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TMI Blog2020 (1) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... d transactions / discrepancies in the accounts and on account of certain loose papers found during the search action. In view of this, the aforesaid disclosure, in our view, falls within the scope of undisclosed income as provided under Explanation (C) to section 271AAB - We hold that the case of the assessee does not fall under the provisions of section 271AAB(3) of the Act but under the provisions of section 271AAB(1) of the Act and minimum penalty@ 10% of the undisclosed income is leviable. - Appeal of the assessee is partly allowed. - ITA No. 698/Chd/2017 - - - Dated:- 6-12-2019 - Shri. N.K. Saini, VP And Shri, Sanjay Garg, JM For the Assessee : Shri Tej Mohan Singh, Advocate For the Revenue : Shri Manjit Singh, CIT DR ORDER PER N.K. SAINI, VICE PRESIDENT This is an appeal by the Assessee against the order dt. 14/02/2017 of Ld. CIT(A)-5, Ludhiana. 2. Following grounds have been raised in this appeal: 1. That the Ld. CIT(A) has grossly erred both in law and on facts in sustaining penalty of ₹ 57,00,000/- ( Fifty Seven Lacs) under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduced herein. 6. Ld. CIT(A) confirmed the penalty levied by the A.O. by observing in para 3.2 to 3.3 of the impugned order as under: 3.2 The facts of the case, the order of the AO imposing the penalty and the arguments of the AR have been considered. The AR has repeated the contentions which were raised before the AO. The AR has reproduced the provisions of Section 271AAB which was introduced by Finance Act, 2012. It is stated that there similarity in the provisions of Section 271AAB with Explanation-5 to section 271(l)(c). The AR repeated the argument that the appellate has duly fulfilled all the conditions as prescribed u/s 271AAB by admitting the undisclosed income, substantiating the manner in which the undisclosed income was derived and paid the tax together with interest in respect of undisclosed income on the specified date. The AR contended that on the above facts of the case no penalty under Section 271AAB is attracted in this case. The AR has quoted certain case laws in support of his argument. It is mentioned here that as submitted by the AR also there was an amendment into the Income Tax Act, 1961 by Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in subsection (1). (3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in this section. Explanation- For the purposes of this section,- (a) specified date means the due date of furnishing of return of income under subsection( l) o f section 139 or the date on which the period specified in the notice issued under section 153A for furnishing of return of income expires, as the case may be; (b) specified previous year means the previous year- (i) Which has ended before the date of search, but the date of furnishing the return of income under sub-section(l) 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 date of search; or (ii) In which search was conducted; (c) undisclosed income means- (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'specified date' applicable in this case, was the due date of furnishing of return of income under sub-Section (1) of Section 139 and for the A. Y. 2013-14 it was 31.10.2013 (as extended by the CBDT). Therefore, for application of low rate of 10% or 20% for calculation of the penalty, the assessee was required besides fulfilling other conditions, to pay taxes together with interest before this date and furnish the return declaring the undisclosed income before 31.10.2013. If either the taxes together with interest were not paid or the return declaring the undisclosed income was not filed before 31.10.2013, then penalty @ 30% as per 271AAB(l)(c) is leviable. The fact that the assessee failed to pay the taxes together with interest before the due date i.e. 31.10.2013 is clear from the letter dated 31.03.2014 filed by the assessee before the AO which is reproduced below:- Sub:- Intimation of rectification of return of Income relating to Assessment Year- 2013-14 M/s. Palace Infratech Pvt. Ltd., B-XIX-546, Govt. College Road, Fountain Chowk, Civil Lines, Ludhiana- AAGCP3488G. This is to inform you that the tax payable alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 10. We have considered the submissions of both the parties and perused the material available on the record. It is noticed that a similar issue having identical facts was a subject matter of the appeal in ITA No. 697/Chd/2017 in case of M/s Palace Jewllers Pvt. Ltd. for the A.Y. 2013-14 wherein vide order dt. 20/12/2018 the relevant findings have been given in para 5 to 10 which read as under: 5. Before us, Ld. Counsel for the assessee has submitted that no undisclosed income of the assessee was found during the search action. The aforesaid surrender of ₹ 4 crores of business income was to buy peace only and to cover the discrepancy, if any, found in the account of the assessee. It has been further pleaded that the surrendered income was duly accounted for in the original return of income filed on 30.9.2013 and further that the Assessing officer was requested to adjust the tax liability relating to such surrender out of the seized assets. However, the assessee was not possessed of sufficient funds to pay the tax on the surrendered income. It has been further pleaded that the assessee, however, has field revised return of income on 12.2.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) on or before the specified date- (A) pays the tax, together with interest, if any, in respect of the undisclosed income; and (B) furnishes the return of income for the specified previous year declaring such undisclosed income therein; (b) a sum computed at the rate of twenty per cent of the undisclosed income of the specified previous year, if such assessee- (i) in the course of the search, in a statement under sub-section (4) of section 132, does not admit the undisclosed income; and (ii) on or before the specified date- (A) declares such income in the return of income furnished for the specified previous year; and (B) pays the tax, together with interest, if any, in respect of the undisclosed income; (c) a sum [computed at the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted. 8. The provisions of section 271AAB (1) are little bit akin to provisions of section 271AAA of the Act. However, the difference is that if the assessee surrendered the undisclosed income in a statement u/s 132(4) of the Act and specify and substantiate the manner in which the income has been derived and pays the due taxes together with interest in respect to such undisclosed income before the specified date, then, as per the provisions of section 271AAB of the Act, the Assessing officer may levy penalty @ 10% of the such undisclosed income, whereas, as per the provisions of section 271AAA of the Act, in the event of assessee complying the aforesaid condition, no penalty is leviable. Since the search in the case was conducted on 31.10.2012, hence, the provisions of section 271AAB are attracted in this case. 9. So far as the non-deposit of tax by the due date is concerned, the assessee made a statement to the Assessing officer to adjust the due taxes against PD. Account / seized assets. However, the Assessing officer rejected the above contention stating that the seized assets can be adjusted only against the existing liability. As per the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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