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2019 (4) TMI 867 - AT - Income TaxPenalty u/s 271AAB - discretionary and not mandatory - in statment u/s 132(4) disclosed total undisclosed income of ₹ 10,01,00,000/- on account of advance for purchase of land and also incorporated in return - except the statement u/s 132(4) there is no undisclosed income in the case of the assessee - in SCN no mention under which clause of section 271AAB the assessee is liable for penalty - HELD THAT:- This Tribunal has taken a consistent view that the levy of penalty U/s 271AAB of the Act is not mandatory but the AO has discretion to take a decision after arriving to the conclusion that the income disclosed by the assessee in the statement recorded U/s 132(4) is an undisclosed income in terms of Section 271AAB(1) r.w. explanation defining the undisclosed income. The decision relied by the ld. CIT-DR in case of Principal Commissioner of Income Tax vs. Sandeep Chandak [2017 (12) TMI 70 - ALLAHABAD HIGH COURT] cannot be applied on the issue before us. In the case in hand though the assessee was required to maintain regular books of accounts as per the provisions of section 44AA of the IT Act, however, the AO in the assessment proceedings rejected the books of accounts of the assessee under section 145(3) and assessed the income from the activity of civil contract on estimated basis by making a lump sum addition of ₹ 4,50,000/-. The diary found during the course of search and seizure at the business premises of the assessee contains the entries of advances given for purchase of land. However, until and unless the said transaction is carried out as part of regular business activity, the same is not required to be recorded in the regular books of account and, therefore, the said amount of advance given for purchase of land can be recorded in the capital account of the assessee. Thus the transactions found recorded in the diary are to be recorded in the capital account of the assessee as well as in the balance sheet prepared as on 31st March, 2014 and not on the date of search as on 4th/5th September, 2013. The nature of transactions if not carried out or entered into as part of the business activity are not required to be recorded in the regular books of accounts maintained for the purpose of business activity of the assessee. Following the earlier decisions of the Coordinate Bench of the Tribunal in the case of Ravi Mathur vs. DCIT [2018 (6) TMI 1128 - ITAT JAIPUR] as well as Shri Raja Ram Maheshwari vs. DCIT [2019 (1) TMI 1546 - ITAT JAIPUR], we delete the penalty levied under section 271AAB of the Act. Since the issue of levy of penalty U/s 271AAB of the Act has been decided on merits in favour of the assessee and against the Revenue therefore, the issue of validity of initiation of the penalty proceeding due to defective show cause notice become academic in nature and we do not propose to adjudicate the same.
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