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TMI Blog2017 (2) TMI 1423X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor recorded under section 132(4) and the explanation of the assessee extracted (supra) during the course of assessment proceedings, we are of the view that the ld.CIT(A) has appreciated the facts in right perspective way, and department is unable to goad us to arrive at any other logical conclusion. Therefore, we do not find any merit in this appeal of the Revenue. Penalty u/s 271AAA - addition made on undisclosed income - amount was declared by the assessee in the statement under section 132(4) - HELD THAT:- No questions were put to the assessee. As far as assessment proceedings is concerned, the AO himself has treated this income of 2 crores as a business income and given set off against the alleged unaccounted profit computed by him. This action of the AO impliedly demonstrate that manner of earning of such income from development of Balaji Mall has not been doubted. Thus, the assessee has fulfilled all three conditions contemplated in sub-section 2 of section 271AAA and it could not be visited with penalty qua the alleged 2 crores disclosed during the course of search and offered them for tax in the return filed by the assessee. CIT(A) has rightly deleted the penalty. - Decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the course of search, the assessee has made a disclosure of ₹ 3.00 crores in the statement recorded under section 132(4) of the Act and it has offered a sum of ₹ 2.00 crores for taxation in this year in the case of the company. The AO has given set off of this ₹ 2.00 crores against the alleged total unaccounted profit computed by him, and thereafter made addition of ₹ 1,75,89,941/- to the total income of the assessee. The explanation of the assessee and finding of the AO is worth to note. It reads as under: "As you are aware that during the course of the income tax proceedings, the said assessee had submitted all the details/data required by your good office and we have also submitted all the evidences/supporting documents correlating each and every entry/papers seized by the department during the course of search operations and as such the amount disclosed by the assessee is voluntary disclosure which cannot be correlated with a specific entry/evidence. However, during the course of the assessment proceedings your good office had stated that on the basis of the page No. 3 to 8 of Annexure-A2, why an amount of ₹ 3.75 crores pertaining to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore the question of accrual of profit as stated in the paper does not arise. Thus, for a temporary period, if we consider that the said paper is pertaining to the Balaji Mall, than in the papers seized by the department, Details mentioned as Annexure 1. This also justifies that the said papers did not belonging to the assessee. 4. Again certain offices were sold after the date of the search to the family members of the Director of the assessee company and the said offices are being used by Manav Infrastructure Pvt. Ltd. as its Corporate Office. Thus, even if for the temporary period, if we consider that the papers seized by the department are correct then it cannot be concluded that the assessee had taken cash profit from itself or from its family members, which can not be a case in real sense. Considering the above fact we reiterate that the papers seized by the department during the course of search are not pertaining to the group or it has no relevance with the working of the Balaji Mall and therefore there is no correlation with the amount shown as profit which has been earned by the assessee. In view of the above, we have to state that the papers/documents seized by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing presented copies of the loose papers seized and inventorized at Annexure A-2 (pages 3 to 8) based on which the AO has made the said addition. The AR of the appellant has explained during the course of the hearing, the contents of the aforesaid seized material. Thus apparently page No. 3 & 4 contain hand written numbers which appear to be certain rough workings without any clear cut indication as to what the said numbers really lead to or relate to. On page No. 5 & 6 there seems to be some working showing net profit of ₹ 3,75,89,941/- apparently based on the difference between the sale value and the cost. There is also apparently a distribution between some parties designated as 'S', 'A' and 'A'. However, again on these pages there is nothing to infer that it relates to.the Balaji Mall. Again, there is no clear cut nexus emerging between the sale value derivation and the break-up of the shops as given on page no. 8 wherein floor-wise shop distribution of Shree Balaji Mall is mentioned. Similarly on page No. 7 there are some Gujarati writings, which apparently relate to certain shops of the Mall, but they really do not lead to anything. 