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TMI Blog2018 (11) TMI 1619X X X X Extracts X X X X X X X X Extracts X X X X ..... peal mentioned hereunder are without prejudice to one another. 2.0 The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad has erred in law as also on facts in confirming the penalty of Rs. 7,55,539/- levied u/s 271 AAB of the Act. The penalty levied u/s. 271 AAB of the Act is totally unjustified on facts as also in law, may kindly be deleted. 3.0 Your Honor's appellant craves leave to add, amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal." 2. The facts leading to the case is this that a search was carried out u/s 132 of the Act at the premises of the assessee on 17.01.2013. Consequently the proceeding u/s 153A of the Act was initiated for A.Y. 2007-08 to 2012-13. The case of the assessee was selected for scrutiny since the search was conducted relevant to the assessment year. On 29.01.2014 the assessee filed the return of income showing total income of Rs. 96,99,920/-. Thereafter, a notice u/s 143(2) of the Act was issued on 22.04.2014, the same was served upon the assessee followed by a further notice dated 12.06.2014 along with detailed questionnaire annexed with the notice u/s 142(1) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to be "undisclosed income" particularly where nothing undisclosed was found in the said search. The assessee further added that since the said additional income of Rs. 75,55,392/- declared in the return of income of the assessee filed u/s 139 of the Act is on ad-hoc basis to cover up any defects or discrepancies remained in the books of account, the provision of that particular Act is not applicable neither the said income could be said to have earned from undisclosed sources; the same cannot be termed as "Undisclosed Income", so as to levy penalty u/s 271AAB of the Act. However, the ld AO did not accept the contention made by the assessee and he therefore imposed penalty of Rs. 7,55,539/- i.e @10% of the undisclosed income of Rs. 75,55,392/- of the specified previous year with the following observation: "3. Assessee's case falls u/s. 271AAB (1)(a) of the Act. In this case, (i) the assessee's family / business head namely Shri Jitendra T. Aghara had voluntarily admitted the additional income of Rs. 10.80 crores on ad-hoc basis on behalf of the family members and group concerns as a whole during the course of statement recorded u/s. 132(4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without any modification of the return of income. Thereafter, the ld AO initiated the penalty proceedings u/s 271AAA of the Act on the additional income declared by the assessee to the tune of Rs. 75,55,392/- and only upon receiving the objection made by the assessee by and under the corrigendum dated 25.06.2015 the penalty proceedings has been sought to be initiated u/s 271AAB instead of section 271AAA of the Act. Further that during the search no unaccounted money, asset, investment or expenditure was recovered in the appellant place. Only on the basis of the statement recorded u/s 132(4) made by the group head in order to buy peace of mind and to avoid long drawn litigation, the ad-hoc additional income of Rs. 75,55,392/- was admitted by the assessee. Further case made out by the ld Counsel for the assessee is that the search was conducted on 17.01.2013 when the due date of filing of return of the specified previous year i.e. F.Y. 2012-13 not expired and therefore the assessee had to file the return of income u/s 139 of the Act which he did on 29.09.2014 declaring total income of Rs. 96,99,920/- including the said ad-hoc income of Rs. 75,55,392/-. The Ld. representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endra T. Aghara; same cannot be an undisclosed income as narrated in explanation 'C' of Section 271AAB. In fact, in this particular case, the income declared by the assessee in the return was accepted in to without any modification made by the ld AR. No incriminating material in the form of cash, jewellery, bullion, valuables or any other documents or data evidencing the undisclosed income was found by the ld AO. Neither any defect nor discrepancies in the books of accounts has been found on the basis of which said income could be equated with "Undisclosed Income" as defined u/s 271AAB of the Act. It appears from the records that no reference has been made by the ld AO towards any incriminating material on which the AO has shown his satisfaction for the purpose of imposition of penalty rather such disclosure by the assessee seems to be solely based on conditional voluntarily disclosure. We have also gone through the order passed by Co-ordinate Bench on this particular aspect of the matter which came to a finding that the AO has imposed the penalty in a nonchalant manner and has probably misunderstood the imposition of penalty as an automatic consequence. Such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 the 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 documents or transactions found in the course of a search under section 132, which has- (A ) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B ) otherwise not been disclosed to the Chief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efined under section 271AAA of the Act. As noted, no reference to underlying material is found in the orders of lower authorities. A simple disclosure made in the course of search under section 132(4) in itself cannot be deemed to be 'undisclosed income' in view of the limitations placed in the definition thereof. 9. Therefore we are of the considered view that in the absence of any incriminating material referred for the purposes of assessing alleged undisclosed income, the imposition of penalty under section 271AAA is without any legal foundation and thus not permissible. 10. In view of the aforesaid discussion, we do not consider it necessary to advert to the alternative plea of the assessee for imposition of penalty with reference to ad-hoc amount of declaration alone. 11. The order of the Assessing Officer towards imposition of penalty under section 271AAA is therefore set aside and the Assessing Officer is directed to delete the penalty so imposed. 12. In the result appeal of the assessee is allowed. 11.3 As noted above, the Co-ordinate Bench has dealt with identical issue and held that in the absence of any reference to tangible material, mer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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