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TMI Blog2021 (10) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of its income from all the sources. It means that the assessee has complied with all the conditions mentioned in section 271AAA(2) of the Act and once the assessee has complied with all the conditions the assessee should not be called upon to pay a penalty under this section. As assessee has complied with the conditions of section 271AAA(2) of the Act, the assessee is not liable for penalty under this provision. Appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... red Separately: a. Income Declared (-) 2,25,00,000 b. Property Dealing Income (-) 1,18,34,820 (-)9,60,78,298 Add: Considered Separately A. Depreciation 9,36,801 Add: As discussed in Para 2.1.1 a. Property Dealing Income (substantive) 55,96,487 b. Property Dealing Income (protective) 62,38,333 Add: Disallowance of expenses a. As per Para 2.3.2 1,41,14,224 b. Fringe Benefit Tax 86,800 c. Donation 17,200 2,69,89,845 (-)7,53,26,786 Less: Allowable Expenses a. Allowable Depreciation under section 32(1) (-) 5,24,801 b. Deferred Tax Asset (-)1,46,012 6,70,813 (-)6,90,88,453 II Income From Various Sources Income offered to taxation in response to Action Under section 132(1) to cover up any and every discrepancy in Business and Acc. Records 2,25,00,000 Gross Total Income (-)4,65,88,453 Total Taxable Income (-)4,65,88,453 Total Taxable Income Rounded Off (-)4,65,88,450 7. There is no change in the income declared by the assessee accepted in the above computation of income by the AO at item II as income from various sources as income offered to taxation in response to action under section 132(1) of the Act to cover u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ware that my books of accounts for the current year are incomplete as my accountant has not entered all the transactions which have taken place during the current financial year and hence I am not in position to reconcile my financial position and explain the discrepancies. Q3. How do you intend to cover up the above mentioned discrepancy? Ans. To cover up any and every discrepancy in my books of account, in my business and in my accounting record and to set things right and to avoid unnecessary litigatin, I hereby offer an additional income of ₹2.25 crores over and above my current years regular income as my current year regular income for Financial Year 2008-09 pertaining to AY 2009-10. I promise to pay the tax of ₹76.50 lacs and I request that I.T. authorities to adjust the seized cash of ₹12.80 lacs as advance tax for AY 20099-10 and I will pay the remaining tax of ₹63.70 lacs in three installments and the 1st Installment of ₹20 lacs will be paid on or before 15th Dec 2008 and the balance of ₹18.70 lacs on or before 15th March, 2009. I am giving this declaration under the bonafide belief that because of my coming forward with the above di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Inspite of the same being the gift given by the company being allowable expenditure. iv. That our of said undisclosed income of ₹2.25 crores, our company has carried out necessary repairs and renovations worth ₹34 lacs in 12 bunglows, Lonavala project as on completion of total renovation our company want to sell the said bunglows at higher price and said amount is debited to our Lonavala Porject. That out of said undisclosed income of ₹2.25 Corres our company has acquired 15 Kilo Gold Bars and Gold Biscuits (15 Kg @ ₹ 11,66,666/- per Kg = ₹1.75 Cr) for giving the same on junghad basis for earning some rent on such janghad and said amount is debited to our Janghad stock for specific purposes of giving the same on hire basis and I have to mention that these excess gold bars and biscuits were not accounted for in our books of accounts. Vi. That I promise to pay the Income tax voluntarily on the above referred declaration of ₹ 2.25 Crores in due course of time for which I have already handed over to you the post dated cheques for such advance tax payment and I hereby requetst you to adjust the seized cash of ₹12.80 lacs towards Advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to their declaring the 2.25 Crore as an additional income and making payment of appropriate tax, no penalty proceeding will be initiated and/or no penalty will be levied as assured. 13. The assessee has authorized the officer to adjust the seized cash of ₹ 12.80 lacs against the Advance Tax for A.Y. 2009-10 and has given three Post dated Payees Account cheques of Advance Tax to the Officer for 15th September, 15th December and 15th March Advance Tax Installment of ₹ 20 Lakh ₹ 18.70 lakhs and Ps. 25 Lakhs respectively and thereby made the payment of Additional Income Tax of ₹ 76.50 lakhs as computed on Additional income of ₹ 2.25 Crore. 14. The assessee has also explained to the Survey party its nature of business and the manner in which the said income is received by them for the period under consideration. The assessee has explained that they are giving their Gold Stock on Rent / Commission popularly known as Janghad basis for earning Rent/ Commission in Metal Terms which results in accumulation of Gold under Janghad system which is to be accounted for at the end of the year as a Janghad Stock representing the Rent / Commission Income in Metal Ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fered to Taxation is our normal income which is to be offered to taxation even otherwise since, without claiming renovation expense, the assessee cannot give effect to the proper income in property trading, without giving proper effect to the Janghad Income in metal terms the assessee cannot give proper effect to our Stock in trade of Gold given on Jhangad basis, without giving effect our cash sales, the assessee cannot give proper effect to cash on hand to be deposited in bank from time to time. The Books of Accounts were incomplete for few days due to the circumstances beyond the control of the assessee and magnitude of multiple business activity and complicated nature of business. 