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2018 (7) TMI 2010 - AT - Income TaxPenalty u/s 271AAB - income surrendered by the assessee during the course of search and seizure and in the statement recorded under section 132(4) - assessee has declared the income as salary received from partnership firm, interest from partnership firm, capital gain short term and long term both and income from other sources, apart from the surrendered income - HELD THAT:- When the provisions for levy of penalty under section 271AAB is a specific provision to deal with the undisclosed income and it provides a strict penal action then the corresponding duty of the tax authority is also equally stringent. The AO cannot escape from following the strict mandatory requirement of law and particularly the principle of natural justice. AO has neither specified the grounds and clause of section 271AAB nor has dealt with the same in the impugned order passed under section 271AAB. The AO has also not given a finding that the case of the assessee falls in the definition of undisclosed income provided under clause (c)(i) of Explanation to section 271AAB. When the transactions of investment in real estate are recorded in the diary being other documents maintained by the assessee for the said purpose, then in the absence of any requirement of maintaining regular books of accounts by the assessee, the case of the assessee would not fall in the definition of undisclosed income as per clause (c) of Explanation to section 271AAB When the assessee is not required to maintain the books of account as per section 44AA, then the matter is required to be examined whether the alleged undisclosed income is recorded in the other documents maintained in the normal course as per clause (c) to Explanation to section 271AAB. Undisputedly the alleged income was found recorded in the diary which is nothing but the other record maintained in the normal course, thus the same would not fall in the definition of undisclosed income. Once the said income is found as recorded in the other documents maintained in the normal course, then it cannot be presumed that the assessee would not have disclosed the same in the return of income to be filed after about one year from the date of search. Hence, in view of the above facts and circumstances of the case as well as the various decisions on this point, we hold that the penalty levied under section 271AAB is not sustainable and the same is deleted. Following SHRI AMIT AGARWAL, SHRI MADAN LAL BESWAL, SHRI MANOJ BESWAL [2017 (11) TMI 678 - ITAT KOLKATA] and Ravi Mathur vs. DCIT [2018 (6) TMI 1128 - ITAT JAIPUR] , we delete the penalty levied by the AO under section 271AAB of the Act. - Appeal of the assessee is allowed.
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