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TMI Blog2020 (12) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 (hereinafter referred to as 'Act'). A search u/sec. 132 was conducted in the case of the assessee on 20/09/2016. During the course of search from the books of accounts seized by the department found that the assessee has claimed the purification loss of 20% - 21% on conversion of gold purchased from their customers. A statement u/sec. 132(4) was recorded on 22/09/2016 and on questioning the purification loss claimed by the assessee, the assessee has admitted the additional income of Rs. 2,62,62,954/- in aggregate for the F.Y. 2015-16 & 2016-17. For the assessment year under consideration i.e. A.Y. 2016-17 the assessee had admitted the additional income of Rs. 1,75,95,335/- and filed its return of income as declared in Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer, the assessee went on appeal before the ld. CIT(A) and the ld. CIT(A) viewed that the addition was purely made on estimation and there was no excess stock found during the course of search, no incriminating material relating to earning of undisclosed income was found by the department. Therefore, viewed that the excess purification loss admitted by the assessee was derived figures and not on the basis of entries in the books of account of the assessee. Accordingly, held that the additional income admitted by the assessee does not fall under the definition of 'undisclosed income'. Accordingly, cancelled the penalty levied by the Assessing Officer and allowed the appeal of the assessee. Against which, the departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that there was no undisclosed income and hence cancelled the penalty. For the sake of clarity and convenience the relevant part of the order of the ld. CIT(A) in para 6 is extracted which reads as under:- "6.0. I have carefully considered the facts of the case and submissions of the appellant. The main contention of the assessee is that there is no "Undisclosed Income" as defined u/s. 271AAB of the Act assessed on which penalty could be levied. The addition of Rs. 1,75,96,335/- was made on account of excess stock found during the course of search which was admitted by the assessee as additional income in the statement recorded u/s. 132(4). But it is seen from the copy of statement filed before me that the disclosure of Rs. 1,75,96,335/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not made on account of excess stock as mentioned in the assessment order and the penalty order. 6.1 It is to be seen whether the amount of R. 1,75,96,335/- which was added on account of disclosure made during the search by the AO, satisfies the definition of "undisclosed Income" as per section 271AAB. The "Undisclosed Income" for the purpose of levying penalty for the purpose of section 271AAS is as under: "(c) "undisclosed income" means- (i) any income of the 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 a search under section 132, which has-- (A) not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d." 7. We find from the orders of the lower authorities that the basis for additional income was only estimation but not supported by any evidence. Even the department failed to substantiate the industry average of purification loss with authenticated documentary evidences. The assessee submitted that the additional income was admitted only to purchase peace and to avoid litigation with the department even though there was no evidence. The claim of loss was found from regular books of accounts maintained by the assessee which were duly accounted. If the department contention is accepted, the income generated out of excess loss claimed by the assessee should be available in the form of undisclosed assets or money, bullion, jewellery or any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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