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TMI Blog2019 (10) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... lso find that the assessee has not fulfilled the conditions under Sub-Section (2) of Sec.271AAA of the Act to be out of the ambit of sub-section(1) of sec.271AAA of the Act. Therefore, penalty u/s 271AAA of the Act can be levied as the undisclosed income found during the course of search has not been substantiated by the assessee and it is also not proved that taxes have been paid thereon. Addition has also been confirmed by ITAT. Therefore, we cannot agree with the contentions of the Ld. Counsel for the assessee that the penalty u/s 271AAA of the Act is not attracted because the explanation of the assessee has not been proved to be wrong. We reject the assessee s grounds and the penalty u/s 271AAA is upheld. - ITA No. 1465/Hyd/2017 (Assessment Year: 2008-09) - - - Dated:- 9-8-2019 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMEBR Assessee by: Shri A.V. Raghuram Revenue by: Shri Dinesh Poduchuri ORDER PER P. MADHAVI DEVI, J.M.: This is assessee s appeal for the A.Y 2008-09 against the levy of penalty u/s 271AAA of the Act and which has been confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has not been able to explain the investments to the extent of ₹ 1,15,000/- in the Serilingampalli property and also unexplained cash found at the time of search of ₹ 5 lakhs. He submitted that these may be grounds for making and confirming the additions but they cannot be considered for levy of the penalty u/s 271AAA of the Act. He submitted that assessee s explanation has not been found to be false and therefore the penalty is not sustainable. 4. The Ld. DR, on the other hand, supported the orders of the authorities below. 5. Having regard to the rival contentions and the material on record, we find that the assessee has not been able to explain the sources of cash found during the course of search and the sources for investment of ₹ 1,15,000/- and therefore, the additions have been rightly made to the returned income of the assessee and the said additions have also been confirmed by the ITAT. This appeal is against the levy of penalty u/s 271 AAA of the Act. For the sake of ready reference, the relevant provision is reproduced hereunder. Section 271AAA of Income-Tax Act, 1961 deals with Penalty where se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious year means the previous year- which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or in which search was conducted.] 5.1. From a detailed reading of the above provision, we find that levy of penalty u/s 271AAA of the Act is not automatic but is subject to the Provisions of Sections 274 and 275. We find that the additions made by the A.O. and confirmed by ITAT have triggered the initiation of penalty proceedings u/s 271AAA of the Act, and the same is not covered by the provisions of Sec. 273B of the Act, but is covered by the provision of Sec.274 of the Act which provides as under. Sec. 274. Procedure (1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. (2) No order imposing a penalty under this Chapter shall be made- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the assessee has not been proved to be wrong. Similar decision was taken by the Co-Ordinate Bench of the Tribunal at Pune in the case of ACIT vs. Shri Shailesh Gopal Mhaske, in ITA No.2242/PUN/2014 dated 27.9.2017. For ready reference, the relevant paras are as under: 13. In order to adjudicate the issue, first we shall refer to Explanation under section 271AAA of the Act, which defines 'undisclosed income'. Undisclosed income means any income of 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 search under section 132 of the Act. The CIT(A) while deciding the issue has referred to part of definition of 'undisclosed income' though in the first part of para 6.4 of the appellate order, he refers that in the assessment order as well as penalty order, there is no whisper either of about any money, bullion, jewelry or other value article or thing or any entry in the books of account or other documents or transactions found in the course of search or books of account maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1AAA of the Act. Hence, the order levying penalty merits to be upheld in case the assessee has not fulfilled the conditions laid down in sub-section (2) of said section. In this regard, reliance was placed upon by the assessee on the Pune Bench of Tribunal in ACIT Vs. Shri Vikas Bapurao Takawane (supra) is misplaced, where satisfaction was for initiating penalty for concealment of income and furnishing of inaccurate particulars of income and the order levying penalty was also for concealment of income. The Tribunal notes that there was no reference of undisclosed income either in the assessment order or the order levying penalty under section 271AAAof the Act and where the Assessing Officer had failed to specify undisclosed income unearthed during the course of search as envisaged under the provisions of section 271AAA of the Act, penalty levied under the said section was deleted. We have already referred to the facts of the present case and order of Assessing Officer while recording satisfaction, wherein he talks about the income unearthed during the course of search and order levying penalty under section 271AAA of the Act, which specifically talks about undisclosed income and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 271AAA of the Act are not fulfilled. 18. The assessee in this regard has placed reliance on the decision of Chandigarh Bench of Tribunal in ACIT Vs. Munish Kumar Goyal (supra) and pointed out that where the assessee had furnished income in the course of search and filed the return of income and taxes were paid, there was sufficient compliance of provisions of section 271AAA(2) of the Act and it was held that the impugned penalty order deserves to be set aside. Reference is made to para 10 of the said order, wherein questions asked to the assessee during the course of search proceedings have been extracted. The question which was put to the assessee was do you want to say anything more. He replied that he voluntarily surrenders sum of ₹ 4 crores for assessment year 2010-11 to cover all the discrepancies in the seized papers. The Tribunal thus, in view thereof, observed that where the Revenue has not asked the assessee to disclose the manner in which said income was earned, then during search, the assessee must have disclosed the manner. However, in the facts of present case, there is variance that vide question No.25, the assessee was specifically asked to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of taxes is prescribed under clause (ii) of Explanation 5 to section 271(1)(c) of the Act. In the facts of said case, the apex court noted that the assessee had paid taxes with interest upto the date of payment and hence, three conditions stood fulfilled. The issue before the Hon'ble Supreme Court was with regard to return filed in response to notice under section 158BC of the Act, which was in addition to the regular returns of income for respective years of search period. On the other hand, penalty under section 271AAA of the Act is leviable in respect of regular return of income of search year. In the facts of present case before us, the assessee has not paid the taxes due on returned income (not additional income under section 158BC of the Act) till the date of passing the assessment order and even till date of passing the order levying penalty. The assessee claims to have paid the taxes thereafter, but such payment of taxes which does not accompany the return of income, cannot be held to be compliance to the conditions laid down in sub-section (2) to section 271AAA of the Act. It may be pointed out that major portion of taxes have been paid after September, 2013 and conse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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