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TMI Blog2019 (5) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered income has been derived and to substantiate the manner in which the undisclosed income was derived, assessee merely harped upon his statement that the surrender is being made to buy peace and to avoid litigation with the Department in the spirit of cooperation, to avail of the escape route from the penalty under sub-section (2) of section 271AAA. So, when the assessee has failed to specify the manner and substantiate the manner in which the undisclosed income was derived rather embark upon the mercy plea that he is making surrender to buy peace of mind and avoid litigation, he is not entitled for the benefit of section 271AAA(2) of the Act. Following the decision rendered in case cited as Pr.CIT vs. Smt. Ritu Singal [ 2018 (3) TMI 593 - DELHI HIGH COURT] we are of the considered view that ld. CIT (A) has erred in deleting the penalty u/s 271AAA, hence appeal filed by the Revenue is hereby allowed and penalty order passed by the AO is restored. - Decided in favour of revenue - ITA No.472/Del./2016 - - - Dated:- 14-5-2019 - Shri R.K. Panda, Accountant Member And Shri Kuldip Singh, Judicial Member For the ASSESSEE : Shri Amit Singhania, Advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has accepted the quantum assessed by the AO and confirmed by the ld. CIT (A). Search and seizure operation was conducted at the premises of the assessee u/s 132 of the Act and incriminating documents/assets were seized and consequently assessee filed return at enhanced income u/s 139(1) of the Act. It is also not in dispute that the assessee has admitted impugned undisclosed income in his statement recorded u/s 132 (4) of the Act and had paid taxes along with interest. Ld. CIT (A) has deleted the penalty by relying upon the decisions rendered by the Tribunal and Hon ble High Court mentioned in para 4.2.5 by drawing the conclusion that the AO has never questioned the assessee during the search or during the assessment proceedings as to the manner in which the undisclosed income was derived. Ld. CIT (A) also observed that the AO has not recorded his satisfaction in the assessment order itself by recording the reasons on the basis of which he was satisfied that the penalty proceedings u/s 271AAA of the Act is liable to be initiated and levied. 6. Ld. DR for the Revenue challenging the impugned order contended that sub-section (2) of section 271AAA of the Act does not ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O sought to initiate the penalty proceedings u/s 271AAA qua the surrendered amount during search operation which is in accordance with the provisions contained in the section. Even otherwise, all the conditions laid down to initiate the penalty proceedings u/s 271AAA are complete as discussed in the preceding paras. 11. Now, the next question arises for determination in this case is :- as to whether assessee has failed to substantiate the manner in which the undisclosed income of ₹ 21,81,00,000/- was derived and is liable to be penalized as required under sub-section (2) of section 271AAA of the Act as contended by the ld. DR for the Revenue. 12. To proceed further, provisions contained under section 271AAA (2) are reproduced as under for ready perusal :- 271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007 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 compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is made with the clear understanding that the necessary tax shall be paid by me and there will be no penal action by the Department whatsoever. The above disclosure is inclusive and comprises of the disclosure made on 06.03.2012. The same is being made to buy peace and avoid litigation with the Department in the spirit of cooperation. 15. Ld. CIT (A) by relying upon the provisions contained u/s 271AAA (2) deleted the penalty by returning following findings :- 4.2.4 The AO has over-looked the provisions of subsection (2) of section 271AAA of the Act which provides that penalty u/s 271AAA (1) shall not be applicable in certain conditions prescribed therein. The appellant had admitted the impugned undisclosed income in his statement u/s 132(4) of the Act and had paid taxes together with interest. As regards the manner in which the undisclosed income was derived, apparently the same was never asked from the appellant, either during the search or during the assessment proceedings. 16. Bare perusal of aforesaid findings returned by ld. CIT (A) goes to prove that the ld. CIT (A) has misconceived the provisions contained u/s 271AAA (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but is not applicable to the facts and circumstances of the case. 20. Hon ble High Court of Delhi in a case relied upon by the ld. CIT DR cited as Pr.CIT vs. Smt. Ritu Singal (2018) 92 taxmann.com 224 (Delhi) after discussing the decisions relied upon by the ld. AR rendered by Hon ble Apex Court in ACIT vs. Gebilal Kanhaialal 348 ITR 561 (SC) and Mak Data (P.) Ltd. vs. CIT 358 ITR 539 (SC), Hon ble High Court of Gujarat in CIT vs. Mahendra C. Shah 299 ITR 305 (Guj.), Hon ble Allahabad High Court in CIT vs. Radha Kishan Goel - 278 ITR 454 (All.), Hon ble Delhi High Court in Mothers Pride Education Personnel (P.) Ltd. vs. DCIT ITA No.3372 (Delhi of 2011 dated 12.10.2012 , reversed the decision rendered by the Tribunal setting aside the penalty on the ground that in the absence of the query raised by the authorized officer during the course of recording of statement u/s 132 (4) to specify and substantiate the manner in which the undisclosed income was derived by returning the following findings :- 16. That the income which was ultimately brought to tax pursuant to the disclosure made, which was voluntary on the part of the assessee is stati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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