6.1 On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustifies the addition made by the AO. Further, it is pertinent to mention that the disclosure made by the appellant is a general purpose disclosure and it would not be correct to infer that the entire disclosure pertains to the unaccounted profit relating to Balaji Mall only. This aspect is evident from the submission made by the appellant and also from the nature of disclosure made by the appellant. 7. In the result the addition made by the AO is deleted and the appeal is allowed." 5. Before us, while impugning order of the ld.CIT(A), the ld.CIT-DR took us through page nos.2 to 8 of the annexure available on page no.6 to 11 of the paper book. He pointed out that a bare reading of these papers would indicate that they are related to the transactions of shops in Balaji Mall. The representative of the assessee must have noted details of certain shops and the amounts. These papers were found at the premises of the assessee, and therefore, it was for the assessee to explain transaction noted in them. 6. On the other hand, the ld.counsel for the assessee contented that the assessee has given an elaborate explanation about these papers. According to him, no doubt these papers w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction having nexus with the business transaction of the assessee can be inferred. The assessee has placed on record details in tabular form exhibiting total shops available in Balaji Mall and how these shops have been sold in F.Y.007-08, 2008-09 and 2009-10. The assessee has also compiled these details floor-wise i.e. availability of shops on ground floor, second floor, third floor and fourth floor. It has placed on record date of sales, area and the amount for which these shops have been sold. Thus, complete picture of the shops, their area, their geographical location, date of sale and the amount for which they have been sold, have been placed by the assessee on page no.43 to 49 of the paper book. During the course of hearing, we have confronted the ld.CIT-DR to demonstrate nexus between narrations available on page no.7 to 10 of the paper book i.e. seized material vis-à-vis alleged book results by the assessee. However, the ld.CIT-DR could point out that on page no.7 i.e. 2nd page of the seized paper, name of Ashish J. Shah was mentioned. It contemplates business of Balaji Mall. On an analytical examination of these details, we find that some narrations here and there, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings under section 271AAA of the Income Tax Act on the ground that addition of ₹ 1,75,89,941/- was made to the total income of the assessee. He imposed penalty at the rate of 10% of the alleged undisclosed income. Accordingly, he quantified penalty of ₹ 37,58,994/-. On appeal, the ld.CIT(A) has deleted the penalty by observing as under: "4. With respect to ₹ 2,00,00,000 declared in the return filed subsequent to search, the AO is of the opinion that ₹ 2,00,00,000 does not form part of ₹ 3,00,00,000 disclosure made by Shri Ashish J. Shah on behalf of entire Shri Balaji group in the statement recorded on 25.04.2008 u/s. 132(4). He is of the opinion that the lump-sum disclosure of ₹ 3,00,00,000 by Shri Ashish J. Shah did not give assessee-wise and assessment year wise break-up and he formed an opinion that ₹ 2,00,00,000 disclosed in the return is not part of disclosure of ₹ 3,00,00,000. In this regard it is seen that CIT(A)-I through order dated 11.8.2011 has noted in para 3 of the order that the AO had given credit of disclosure made by the appellant of ₹ 2,00,00,000 as profit on sale of shops of Shri Balaji Mall pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under three conditions namely, (1) in the course of search, under sub-section (4) of section 132 admits undisclosed income and specifies manner in which such income has been derived, (2) substantiates manner in which undisclosed income was derived, and (3) pays the tax, together with interest, if any, in respect of the undisclosed income. In the present case, the assessee has made disclosure in the statement recorded under section 132(4) of the Act. So, first condition has been fulfilled. So far as condition no.(3) is concerned, it is also not disputed. The assessee included this amount in its return and paid taxes along with interest. Only condition no.2 remained to be examined i.e. assessee specifies manner in which such income was derived and substantiate the manner. This aspect has been considered y the hon'ble Gujarat High Court in the case of CIT Vs. Mahendra C. Shah, 299 ITR 305 (Guj), In that case, the Hon'ble High Court was examined scope of Explanation 5 to section 271(1)(c) of the Act where similar conditions are being contemplated. According to this decision of the Hon'ble High Court, there was no occasion for the assessee to explain manner in which undisclosed income w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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