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2015 (7) TMI 159 - ITAT PUNE

2015 (7) TMI 159 - ITAT PUNE - TMI - Penalty levied u/s. 271AAA - assessees have not been able to substantiate the manner in which the undisclosed income has been derived - CIT(A) cancelled penalty levy - Held that:- A perusal of questions and answers put to the assessee, show that the undisclosed income and the source of income both were substantiated by the assessee during the course of search. Since, no further query was put to the assessee with respect to undisclosed income the assessee did .....

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ner in which undisclosed income has been derived. Since, all the three conditions as laid down in sub-section (2) of section 271AAA are satisfied. The levy of penalty u/s. 271AAA is not warranted. - Decided against revenue. - ITA No. 1436/PN/2013,ITA No. 1438/PN/2013,ITA No. 1440/PN/2013 - Dated:- 26-6-2015 - Shri R.K. Panda and Shri Vikas Awasthy, JJ. For the Petitioner : Shri Y.K. Bhaskar For the Respondent : Shri J.P. Bairagra ORDER PER VIKAS AWASTHY, JM:- These appeals have been filed by the .....

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rch u/s. 132 was conducted on the group concerns on 16-06-2009. In response to notice u/s. 153A, the assessees filed return of income in their respective cases. On the basis of disclosure statement recorded u/s. 132(4), addition was made in the hands of the assessees. The details of income returned by the assessees, income assessed, income disclosed and penalty levied u/s. 271AAA are as under: ITA No. Income Return Income Disclosed u/s. 132(4) Income Assessed Penalty u/s. 271AAA 1436/PN/2013 Rs. .....

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nalty order u/s. 271AAA, the assessees preferred appeals before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) vide impugned order cancelled the levy of penalty u/s. 271AAA in the case of respective assessees. Now, the Revenue has come in appeal before the Tribunal assailing the findings of the First Appellate Authority in deleting penalty in respect of all the three assessees. 4. Shri Y. K. Bhaskar representing the Department, vehemently defending the order l .....

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pearing on behalf of the assessees submitted that the statement of Shri Ghanshyam Chunnilal Goyal was recorded u/s. 132(4) of the Act during the course of search action. Subsequently, statement u/s. 131 of the Act was also recorded wherein Shri Ghanshyam Chunnilal Goyal gave the details of amount disclosed in the hands of various members of the group. During the course of recording statement u/s. 132(4), a specific question (Q. No. 50) was asked, whether for availing the benefit of section 271AA .....

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p. Accordingly, addition was made in the hands of the group members. The substantial part of additional income declared is with respect to amounts receivable on account of hundi/petty loans/unaccounted sales and unaccounted purchases total to the tune of ₹ 6,54,35,000/- and unaccounted income from badla transaction of land ₹ 85,10,000/-. The ld. AR also referred to Q. No. 10 and Q. No. 13 of the statement recorded u/s. 131 to show that the additional income offered was substantiated .....

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issions made by the representatives of both the sides and have perused the orders of the authorities below. We have also examined the decisions on which the ld. AR of the assessee has placed reliance. The penalty u/s. 271AAA has been levied on the ground that the assessees have not been able to substantiate the manner in which the undisclosed income is derived. Before we proceed with the issue, it would be appropriate to first examine the relevant provisions of section 271AAA of the Act. The sam .....

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sub-section (1) shall apply if the assessee,- (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income. 7. A perusal of sub-section (2) of section 271AAA shows that for seeking immunity from levy of penalty u .....

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led according to the Revenue is that the assessee has not been able to substantiate the manner in which undisclosed income is derived. The ld. AR of the assessee has drawn our attention towards the statement recorded u/s. 132(4) on 08-07-2009 and u/s. 131 on 17-08- 2009. During the recording of statement u/s. 132(4), we find a specific question was put to the assessee with respect to availing of benefit u/s. 271AAA. The same reads as under: Q. 50. Do you want to say anything else for availing th .....

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may has some technical errors. On account of the same and to buy the peace of mind I want to offer ₹ 14 Crores as an additional income over and above the regular income of the Group concerns for the assessment year 2010-11 in the hands of the following directors :- 1. Shri Ghanshyam Chunnilal Goyal 3.50 Crores 2. Shri Arun Shrikishan Agrawal 3.50 Crores 3. Shri Anil Nandkishor Goyal 3.50 Crores 4. Shri Naresh Banarasidas Jindal 3.50 Crores Total 14 Crores The said income of ₹ 14 Crs. .....

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rs or any other assessee of this group. 9. To show that the undisclosed income was substantiated, the ld. AR referred to Q. No. 10 and Q. No. 13 of the statement recorded u/s. 131 of the Act. The same reads as under: Q. No. 10. I am showing you the chit seized from your residential premises, during the course of search action and inventoried as Annexure - A/4, page No. 6 (back page). Please go through the contents of this page and explain the entries there in. Ans. I have gone through the said p .....

