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TMI Blog2022 (12) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... on all occasions has voluntary surrendered income by simply accepting the figure has stated by the search team. CIT(A) and the AO failed to note that the assessee herself has explained the source of income by stating that out of cash surrender during the search at Rs. 50,000/- was withdrawn from the bank account of the assessee and Rs. 1,00,000/- was withdrawn by husband of the assessee and the remaining was past savings. We observe that as per the specific definition of undisclosed income in explanation (c) to section 271AAB of the Act.,the amount of Rs. 2,22,492/- being the cash available as consequences of her saving and gifts on various occasions cannot be considered as undisclosed income and the source of income explained by the assessee herself. In the statement recorded u/s 132(4) of the Act was not disputed or disproved by the AO. Thus grievance of the assessee is accepted as genuine and as such the order of the ld. CIT(A) sustaining the penalty is hereby quashed. - Decided in favour of assessee. - ITA No. 1132/JP/2019 - - - Dated:- 30-11-2022 - DR. S. SEETHALAKSHMI, JM And SHRI RATHOD KAMLESH JAYANTBHAI, AM Assesseeby : Shri Mahendra Gargieya (Adv.) Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee, in compliance of which ROI was filed on 16.01.2017 for A.Y. 2016-17 declaring total income of Rs. 24,67,900/-(including surrendered income of Rs. 2,22,492/-). The AO completed the assessment u/s 143(3) r.w.s. 153B (1)(b)on 27.12.2017 accepting total income as offered by the assessee. The assessee did not file any appeal against the said assessment order u/s 143(3) dated 27.12.2017. 5. The AO initiated penalty proceedings u/s 271AAB, and therefore, SCN u/s 274 r/w 27AAB was issued on 27.12.2017for imposing penalty. The assessee, in response, however the AO not feeling satisfactory, imposed penalty @ 30% of Rs. 66,748/- on the assessed undisclosed income of Rs. 2,22,492/- vide order dated 26.06.2018 holding as under:- 1. The Penalty u/s 271AAB is mandatory in nature. 2. That in the present case all essential requirements of invoking S.271AAB are satisfied. 3. The assessee failed to explain source of income satisfactorily and could not produce any documents in his favour. 4. Assessee would not have declared this income in absence of search 6. Before the ld. CIT(A), the assessee has reiterated its arguments. The ld. CIT(A) for the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on or before the due date u/s 139(1). 5.3.3b In the instant case, the return of income was not filed on the due date for filing return of income u/s 139(1) but belatedly on 16.01.2017, therefore penalty has rightly been levied by the A.O. under clause of Section 271AAB, i.e. at 30% of undisclosed income. 5.4 In view of the above discussion penalty of Rs. 66,748/- levied by the AO u/s 271AAB(1)(c), is hereby confirmed. In the result, the appeal is dismissed. 7. The ld. AR for assessee submitted a detailed written submissions which are as under:- GOA- 1 5: Impugned penalty imposed u/s 271AAB against the provision of law as the subjected amount is not undisclosed income: 1. Assessment and penalty - separate proceedings: 1.1 It is pertinent to note that the AO has levied the impugned penalties only on the basis of findings recorded by the AO in the assessment orders. It is by now well settled that assessment and penalty proceedings are separate and distinct from each other. The order imposing penalty is quasi-criminal in nature and, thus, the burden lay on the department to establish that the assessee had concealed his income. Since the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is not empowered to impose penalty as per Expl. (c) to S.271AAB(1).In this case the assessee declared income of Rs24,67,900/- (which includes surrendered income of Rs. 2,22,492/-) on dated 16.01.2017. Therefore, the question whether the income disclosed by the assessee is undisclosed income in terms of the definition u/s 271AAB of the Act has to be considered and decided in the penalty proceedings. Since the assessee has offered the said income in the return of income filed u/s 139(1) of the Act, therefore, the question of taking any decision by the AO in the assessment proceedings about the true nature of surrender made by the assessee does not arise and only when the AO has proposed to levy the penalty then it is a pre-condition for invoking the provisions of S. 271AAB that the said income disclosed by the assessee in the statement u/s 132(4) is an undisclosed income as per the definition provided u/s271AAB. Therefore, the AO in the proceedings u/s 271AAB has to examine all the facts of the case as well as the basis of the surrender and then arrive at the conclusion that the income disclosed by the assessee falls in the definition of undisclosed income as stipulated in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Income only: That the income declared by the assessee at the best is additional income and not undisclosed income. This fact is quite evident from the statement recorded u/s 132(4), which was offered to buy peace of mind. It may be submitted that the AO has nowhere alleged that the assessee had intent fully tried to hide the income. 