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TMI Blog2019 (9) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... exceptional clauses of sub-section (2) of section 271AAA. The assessee in the course of search has made a statement and has admitted the undisclosed income and also specified the manner of earning of income, which also stood substantiated from the documents seized and has also paid the due taxes together with interest in respect of the undisclosed income. In view of this, the action of the lower authorities in levying the impugned penalty cannot be held to be justified. - Decided in favour of assessee Penalty in respect of which even no document/evidence of any unaccounted transaction was found - assessee surrendered the aforesaid income to cover up further discrepancies, if any, found in the seized documents - HELD THAT:- Definition of undisclosed income would show that there must be some income found during the course of search action either in the form of money, bullion or jewellery or other items or there must be some transaction or entry either not recorded in the books of account or in the form of expenditure or an entry of any expenditure, etc., which is found to be false. However, we find that in the case of surrender except the seized documents, otherwise nothing w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein the assessee was also covered. During search action, the assessee surrendered additional income of ₹ 5,57,24,400/- as its business income. The assessee thereafter filed return u/s 139(1) of the Act, which included the aforesaid income also. The A.O. accepted the returned income in the assessment proceedings carried out u/s 153A of the Act including the surrendered income. However, the A.O. thereafter levied the penalty u/s 271AAA of the Act on the ground that the assessee had not accounted for this surrendered income in his books of account on the date of search and further the assessee has failed to specify the manner in which such income has been derived and even failed to substantiate such manner. 5. The Ld.CIT(A) also confirmed the penalty, so levied by the A.O. 6. We have heard the rival submissions and also gone through the orders of the lower authorities. 7. The Ld. DR has relied upon the findings of the CIT(A) and has submitted that since the assessee had failed to substantiate the manner in which the surrendered income of ₹ 5,57,24,400/- was earned, hence the penalty was rightly levied by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Halycon Lifesciences P. Ltd. 5,5724,400/- - 5,57,24,400/- Ind Swift Ltd. Nil 12,73,41,000/- 12,73,41,000/- 42,80,04,000/- Thus an amount of ₹ 42,80,04,000/- rounded off to ₹ 43 crores is hereby surrendered for F.Y. 10-11 11-12 toward unaccounted cash profit earned from unaccounted transaction in CMO. 10. A perusal of the above questions and answers reveals that no such income in any form of cash or other valuable items was found during the course of search action, rather certain documents were seized, wherein certain unaccounted transactions were recorded. The questions were put to Shri Nav Rattan Munjal regarding unaccounted transactions and in answers to those question, as reproduced above, the Director of the company explained that these transactions contained trading of CMO (Crude Menthol Oil) and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further observed that with regard to seized documents, an amount of ₹ 12,73,41,000/- was surrendered as unaccounted cash profit earned from the trading from Crude Menthol Oil. However, the remaining amount of ₹ 1,77,00,000/- was surrendered in order to cover discrepancy, if any, found in the seized documents. The Ld.CIT(A) though deleted the penalty in respect of the amount, which tallied with the transactions of trading in Crude Menthol Oil recorded in the seized documents, however, he confirmed the penalty on the surrendered amount of ₹ 1,77,00,000/- on the ground that the same was not represented by any specific asset, nor with any entry in the books of account or other documents or transactions found in the course of search and hence, does not fulfill the conditions for getting immunity from penalty u/s 271AAA of the Act. 12. The Revenue has agitated the action of the CIT(A) in deleting the penalty in respect of part of the surrendered income of ₹ 12,73,41,000/-, related to the seized documents. 13. On the other hand, the assessee has preferred the present appeal agitating the action of the CIT(A) in confirming the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious year which is found to be false and would not have been found to be so had the search not been conducted; 15. A perusal of the above definition of undisclosed income would show that there must be some income found during the course of search action either in the form of money, bullion or jewellery or other items or there must be some transaction or entry either not recorded in the books of account or in the form of expenditure or an entry of any expenditure, etc., which is found to be false. However, we find that in the case of surrender of ₹ 1,77,00,000/- except the seized documents, otherwise nothing was found during the search action which would construe undisclosed income of the assessee as defined under the provisions of section 271AAA of the Act. Though the assessee has honored its commitment and has duly offered for taxation the total surrendered income. However, in view of our findings given above, it is not a case of levy of penalty either in the case of the surrendered amount, the mode and manner of remaining of which has been stood specified and substantiated, as held by the CIT(A), nor in respect of the remaining amount of ₹ 1,77,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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