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aresh B. Jindal. The said amount was shared by us equally. I accept the fact that this amount is not recorded in the regular books of A/c of the assessees, hence I am offering this amount as an additional income in the hands of the Myself, Shri Arun Agrawal, Anil Goyal and Naresh B Jindal for the AY 10-11 @ 21,27,500/- each. Q. No. 11. Xxxxxxxxxx. Q. No. 12. Xxxxxxxxxx. Q. No. 13. I am showing you the chit seized from your residential premises, during the course of search action and inventoried .....

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esh Jin) and my self (mentioned as Ghanshyam). As per the said entries the peak amount is ₹ 6,54,35,000/-. I accept the fact that this amount is not recorded in the regular books of A/c of the assessees; hence I am offering this amount as an additional income in the hands of the Myself, Shri Arun Agrawal, Anil Goyal and Naresh B Jindal for the AY 10-11 @ 1,63,58,750/- each. 10. A perusal of aforesaid questions and answers, show that the undisclosed income and the source of income both were .....

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ble Rs. Badla income Rs. Total Rs. 1) Sunil Goyal 1,13,58,750 21,27,500 1,34,86,250 2) Nandkishor Goyal 50,00,000 - 50,00,000 3) Narendra Agrawal 1,63,88,125 21,27,500 1,85,15,625 4) Jaibhagwan Jindal 1,13,58,750 21,27,500 1,34,86,250 5) Banarasidas Jindal 50,00,000 - 50,00,000 6) Gopal Agrawal 1,63,58,750 - 1,63,58,750 7) Ghandshyamdas Goayl - 21,27,500 21,27,500 Total 6,54,64,375 85,10,000 7,39,74,375 In the statement u/s. 131, the assessee Shri Ghanshyam Chunnilal Goyal has given the details .....

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estion no. 7] 5,00,000 7 Unaccounted income from badla transaction [Question no. 10] 85,10,000 8 Unaccounted transactions explained [Question no. 13] 6,54,35,000 TOTAL 14,01,61,595 It is evident that the total undisclosed income under badla transaction and unaccounted transactions have been offered to tax in the hands of group members. 11. Thus, in our considered view the assessees have been able to substantiate the manner in which undisclosed income has been derived. Since, all the three condit .....

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nt and paid taxes thereon, there was sufficient compliance of provisions of section 271AAA(2). The relevant extract of the order of the Tribunal is as under: 10. Plain reading of sub-section would show that if the assessee during the course of search in a statement admits to some undisclosed income and pay taxes on the same then penalty cannot be levied in terms of subsec (1) of this Section. In the case before us, the amount of ₹ 4 crores which was surrendered during search, has been decl .....

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. Four crore) for current financial year i.e. 2009-10 relevant to A.Y. 2010- 11 in any (should be my ) individual capacity. They cover all the discrepancies in the seized papers during the course of search proceedings. 11. Therefore clearly the Revenue has not asked the assessee to disclose the manner in which such income was earned. In any case once the income is surrendered during the course of search u/s. 132(4) it can be safely assumed that during discussion the assessee must have disclosed .....

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to any material or decision which can controvert the findings of the CIT(A). In the following cases which have been relied on by the Ld. Counsel for the assessee which was clearly held that penalty is not leviable. 12. Further the assessee has relied on the following decisions: Kanakia Spaces (P.) Ltd. (supra) A.N. Annamalaisamy (HUF) (supra) Pramod Kumar Jain (supra) Smt. Raj Rani Gupta (supra) 13. The Ld. D.R. for the Revenue was not able to place before us any decision which supports his case .....

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ered to tax during such proceedings. 14. The Delhi Bench of the Tribunal in the case of Neerat Singhal (Supra) has held that levy of penalty u/s.271AAA is not justified in absence of any query raised by the authorised officer during the course of recording of statement u/s.132(4) about the manner in which undisclosed income has been derived and about its substantiation. 15. The Mumbai Bench of the Tribunal in the case of Kanakia Spaces Pvt. Ltd. in ITA No. 6763/Mum/2011 decided on 10-07-2013 whi .....

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the Hon'ble Gujarat High Court considered similar statement under section 132(4) to grant immunity under section 271(1)(c). The Hon'ble High Court held as under:- "When the statement is being recorded by the authorized officer it is incumbent upon the authorized officer to explain the provisions of Explanation 5 in entirety to the assessee concerned and the authorized officer cannot stop short at a particular stage so as to permit the Revenue to take advantage of such a lapse in the .....

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