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TMI Blog2019 (2) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that the appellant has not been able to substantiate the manner in which the undisclosed income was derived and hence he is not entitled to the immunity provided by sub-section (2) of section 271 AAA. (d) The appellant, respectfully submits that on harmonious interpretation of the provisions of sub-section (2) of section 271 AAA, the appellant cannot be made to substantiate the manner in which the undisclosed income was derived specially when during the course of the search, the appellant was not asked to even specify the manner in which the undisclosed income was earned. 3. Brief facts of the case are as under: A search and seizure action u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') was car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 29,41,015/-. Thirdly the assessee stated that income of ₹ 29,41,015/- was offered to tax to buy peace of mind and avoid litigation. 5. However, the Assessing Officer (A.O. for short) was not satisfied. He levied the penalty of ₹ 3,03,528 u/s. 271AAA of the Act. 6. Against the above order, the assessee appealed before the ld. CIT(A). 7. The ld. CIT(A) noted the assessee s submissions as under: 5.2 In the course of the appeal proceedings, the appellant contended that: (i) the case of the appellant is' covered by sub section (2) of section 271AAA which provides immunity from penalty 271AAA(1). (ii) there is no stipulation in sub section (2) of section 271AAA as regards including the income either in the ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71AAA and immunity envisaged in sub section (2) of the section 271AAA cannot be denied to the appellant. (xi) once the income disclosed has been included in the Return of Income and the' tax and interest on the same is paid by the assessee, the penalty u/s. 271(l)fc), of the Act cannot be levied even if the statement u/s. 132(4) does not specify the manner in which the income is derived. CIT Vs. Mahendra C. Shah 299 1TR 305 (Guj) ' (xii) in a case where the assessee admits certain income during the course of search, includes the same in the Return of Income and pays tax on the same, the assessee shall be normally entitled to immunity as provided under sub section (2) of section 271AAA. If the revenue has not asked any question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 132, specified the manner in such income has been derived and (ii) substantiate the manner in which the such income was derived. As regards the condition in clause (i), the appellant contends that he was not asked to explain the manner in which the undisclosed income was derived in the statement recorded u/s 132(4) and, therefore, it was wrong to attribute any omission to him (the appellant) in this regard and to deny him the immunity-envisaged in section 271AAA(2). 1 find that even if, this contention of the appellant is accepted, he (the appellant) will still be ineligible for the immunity because of his failure to substantiate the manner in which the undisclosed income was derived. The appellant was free to substantiate the manner of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn of income. That it was only subsequent that the return was revised. He submitted that the authorities below are correct in levying the penalty. 15. We have heard both the counsel and perused the records. We have also considered the precedents relied upon. We find that the assessee s source of income is salary and income from other source. In the course of search, certain jewelleries were found. The assessee disclosed the sum of ₹ 29,41,015/- on search on 13.07.2012 and also paid the tax due thereon on 14.07.2012, much before the filing of the return of income pursuant to search. These facts are undisputed. This duly corroborates the bonafide of the conduct of the assessee in terms of the provisions of section 271AAA. The penal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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