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TMI Blog2023 (5) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority has been deleted. In any case of the matter, on overall analysis of facts and material on record, we are convinced that there is no undisclosed income relating to specified previous year which could have enabled the Assessing Officer to invoke the provisions of section 271AAA - Decided in favour of assessee. Scope of exceptions provided in sub-section (2) of section 271AAA - Whether disclosure made at the time of search and seizure operation, cannot be construed as undisclosed? - HELD THAT:- Assessee has not only offered such income in statement recorded under sub-section (4) of section 132, but specified/substantiated the manner in which such income was derived. It is relevant to observe, while deciding Assessee s appeal against addition made in the assessment order, ld. Commissioner (Appeals) had deleted the additions. Tribunal in turn in order [ 2020 (3) TMI 115 - ITAT DELHI ] has held that additional income declared by Assessee is connected with the business activity of Assessee, hence, is in the nature of business income, which has rightly been taken into profit and loss account. Tribunal has given a categorical finding of fact that Assessing Officer has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an amount of Rs.15.74 crores u/s. 14A read with Rule 8D. However, presently, we are not concerned with that disallowance. Based on the disclosure of income of Rs.10.00 crores made at the time of search and seizure operation, Assessing Officer initiated proceedings for imposition of penalty u/s. 271AAA of the Act and ultimately passed an order imposing penalty of Rs.1.00 crore under the said provision. Against the penalty order so passed, Assessee preferred an appeal before the ld. Commissioner (Appeals). After considering the submissions of Assessee in the context of facts and material on record, ld. Commissioner(Appeals) was of the view that in course of search and seizure operation, no undisclosed income of Assessee was unearthed. Therefore, the provisions of section 271AAA of the Act would not be applicable. In this context, ld. Commissioner (Appeals) referred to the definition of undisclosed income as provided u/s. 271AAA of the Act. Accordingly, he deleted the penalty imposed u/s. 271AAA of the Act. 3. Before us, ld. Departmental Representative submitted that first appellate authority has given an erroneous conclusion that the penalty imposed is not based on any undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007 but before the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) Nothing contained in sub-section (1) shall apply if the assessee, (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) pays the tax, together with interest, if any, in respect of the undisclosed income. (3) 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 sub-section (1). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation. For the purposes of this section, (a) undisclosed income means (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of search in the books of account or which has not been disclosed before the date of search. It also means, any income arising out of any entry in respect of an expenditure recorded in the books of account or other documents maintained in normal course relating to specified previous year, which is found to be false and would not have been found to be so, had search not taken place. 7. Keeping in perspective the aforesaid provisions, if we examine relevant facts emerging on record, it can be seen that in course of search and seizure operation, no incriminating material was found, from which undisclosed income emanated. In statement recorded u/s. 132(4) of the Act from a responsible person of the group, additional income of Rs.60.00 crores was declared. Subsequently, in a letter dated 31.07.2012, break-up of additional income of Rs.60.00 crores was furnished, out of which an amount of Rs.10.00 crores was offered as additional income in case of present Assessee on account of disallowance of expenses and others. It is a fact on record that additional income declared at the time of search and seizure operation was not based on any incriminating material indicating undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l/2016: 9. Facts in this appeal are more or less identical to ITA No. 403/Del/2016. In case of the present Assessee, an amount of Rs.39.00 crores was declared as additional income at the time of search and seizure operation. Additional income offered at the time of search and seizure operation was followed up by Assessee in the return of income wherein declared income was taken to Profit Loss Account, though with slight variation in the manner in which such income was earned. Based on the aforesaid facts, Assessing Officer initiated proceedings for imposition of penalty u/s. 271AAA of the Act and ultimately passed an order under the said provision, imposing penalty of Rs.3,90,00,000/-, being 10% of alleged undisclosed income of Rs.39.00 crores. Assessee challenged imposition of penalty by filing an appeal before learned Commissioner (Appeals). While deciding Assessee s appeal, ld. Commissioner (Appeals) concluded that out of disclosure made of Rs.39.00 crores, an amount of Rs.4.5 crores can be treated as undisclosed income. However, he also held that even in respect of such undisclosed income of Rs.4.5 crores, the exceptions provided in sub-section (2) of section 271AAA of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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