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TMI Blog2016 (10) TMI 1404X X X X Extracts X X X X X X X X Extracts X X X X ..... f financing and brokerage. Therefore, the first condition is satisfied.
Second requirement is to substantiate the manner in which the undisclosed income was derived. CIT (A) has reported that the AO himself in the assessment order and also in the penalty order reported that the surrender made by the assessee was on account of undisclosed business of financing and brokerage.
Therefore, this observation of the ld. CIT (A) is not disputed by the revenue. Therefore, the second requirement is also met by the statement of the assessee.
The third requirement is of law that the assessee pays tax along with interest on the undisclosed income. The revenue has not disputed the payment of tax and interest thereon. Therefore, in view of the above discussion, we do not find any reason to interfere in the order of ld. CIT (A), same is hereby upheld. The ground of the revenue is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission are as under :- "Sole grievance of revenue in this appeal is against the deletion of penalty of Rs. 1,81,07,047/- levied by Ld. AO u/s 271AAA of the Income Tax Act, 1961. As submitted above, entire additions of Rs. 8,21,20,759/- [though the penalty was levied on total additions of Rs. 18,10,70,473/-] made by Ld. AO and as upheld by Ld. CIT(A) stood deleted by this Hon'ble Tribunal, thus there remained no addition on which the penalty could be levied, therefore there remains no dispute regarding the penalty levied qua the additions of Rs. 8,21,20,759/- [being the additions uphold by Ld. CIT(A) and deleted by Hon'ble Bench] had no legs to stand and thus, the penalty u/s 271AAA levied on the same has rightly been deleted by the Ld. CIT(A). Regarding penalty u/s 271AAA levied on the additional undisclosed income of Rs. 10,00,35,045/- declared by assessee in his return of income filed in due course [on which due taxes were paid], it is submitted as under: That from a perusal of the statements of the assessee recorded u/s 132(4) of Income Tax Act, 1961 during the course of search, it would transpire that the assessee in reply to question No. 19 (APB 133) has admitted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (2) of section 271AAA. 4. That, the assessee had duly declared the undisclosed income in the statements recorded u/s 132(4) and had substantiated the mode and manner of deriving such undisclosed income and has also paid the due tax thereon and the same was assessed as such. Thus, there was no occasion for the Ld. AO to levy penalty u/s 271AAA of the Act. Now on merits, at the outset, it is submitted that the Ld. AO had levied the penalty in a most casual manner made. The levy of penalty being an independent proceeding in nature, the law does not permit the AO to act in a per-functory manner, on the other hand a serious duty is casted upon the AO and it has been made incumbent upon the authority levying penalty to properly appreciate the basis for levying penalty and need be to call and collect specific material / information from the assessee before arriving at a decision to levy the penalty more particularly when allegations made for levy of penalty had already been explained during the assessment proceedings and were accepted without making any adverse remarks in assessment order when the penalty proceedings were initiated. It is pertinent here to make a referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted." Manifestly, sub-section (2) to section 271AAA lays down the specific conditions which, if fulfilled, can absolve the assessee from any liability under section 271AAA of the Income Tax Act, 1961. It is submitted that all of the three conditions have been satisfied in the facts and circumstances of the present case, which though were not doubted in assessment order where Ld. AO after duly considering, the statements of the assessee recorded u/s 132(4) at the time of search and the additional income declared categorically accepted, the contention of the assessee in last para at page 2 of the assessment order and assessed the same as business income of the assessee, however, in penalty proceedings completely divergent view was taken and levied penalty which is totally against the clear provisions of the said sub-section. From the perusal of sub-section (2) of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; कार्रवाही के दौरान 3,45,500/- रूपये, लॉकर नं. 871, गणपति प्लाजा की तलाषी के दौरान 1,49,00,000/- रूपये, लॉकर नं. 925, गणपति प्लाजा की तलाषी के दौरान 4,17,98,500/- रूपये एवं बिरानी लॉकर्स, राम लला का रास्ता, जौहरी बाजार, जयपुर स्थित लॉकर संख्या 1031 की तला&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46;ये 23,60,584.85 आता है। इसे छोड़कर शेष पाये गये बे अर्थात रूपये 10,00,35,045/- का मिलान लेखा पुस्तको से कराने मे असमर्थ हॅू। वास्तव मे उक्त नकद राषि मेरी स्वयं की थ्पदंदबपदह एवं ठतवामतंहम व्यवसाय की आय से अर्जित किया गया है जिसे &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has accepted the mode and manner of the additional income and the explanation to substantiate the same was also not doubted. Further no other source of income except finance and brokerage regularly carried on by assessee has been found or alleged by Ld. AO. iii) All the tax due on such additional undisclosed income was paid by the assessee alongwith the return of income filed. Since all the three conditions as enumerated in sub section (2) to section 271AAA were fully satisfied as the assessee had offered the additional income and duly substantiated the manner as to how it has been worked out