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TMI Blog2015 (4) TMI 1245X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case and as per provisions of law the Ld. (CIT(A)(C) is correct in deleting the penalty of ₹ 12,50,000/- u/s. 271AAA despite the fact that the assessee failed to substantiate the manner in which undisclosed income has been derived, one of this being mandatory conditions which needs to be fulfilled as per sub-section 2 of section 271AAA? 3. After hearing both the parties we find that a search was conducted in the Chadha Group of cases wherein incriminating documents were found and seized. During the search assessee made surrender of ₹ 1.25 crores which has been included in the return of income. The surrender was accepted. However, since assessee failed to disclose the manner of earning of surrendered income, penalty proceedings under section 271AAA were initiated. 4. In response to the show cause notice for levy of penalty it was mainly submitted that since assessee has admitted the undisclosed income and surrendered the same and has included this surrendered income in the return of income and paid taxes therefore assessee was entitled to immunity provided under section 271AAA. After considering these submissions AO again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lared and tax thereon paid, there would be substantial compliance not warranting any further denial of the benefit. Further this issue came up for consideration of the Chandigarh Bench of the Tribunal in case of DCIT v. Amarjit Goyal and others, ITAs No. 1080, 1081 1082/Chd/2013. Following issue was decided vide para 5 which is as under: 5. After considering the rival submissions and the material on record, we find that identical issues came up for consideration of the Tribunal in ITAs No. 1005/Chd/2013 in case of ACIT v. Gian Chand Gupta, 1006/Chd/2013 in case of ACITV v. Mohinder Gupta and 1007/Chd/2013 in case of ACIT v. Sanjay Kumar Goyal and the issues were decided against the revenue following the order of the Tribunal in ITAs No. 1003 1004/2013 in case of Munish Kumar Goyal and Harish Kumar Singla vide paras 4 to 11 which read as under: 4. After considering the rival submissions and the material on record, we find that identical issues came up for consideration of the Tribunal in ITAs No. 1003 1004/2013 in case of Munish Kumar Goyal and Harish Kumar Singla which were adjudicated vide paras 8 to 13 which is as under: 8. We have gone through the rival subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conditions. This means that entire disclosure of income at the time of search operation may not fall under the definition of undisclosed income if it could not be relatable to some assets/documents/entry found during the course of search operation. It also means that if the AO during the course of search operation. It also means that if the AO during the course of search assessment proceedings makes certain additions independent of the incriminating material/documents found during the course of search operation then such an assessed income would not invite penalty proceedings u/s. 271AAA but under section 271(1)(c). It also means that initiation of penalty proceedings would depend upon the nature of the income assessed and there could be penalty proceedings u/s. 271AAA as well as 271(1)(c) for the same assessment year, however in respect of different income. The AO in the penalty order has clearly accepted that disclosure of income by the assessee to the tune of ₹ 3,80,12,500/- is not represented by any assets/documents found during the course of search operation and has also observed that the same was part of the undisclosed income just because this disclosure had come dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rect that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007 43[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 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 provisions 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 of this section,- (a) undisclosed income means- (i) any income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that if the explanation of the assessee has been accepted for a sum of ₹ 1987500 out of total surrender of ₹ 4 crores then same manner should have been accepted for the whole of the amount. It is not clear from the penalty order how explanation for ₹ 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. Following the above order we decide the issues against the revenue. From above it as well as the observation of Hon'ble Gujarat High Court in case of CIT v. Mahendra C. Shah (supra) it becomes clear that if no question is asked during the statement recorded u/s.132(4) then the assessee cannot be expected to further substantiate the manner of earning of income. Since taxes have already been paid, therefore in our opinion, penalty could not have been levied. Accordingly we set aside the order of Ld. CIT(A) and delete the penalty. In the present case also R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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