4. Supporting case laws: Covered issue: 10.1 In fact similar papers /dairy was seized in the case of Padam Chand Pungliya vs. ACIT (2019) 201 TTJ 307(JP) (DPB ____),whereupon it was held as under: Disclosure of additional income in the statement recorded under s. 132(4) itself is not sufficient to levy the penalty under s. 271AAB until and unless the income so disclosed by the assessee falls in the definition of undisclosed income defined in the Explanation to s. 271AAB(1). Since the assessee has offered the said income in the return of income filed under s. 139(1), the question of taking any decision by the AO in the assessment proceedings about the true nature of surrender made by the assessee does not arise and only when the AO has proposed to levy the penalty then it is a precondition for invoking the provisions of s. 271AAB t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Visakhapatnam)it was held in para 9 as under: Penalty u/s 271AAB attracts on undisclosed income but not on admission made by the assessee u/s 132(4). The AO must establish that there is undisclosed income on the basis of incriminating material. In the instant case a loose sheet was found according to the A.O., it was incriminating material evidencing the undisclosed income. X xxxxThere was no money, bullion, jewellery or valuable article or thing or entry in the books of accounts or documents transactions were found during the course of search indicating the assets not recorded in the books of accounts or other documents maintained in the normal course, wholly or partly. The revenue did not find any undisclosed asset, any other undisclosed income or the inflation of expenditure during the search/ assessment proceedings. Therefore, we are unable to accept the contention of the revenue that the loose sheet found during the course of search indicates any undisclosed income or asset or inflation of expenditure. The Hon'ble ITAT Delhi Bench in the case of Ajay Sharma v. Dy. CIT [2013] 30 taxmann.com 109 held that with respect to the addition on account of alleged receivables ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 274, finally held at internal page 22 as under: Thus it is clear that both the show cause notices issued by the AO for initiation of penalty proceedings under section 271AAB are very vague and silent about the default of the assessee and further the amount of undisclosed income on which the penalty was proposed to be levied. Even the Hon ble Jurisdictional High Court in case of Shevata Construction Co. Pvt. Ltd in DBIT Appeal No. 534/2008 dated 06.12.2016 has concurred with the view taken by Hon ble Karnataka High Court in case of CIT vs. Manjunatha Cotton Ginning Factory, 359 ITR 565 (Karnataka) which was subsequently upheld by the Hon ble Supreme Court by dismissing the SLP filed by the revenue in the case of CIT vs. SSA s Emerald Meadows, 242 taxman 180 (SC). Accordingly, following the decision of the Coordinate Bench as well as Hon ble Jurisdictional High Court, this issue is decided in favour of the assessee by holding that the initiation of penalty is not valid and consequently the order passed under section 271AAB is not sustainable and liable to be quashed. 2.1 Again very recently, this Hon ble ITAT in the case of LaxmanNainani vs DCIT [2020] 80 ITR (Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishing of inaccurate particulars of income. At the same time, it is also noted on perusal of the penalty order that the finding so given is not specific to three separate disallowances and the Assessing Officer has merely gone by the order of the Tribunal in the quantum proceedings ITA No. 826/JP/2019 B. D. Mundra Sons, Kota Vs. DCIT, Kota where additions have been sustained and has not given any specific finding as to how the disallowances so made and sustained results in furnishing of inaccurate particulars of income. In case of Shweta construction (supra), the Hon'ble Rajasthan High Court has held that the Assessing officer has to give a specific notice while initiating the penalty proceedings itself. In the instant case, the show-cause notice is not specific as to the charge for levy of penalty which shows non-application of mind by the Assessing officer and hence, respectfully following the decision of the Hon'ble Rajasthan High Court, the consequent penalty order cannot be sustained. In the result, the penalty so levied by the Assessing officer is directed to be deleted. 2.5Also kindly refer M/s K.P. Singh Bhadoria Contractor vs DCIT in ITA. No. 312/JP/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of appeal cannot be raised which was not raised before the ld. CIT(A) taking into consideration of the above facts and circumstances. Since the ground which was raised by the assessee is purely legal nature and challenging the notices itself. We allow the additional ground of appeal. We allow and admit additional ground of appeal. 11. Going into merits of the case, we observe that the Assessing Officer has initiated the penalty u/s 271AAB(1) of the Act on undisclosed income of Rs. 2,22,492/- by way of notice u/s 274 read with section 271AAB(1)(c) of the Act. The ld. AR for the assessee contended that the notices issued was in vague. The total income of the assessee in the status of Individual for Assessment Year 2016-17 relevant to Previous Year 2015-16 is assessed at Rs. 24,67,900/- u/s 143(3) r.w.s 153B(1)(b) of the Act. The form ITNS-150 showing calculation of tax and interest chargeable, if any, is attached herewith and forms a part of this Order. A notice of demand u/s 156 of the Act and challan for payment of tax, if payable, is hereby issued. Penalty u/s 271AAB(1)(c) of the Income Tax Act is initiated on undisclosed income of Rs. 2,22,492/- by way of issue of notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income expires, as the case may be Thus, the statute is unambiguous that for a case to fall under clause (a) or (b) of Section 271AAB(1), one of the conditions to be satisfied is that the assessee has furnished the return of income declaring the undisclosed income is furnished on or before the due date u/s 139(1). 5.3.3 In the instant case, the return of income was not filed on the due date for filing return of income u/s 139(1) but belatedly on 16.01.2017, therefore, penalty has rightly been levied by the AO under clause (c) of Section 271AAB, i.e, at 30% of undisclosed income. 13. Taking into facts and circumstances of the case it is an evident from the show cause notice u/s 274 read with section 271AAB of the Act that the Assessing Officer was not clear i.e whether it is for the clause (a) or clause (b) or clause (c) of section 271AAB(1) of the Act. Where the ld. CIT(A) and the AO failed to note that the surrendered income is not always undisclosed income. In the present case the assessee declared income of Rs. 24,67,900/- which includes surrendered income of Rs. 2,24,492/- on 16.01.2017. Therefore, there is no any doubt or question whether the income disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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