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2016 (8) TMI 685 - AT - Income TaxPenalty levied by the AO u/s 271AAA - Held that:- In the present case, it is an admitted fact that excess stock of gold & diamond amounting to ₹ 1,24,40,928/- and excess cash of ₹ 54,81,173/- were found which the assessee offered for taxation during the course of search in the statement recorded u/s 132(4) of the Act. The AO levied the penalty u/s 271AAA of the Act for the reason that the manner in which the undisclosed income was derived was not substantiated. In the present case, it is noticed from the statements of the partner of the assessee firm recorded u/s 132(4) of the Act during the course of search that no specific query was raised relating to the manner in which the undisclosed income was derived by the assessee. On the contrary, the assessee explained that the earning of undisclosed income had been generated from the sale of unaccounted/undisclosed jewellery. The assessee was engaged in bullion trading and gold & diamond jewellery, therefore, the source of the unaccounted excess cash, gold & diamond jewellery was the business activity of the assessee. In the present case, no specific query was raised by the authorized officers during the course of recording of statement u/s 132(4) of the Act about the manner in which the undisclosed income had been derived and about its substantiation. The said query was raised during the course of recording the statement of Sh. Surender Kumar Jain Son of Late Sh. Suraj Parkash Jain partner of the assessee on 21.07.2011, copy of the said statement is placed at page nos. 5 to 7 of the assessee’s paper book. In that statement no query was raised relating to the manner in which the undisclosed income was earned. Therefore, in the absence of any such query raised by the authorized person, the AO was not justified in taking the adverse view and imposing the penalty u/s 271AAA of the Act - Decided in favour of assessee.
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