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2023 (3) TMI 513 - ITAT CHENNAIPenalty proceedings u/s.270A - unaccounted rental income - misreporting of income - failure to disclose rental receipts in the return of income filed for the assessment year before the date of search - Assessee submitted that mere admission of undisclosed income towards rental income, does not per-se leads to conclusion that there is an undisclosed income within the meaning of Section 270A - HELD THAT:- In this case, from the facts available on record, it is abundantly clear that although, the assessee has received rental receipts from properties, but said rental income has not been accounted in the books of accounts, which is having a bearing on total income computed for the impugned assessment years. Therefore, in our considered view, it is a clear case of misreporting of income, which attracts penalty u/s.270A . Additions made towards undisclosed income is only estimation of rental receipts without any reference to incriminating material found during the course of search - we find that during the course of search, incriminating documents with respect to rental income received for FYs 2013-14 to 2019-20, were found and impounded. Further, the assessee was called upon to question the documents and in response to a specific question, the assessee admitted to have received rental income, but failed to disclose rental income in the return of income filed for relevant to assessment year. Therefore, we are of the considered view that had search not been conducted, the assessee would not have been disclosed income and thus, we are of the considered view that it is a case of misreporting of income as per provisions of Sec.270A(9) of the Act, and the AO has rightly levied penalty @200% of the amount of tax payable - no error in the reasons given by the Ld. CIT(A) to sustain penalty levied by the AO u/s.270A(9) - Decided against assessee. Penalty levied u/s.271AAB - rental income received from certain properties was not disclosed in the return of income filed for the impugned assessment years - assessee submitted that additions made towards rental income is on estimation basis without any reference to material found during the course of search in the possession of the assessee - HELD THAT:- in respect of rental income, the question of recording such receipts in the books of accounts does not arise, if the assessee does not maintained books of accounts for relevant to assessment year. Therefore, the findings recorded by the AO that the assessee would not have disclosed the rental income, had the search not been taken place, are only apprehension, but not based on relevant facts. Therefore, we are of the considered view that the AO is erred in levying penalty u/s.271AAB of the Act, towards addition made on rental receipts as undisclosed income, because, the assessee would have disclosed said rental receipts in the return of income to be filed for the relevant to AYs 2019-20 & 2020-21 when he has filed return of income. Since, as on the date of search, the due date for filing of return of income for those two assessment years was not expired, the AO cannot come to the conclusion that the assessee would not have disclosed such rental receipts for tax, had search has not been taken place. Therefore, we are of the considered view that the AO is erred in levying penalty u/s.271AAB - Decided in favour of assessee.
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