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TMI Blog2021 (2) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... ,97,221/- with bills and vouchers. The assessee, however, explained that the said jewelry was accumulated out of gifts received by the assessee on the eve of marriage and other ceremonies/occasions from time to time. The assessee, thereafter, included the value of the above stated jewelry in the computation of income and offered the same for taxation. The Assessing Officer in the assessment proceedings noted that the assessee in the return of income has disclosed income of Rs. 21,79,222/- on account of undisclosed jewelry. He, therefore, initiated penalty proceedings u/s.271AAB of the Act and levied the minimum penalty @ 10% of the said declared income of the assessee. 3. Being aggrieved by the above order of the Assessing Officer, the assessee preferred appeal before the Ld. CIT(A). The ld. CIT(A), however, observed that the levy of penalty under the provisions of section 271AAB was mandatory. He accordingly confirmed the penalty so levied by the AO. 4. Before us, the Ld. Counsel for the assessees has submitted that though, the assessee has offered the value of the jewelry as additional income in the return of income, but the same does not fall in the definition of "undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le the details of assets and liabilities, hence, the conditions of recording the same in the books of accounts was not applicable to the assessee, therefore, the assets/jewelry so found/offered in return of income does not fall in the definition of undisclosed income as defined under the provisions of section 271AAB of the Act. That even the assessee has not made any surrender of such income in his statement recorded u/s 132(4) of the Act during the search action. He has further submitted that even otherwise, the levy of penalty u/s 271AAB is not mandatory. 6. On the other hand, the Ld. DR has submitted that the assessee himself offered the undisclosed income in the return of income and has paid due taxes. He, therefore, has submitted that the levy of penalty by the Assessing officer on such undisclosed income was justified. 7. I have considered the rival contentions and gone through the record. I have also examined the relevant provisions of the Act and case laws on the issue. For the sake of ready reference, the relevant provisions of section 271AAB and section 274 of the Income Tax Act are reproduced as under: "Penalty where search has been initiated 271AAB: (1) The Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted. Section 274 Procedure 274 (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- (a) by the Income- tax Officer, where the penalty exceeds ten thousand rupees; (b) by the Assistant Commissioner, where the penalty exceeds twenty thousand rupees, except with the prior approval of the Deputy Commissioner.] (3) An income- tax authority on making an order under this Chapter imposing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B will not be attracted if the surrendered income would not fall in the definition of 'undisclosed income' as defined under explanation to section 271AAB of the Act. 9. On a perusal of the provisions of section 271AAB, it is evident that the Section 271AAB is self-contained. There can be no doubt that there is no discretion with the AO as the parameters by which the AO or the tax authorities are bound in regard to the rate of penalty and the circumstances on the basis of which the penal provision can be attracted are self-explanatory. It can be noticed that the Co-ordinate Benches of the Tribunal have categorically held that the expression 'undisclosed income' is given a definite and specific meaning and the word has not been described in an inclusive manner so as to enable the tax authorities to give wider or elastic meaning which enables them to bring within its ambit the species of income not specifically covered by the definition. Moreover, such penal provisions are required to be interpreted in a strict, specific and restricted manner and not in an inclusive manner. If the surrendered income does not fall in the definition of "undisclosed income" as defined u/s 271AAB of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above reproduced relevant part of the assessment order reveals that the assessing officer has not mentioned about unearthing of any undisclosed income as defined u/s 271AAB of the Act during search action carried out at the premises of the assessee. In my view, the income declared by the assessee in the return of income or found or assessed by the Assessing officer in the assessment proceedings may be relevant for assessment of the income under section 68 /69 and other related provisions of the Act and also for the levy of penalty under section 271(1)(c) of the Act in view of the relevant provisions of section 68/69 and 271(1)(c) of the Act. However, for the levy of penalty u/s.271AAB, the case must fall within the four corners of the definition of expression "undisclosed income" as defined u/s 271AAB itself. The assessee in this case is an individual and has earned income from partnership firm and interest income. The assessee has neither earned any business income nor earned any income exceeding Rs. 50 lakhs so as to require mandatory filing of personal assets and liabilities or to maintain books of accounts; even the assessee is not required to otherwise disclose any suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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