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TMI Blog2019 (8) TMI 1267X X X X Extracts X X X X X X X X Extracts X X X X ..... evy of penalty u/s 271AAB of the Act on the income surrendered consequent to search action carried out on Maharaja Group of cases to which all the above assessees belonged. It was stated that consequent to search and seizure operations conducted on the assessees u/s 132(1) of the Act on 27.8.2015,the following incomes had been surrendered by the assessees in the statement recorded u/s 132(4) of the Act as under: 1) Gaurav Jain, ITA No.921/Chd/2018 = Rs. 80 lacs 2) Deepak Kumar, ITA No.923/Chd/2018 = Rs. 75 lacs 3) M/s Big Digs Resorts Ltd., ITA No.1237 & 916/Chd/2018 (A.Y. 2015-16 & 2016-17) = Rs. 150 lacs 3. Penalty proceedings u/s 271AAB of the Act were thereafter initiated, in response to which the assessee submitted that firstly the levy was not mandatory and the assessee having included the surrendered income in its return of income, substantiated the manner of earning such undisclosed income, due taxes alongwith interest having been paid and return filed on time as per the provisions of section 139(1) of the Act, no penalty was leviable. The AO considered the reply of the assessee but did not find it tenable. He noted that the surrender was offered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o admit that it is not in all the cases that no incriminating material was found. That certain items of jewellery of silver were found / noticed during the search action, the source of income from which as held by the Assessing Officer also stood explained and also the manner of earning of the income was also substantiated. He, therefore, has been fair enough to admit that penalty under the provisions of section 271AAB (1)(a) of the Act was liable to be confirmed to the extent of the property / material found during search action. He, in this respect has given a chart, which for the sake of ready reference, is reproduced as under:- S.No. Particulars Sukhdarshan Kumar Rama Rani Venna Rani R.D. Place Private Limited 1 Jewellery 0 133 54.23 0 2 Silver 0 0 8.40 0 3 Income Declared 230 67 27.37 300 Total 230 200 190 300 11. In the case of Mrs. Rama Rani, (ITA No. 1240/Chd/2018) for assessment year 2016-17, as noted from the above chart, jewellery worth Rs. 1.33 crores was found, whereas, income surrendered by her during the search action was of Rs. 2 crores. In view of the discussion made above, the penalty us 271AAB(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of "Income declared", in the absence of any incriminating material to support it, was held not to be in the nature of undisclosed income and hence not liable to penalty and, therefore, accordingly penalty on the surrender made on account of Income declared in all the cases was deleted by the I.T.A.T. The Ld.Counsel for the assessee thereafter pointed out that the impugned cases related to rest of the assessees/persons belonging to the group searched and the facts were identical with the surrender in the impugned cases also, being made on account of incriminating material found being wrist watches and also on account of income declared. A chart bifurcating the income surrendered as above in each case was filed before us as under: S.No. Particulars Deepak Kumar Gaurav Jain Big Digs Resorts Private Limited 1 Jewellery 0 0 0 2 Silver 0 0 0 3 Wrist Watches 3.42 1.75 0 4 Income declared 71.58 78.25 150 Total 75 80 150 7. The Ld.Counsel for the assessee contended, therefore, that the issue being identical to that in the appeals decided by the I.T.A.T. as aforestated. It was squarely covered by the said decision. 8. The Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... banking channel? Ans. No sir,l I think these are the transactions related to prof its earned in cash f rom sale and purchase of properties, commodities, bullion etc. Q.21. Do you mean to say that the transactions recorded in the diary annexed as annexure AA-5 are unrecorded transactions and is the undisclosed income of your's and your f amily members? Ans. Yes Sir. Q.22. Please explain the modus operandi of how you and your f amily members have earned these prof its? Ans. Sir, generally there is not a set pattern as such. Sometimes with the help of some known persons, friends we get to know of some good property deals wherein the seller of the properties are in dire need of f unds and are ready to sell the property at much below the real market price. In those cases without getting the properties ac tually registered in our names, we do make f urther sales by getting cash prof its on these transactions without routing them through our regular books of accounts. These prof its are further reinvested to earn prof its on other property transactions, commodity transactions and on trading in bullion. Q.23. Please tell the names of persons with whom you and your f amily membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uals are those derived f rom the unaccounted and undisclosed transactions f rom sale and purchase of properties, bullion and commodity trading etc. during the current f inancial year i.e. FY 2015-16. These also include certain receivables on account of prof its earned f rom the sale of properties etc. Some of these prof its have been utilized to purchase gold jewellery and kept as cash etc. which has been seized earlier by the Income tax department during the course of search from our residential premises and f rom the lockers. Some prof its have been utilized for household expenditure etc. and also as temporary advances, the details of which are not available at this moment. However, in order to avoid any prolonged litigation and to buy peace of mind, I on behalf of my f amily members off er to disclose additional income of Rs. 17.00 cr. The details of which are as under:- S.No. Name Amount (in Lacs) FY 2014-15 Amount (in Lacs) FY 2015-16 1 M/s R.D.Palace Pvt. Ltd. 200 100 2 M/s Big Digs Resorts Ltd. 100 50 3 M/s Maharaja Light & Tent Service - 50 4 Sukhdarshan Kumar - 230 5 Rama Rani - 80 6 Rajat Jain - 200 7 Vani Jain - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oup. 11. We have heard the rival contentions, carefully perused the orders of the authorities below and also considered the various documents referred to before us. The issue before us relates to levy of penalty u/s 271AAB of the Act. 12. As per section 271AAB, penalty is levied on the undisclosed income found during search and the quantum of penalty varies from 10% to 30% of the undisclosed income, depending upon fulfillment of certain conditions by the assessee as specified in the section. The term "undisclosed income" has been defined in the Explanation to section 271AAB of the Act, as under: "271AAB "(c) "undisclosed income" means---- (i) Any income of the specif ied 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 f ound in the course of search under section 132, which has------ (A) Not been recorded on or bef ore the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) other wise not been disclosed to the [Principal Chief Commissioner or] Chief Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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