and even till date of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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