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2022 (9) TMI 298 - AT - Income TaxPenalty u/s 271AAA - money surrendered in search and seizure operation - assessee has offered the undisclosed income in the statement recorded under section 132(4) - HELD THAT:- Penalty under section 271AAA(1) cannot be imposed in a case where the assessee has offered the undisclosed income in the statement recorded under section 132(4) specifying the manner in which such income has been derived and if the assessee pays the tax along with interest of such income. In the facts of the present case, undisputedly, the assessee has offered the cash found as income in the statement recorded under section 132(4) - It is also a fact that the assessee has paid the tax on such income. Whether penalty under section 271AAA could be levied for the years under consideration? - As we note that for the assessment year 2009-10 being the search year, the said assessment year falls out of the block period and therefore the necessary criteria to levy penalty under section 271AAA is not applicable. According to the department assessee has not specified the manner in which such income was derived - On a perusal of the statement recorded under section 132(4) of the Act, that forms part of the assessment order, we observe that, in response to a question asked by the authority concerned, the assessee came forward to offer the money found in the bank account as well as in cash as income. It is observed, the authority recording statement did not pose any specific query to the assessee to explain the mode and manner in which such undisclosed income was derived. Further during the penalty proceedings, we note that the reply filed by the assessee has not even been considered and has been rejected at the threshold. Thus, in course of search and seizure operation when the assessee came forward and offered certain income to show his bona fide and ultimately followed it up by actually offering such income to tax, in our view, the assessee should be given the benefit of the exceptions provided under sub-section (2) of section 271AAA. It is a fact on record that the assessee is no more and has been substituted by his legal heir, in course of proceeding before us. Thus, in our considered opinion, a liberal and compassionate view has to be taken qua the imposition of penalty under section 271AAA of the Act. Based on the above discussion we direct the Ld.AR you to delete the penalty levied for both the assessment years under consideration under section 271AAA of the act. - Decided in favour of assessee.
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