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2018 (5) TMI 1254 - AT - Income TaxLevy of penalty u/s 271(1)(c) - unexplained income on account of corpus fund - Held that:- Return for the assessment year 2007-08 was filed on 31.10.2007 declaring loss of ₹ 5,31,945/-. Search was conducted on 23.7.2009 i.e. after the first day of June, 2007. The assessee accepted the unexplained income on account of corpus fund relating to its source. The alleged undisclosed income was not offered to tax in the regular return of income and was finally admitted for paying tax in the course of assessment proceedings. The assessee is directly hit by the provisions of Explanation 5A to section 271(1)(c) of the Act(1)(c) of the Act. Therefore, in our considered view, the learned Commissioner of Income Tax (Appeals) has rightly confirmed the penalty - Decided against assessee Levy of penalty u/s 271AAA - whether the assessee has admitted the undisclosed income during the course of search with specific manner in which it has been derived - Held that:- The search was conducted on 23.7.2009. The assessee did not make any disclosure during the course of search. It was two months thereafter on 23.11.2209 that the assessee submitted a letter before the ITO, Investigation, Bhopal. In our view, the statement given on 23.11.2009 cannot be considered as a statement given during the course of search because it was an afterthought and given two months after the date of search. The assessee has duly substantiated the manner in which the undisclosed income was taxed. As far as the third condition as to whether the assessee has paid the taxes together with interest, we find that the assessee has not offered the undisclosed income voluntarily in the return of income filed in compliance with the notice u/s 153A of the Act and it was only during the course of assessment proceedings that when it was confronted with the seized material as well as the disclosure made on 23.11.2009 then it accepted to pay taxes. Therefore, the assessee has not paid the taxes voluntarily on the income surrendered. The assessee has been unable to fulfill two out of the three conditions provided in section 271AAA of the Act for getting immunity from paying penalty @ 10% of the undisclosed amount. We, therefore, find no reason to interfere with the findings of the learned Commissioner of Income Tax (Appeals) and confirm the penalty imposed u/s 271AAA of the Act. - Decided against assessee.
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