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TMI Blog2018 (10) TMI 1673X X X X Extracts X X X X X X X X Extracts X X X X ..... h have been accepted by the Revenue, no penalty u/s 271AAA is leviable for not specifying the manner of earning the income surrendered. All the aforesaid conditions admittedly stood fulfilled in the case of surrender made on account of documents found and capital introduced in the firm as per the CIT(A). The cash was also part of the same surrender and no distinction has been brought out of the same with the rest of the surrender made. We therefore hold that there was no basis for upholding the levy of penalty on the cash surrendered and the same is therefore directed to be deleted. The appeal filed by the assessee is, therefore, allowed. - ITA No.1556, 1557/Chd/2017 Assessment Year : 2009-10 - - - Dated:- 15-10-2018 - Sh.Sanjay Garg And Smt.Annapurna Gupta, JJ. Assessee by: Shri Sudhir Sehgal, Adv. Revenue by: Smt.Chanderkanta, Order Annapurna Gupta, Both the above appeals have been filed by different assessees against separate orders of the Commissioner of Income Tax (Appeals)-3, Gurgaon (in short CIT(A) both dated 29.8.2017, upholding the penalty levied u/s 271AAA of the Income Tax Act, 1961 (in short Act ). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same. However, vis- -vis surrender of cash of ₹ 11 lacs, the Ld.CIT(A) held that as per the decision of the Hon'ble Jurisdictional High Court in the case of Kim Pharma Pvt. Ltd. Vs. CIT (P H) (2003) 258 CTR 458, the same was assessable as deemed income of the assessee u/s 69A of the Act and not business income and since no explanation with regard to the same has been furnished, penalty u/s 271AAA on the same was upheld. The relevant findings of the Ld.CIT(A) at para 5- 5.4 of his order are as under: 5. Decision:- I have considered the basis of penalty imposed by the AO and the submissions made by the AR of the appellant. The perusal of the provisions of the section 271AAA make it clear that the penalty can be levied on undisclosed income of the specified year if the conditions specified in the sub-section (2) of section 271AAA are not satisfied. It, therefore, follows that first thing to determine is what is the amount of undisclosed income under the given circumstances. The concept of undisclosed income has been clearly defined by Explanation to section 271AAA. However, the AO has imposed the penalty on the ground that the appellant had not substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d substantiating the manner in which the undisclosed income is earned as required by the section 271AAA(2)(i)and (ii). 10. We find that a similar requirement of disclosing the manner in which undisclosed income is earned is also there in Explanation-5 to section 271(l)(c). interpreting which the Allahabad High Court in the case of CIT vs RadhaKrishanGoel ( 2005) 278 ITR 454 observed that non disclosure of manner of earning the undisclosed income is not relevant for the purpose of availing benefit under Explanation 5 below section 271(l)(c). In CIT vs Mahendra C. Shah [2008] 215 CTR 493 (Guj). It was held the assessee having declared the value of diamonds in his statement under section 132(4) and paid taxes thereon before assessment was entitle to immunity from penalty under section 271(l)(c) under Explanation 5 thereof even though the statement did not specify the manner in which the income representing value of diamonds in his statement under section 132(4) and paid taxes thereon before assessment was entitled to immunity from penalty under section 271(l)(c) under Explanation 5 thereof even though the statement did not specify the manner in which the income representing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of cash found from residential premises of the assessee group amounting ₹ 11,00,000/-, it is held that manner of earning this income-has not been specified and substantiated because:- (i) cash of ₹ 11 lakh surrendered by the appellant was part of ₹ 44 lakh cash surrendered by the assessee group vide letter dated 22.07.2008 and it was in the surrender letter itself stated as unexplained cash found in residential premises during search operations. It has been held by the Hon'ble Jurisdictional High Court in the case of Kim Pharma (P) Ltd vs CIT (P H) [2013) 258 CTR 458 that where amount surrendered during survey was not reflected in books of accounts and no source from where it was derived was declared by the assessee, it was assessable as deemed income of assessee u/s 69A and not business income. In view of the above referred judgement, cash found is held as unexplained as no from which it is derived. Thus, with regard to the same, it is held that the appellant has not specified and substantiated the manner of earning income during the course of search and hence Penalty u/s 271AAA of the Act is leviable on this amount. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... htly upheld by the CIT(A). 9. We have considered the rival contentions and have also gone through the order of the CIT(A).Undisputedly the entire surrender made by the assessee on account of capital introduced in firms documents found and cash , amounting in all to ₹ 54,87,500/- was accepted and assessed to tax by the Revenue. All taxes thereon had been paid Admittedly no portion of the surrender had been assessed separately under any other head. Therefore the decision of the ITAT in the case of Sanjeev Goyal (supra) applied to the entire surrender made, and the CIT(A) ,we hold had wrongly segragated the surrender made on account of cash by stating that the same was assessable u/s 69A of the Act,when the fact was that it had not been so assessed. In fact on going through the order of the ITAT in the case of Sanjeev Goyal (supra) we find that it has been held in the said case that the disclosure of income u/s 132(4) during search having been made and the assessee having surrendered the same and included the same in the returns filed which have been accepted by the Revenue, no penalty u/s 271AAA is leviable for not specifying the manner of earning the income surrender ..... X X X X Extracts X X X X X X X X Extracts X X X X
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