16. In view of the above facts and circumstances, now question arises whether the assessee has complied with all the three conditions as prescribed under the provision of section 271AAA of the Act. We noted that the three conditions mentioned in the provision of section 271AAA are (i) that the assessee should admit the undisclosed income in a statement made under section 132(4) of the Act. (ii) The assessee specify the manner in which such income has been derived and substantiate the manner in which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd doubt that the offer of undisclosed income of ₹ 2 crores was made voluntarily by the assessee without any detection by the department and accordingly the argument of the Learned DR that but for the search, this income would not have been offered does not hold any water and deserves to be dismissed. It is already well settled that though the income is not disclosed in the return filed u/s 139(1) of the Act, but duly disclosed in the petition filed u/s 132(4) of the Act followed by the filing of return in response to section 153A of the Act and taxes paid thereon, then the assessee would not be invited with the levy of penalty. We find that if the argument of the Learned DR that since the assessee had not offered the said income in return filed u/s 139(1) of the Act thereby levy of penalty is in order is to be accepted, then it would make the immunity provisions contemplated u/s 271AAA(2) of the Act redundant. The legislature in its wisdom had given a thoughtful consideration on the facts and circumstances under which the assessee would not be invited with the levy of penalty pursuant to the search subject to fulfillment of certain conditions stipulated in the said section . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income- tax/Assessing Officer chose to levy maximum penalty under section 271(1)(c). While levying the penalty, the Assessing Officer repelled the contention of the appellant that a promise had been made not to levy the penalty, as there was no evidence to this effect on record. It was also held that the appellant was not entitled to the immunity given under section 132(4) read with section 271(1)(c) of the Act." The Learned CIT(A) deleted the levy of penalty u/s 271(1)(c ) of the Act. On second appeal by the revenue, the tribunal held as follows:- "Although there is nothing on record to show that he was given an assurance that no penalty would be levied, the fact however clearly suggest that such an inducement must have been given by the searching party. When only partial evidence in support of concealment for a very limited period was detected during the search, why would a man go to offer much higher amounts for a large number of years unless he was promised some reciprocal benefit like not being visited with penalty? The learned DR has tried to argue before us that a change of heart might have taken place as a result of which Sri Ramesh came forward with all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e undisclosed income over all these years in the way in which such assessments have been made. The only way for the department in such a case would have been to assess the entire amount of undisclosed investments for the year of search as has been discussed by us above, the Deptt. could not have been in a position to levy penalty for concealment in such a case. We are therefore of the opinion that the case laws as cited by the Department, do not exactly support its case, so far as the present appeals are concerned. On the other hand, most of the judgments cited by the learned counsel for the assessee support the case of the assessee that on account of strong circumstantial evidences being there about inducement having been given by the departmental authorities for not levying penalty in case of disclosure of income over the earlier years, no penalty can actually be levied by the Department." These findings have been finally approved by the Hon'ble Supreme Court by observing as under:- 17. Accordingly, the orders under appeal are set aside and that of the CIT(Appeals) and Tribunal restored. It is held that in the facts and circumstances of the case, penalty under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT [2013] 34 taxmann.com 62 (Nagpur - Trib) "Section 271AAA of the Income-tax Act, 1961 - Penalty - Where search has been initiated - Assessment year 2009-10 - Whether where during course of search assessee admitted undisclosed income, paid tax together with interest, filed return showing said income as business income and Assessing Officer had accepted same, it could not be said that assessee had not specified manner or could not substantiate manner in which income was derived - Held, yes - Whether, therefore, penalty under section 271AAA was not leviable as assessee's case fell under sub- section (2) of section 271AAA - Held, yes [Para 9] [In favour of assessee]" 9. In view of the aforesaid facts and circumstances and specific findings given by us and in view of the judicial precedents relied upon hereinabove, we hold that the assessee is entitled for immunity from levy of penalty u/s 271AAA(2) of the Act and accordingly the penalty levied by the Learned AO is cancelled. The grounds raised by the revenue are dismissed." 18. In view of the above factual discussion and the position of law and the fact that the assessee has complied with the conditions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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