and the Ld. AO neither doubted the quantum of additional income declared nor mode and manner of earning of such income and due taxes alongwith interest has been paid while filing the return of income. Therefore there was no basis at all for which penalty u/s 271AAA could be levied by Ld. AO on the additional undisclosed income declared by the assessee in the return of income filed for the year under reference, and therefore, the same has rightly been deleted by the Ld. CIT(A). Further no fresh evidence or material was brought on record either in assessment proceedings or in penalty pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been just levied to complete the proceedings. In fact there are no material facts warranting the levy of penalty and, accordingly, the penalty of Rs. 55,00,000/- levied under section 271AAA is directed to be deleted." 4. After considering the rival submissions, we do not see any reason to interfere with the order of CIT(A). The order is in tune with the principles laid down by various co-ordinate Benches and High Courts particularly with reference to disclosure made under section 132(4). In the case of CIT v. Mahendra C. Shah (299 ITR 305) the Hon'ble Gujarat High Court considered a similar statement under section 132(4) to grant immunity under section 132(4) to grant immunity under section 271(1)(c). The Hon'ble High Court held as under:- When the statement is being recorded by the authorized officer it is incumbent upon the authorized officer to explain the provisions of Explanation 5 in entirety to the assessee concerned and the authorized officer cannot stop short at a particular stage so as to permit the Revenue to take advantage of such a lapse in the statement. The reason is not far to seek. In the first instance, the statement is being recorded in the question and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard and in case in the statement the manner in which income has been derived has not been stated but has been stated subsequently, it amounts to compliance with Explanation 5(2). If there is nothing to the contrary in the statement recorded u/s 132(4) of the Act, in the absence of any specific statement about the manner in which such income has been derived, it can be inferred that such undisclosed income was derived from the business which he was carrying on. The object of the provision is achieved by making the statement admitting the non-disclosure of money, bullion, jewellery etc. Thus, much importance should not be attached to the statement about the manner in which such income has been derived. It can be inferred on the facts and circumstances of the case, in the absence of anything to the contrary. Therefore, mere non-statement of the manner in which such income was derived would not make Explanation 5(2) inapplicable. For the sake of convenience, the facts and circumstances of the present case are summarized as under: * The assessee has admitted the cash found during the course of search as his undisclosed additional income in the statements recorded during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be upheld and the appeal of department be dismissed." The above submissions of the assessee are opposed by the ld. D/R. However, the facts as narrated in the submissions are not contradicted by the ld. D/R by placing any contrary material on record. The ld. CIT (A) has given the finding of fact at page 15-16 of his order as under :- " Thus it is seen that during the course of statement u/s 132(4) and subsequently in statements u/s 131, the appellant has confirmed the notings in seized documents with reference to his unaccounted income from his business. The appellant admitted that the transactions as per the seized documents related to the unaccounted cash found and were not part of his regular books of accounts and the amount was surrendered by him while filing his return. Thus it cannot be held that the manner of deriving the income was not substantiated by the appellant because he substantiating evidence by way of seized documents was with the department and was confronted with the appellant, during the course of his statements u/s 131 on the basis of which he affirmed the surrender. In fact it was noted by the AO himself in the assessment order and also in the penalty ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case of the appellant." There is no dispute with regard to the proposition that penalty u/s 271AAA is not leviable, if the assessee in the course of search in a statement under sub section (4) of section 132 admits the undisclosed income and specifies the manner in which the said income has been derived, substantiated the manner in which the undisclosed income is derived and pays the tax together with interest in respect of the undisclosed income. The first requirement of immunity under section 271AAA is that the assessee admits the undisclosed income in a statement recorded u/s 132(4) of the Act and specifies the manner in which the income has been derived. We find that the assessee in response to question no. 19 to the statement recorded under section 132(4) has admitted the undisclosed income and stated that the income derived from the business of financing and brokerage. Therefore, the first condition is satisfied. Second requirement is to substantiate the manner in which the undisclosed income was derived. The ld. CIT (A) has reported that the AO himself in the assessment order and also in the penalty order reported that the surrender made by the assessee was on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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