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2015 (7) TMI 330 - ITAT AHMEDABAD

2015 (7) TMI 330 - ITAT AHMEDABAD - TMI - Penalty Section 271AAA r.ws. 271(1)(c) - CIT(A) deleted penalty levy - Held that:- CIT (A) while deleting the penalty has noted that the disclosure made by the assessee of undisclosed income of ₹ 2 crore was covered under the definition of “undisclosed income” as per the Explanation (a) to Section 271AAA r.ws. 271(1)(c) of the Act, the assessee had specified the manner in which the undisclosed income was earned and had substantiated the manner in w .....

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ples laid down by the decisions relied upon the CIT (A) are not applicable to the facts of the aforesaid case. - Decided against revenue. - I.T.A. No. 2092/Ahd/2011 - Dated:- 25-6-2015 - Shri Anil Chaturvedi and S.S. Godara , JJ. For the Petitioner : Shri V.K. Singh, Sr. D.R. For the Respondent : Shri Rajesh Shah, A.R. ORDER PER ANIL CHATURVEDI ACCOUNTANT MEMBER: This appeal is filed by the Revenue against the order of CIT (A)-II, Ahmedabad dated 14-6-2011 for Assessment Year 2008-09. 2. The rel .....

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-1-2009 declaring total income of ₹ 2,40,48,820/- which included the disclosure of ₹ 2 crore made at the time of search and seizure operation. Thereafter, assessment was framed under Sec. 143(3) of the Act vide order dated 31-12-2009 and total income was determined at ₹ 2,89,46,800/-. On the undisclosed income of ₹ 2 crore, A.O. vide order dated 29-6-2010, levied penalty of ₹ 20 lac under Section 271AAA of the Act for the reason that the assessee during the course o .....

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ered under the definition of undisclosed income as defined in Explanation (a) to section 271AAA of the Act, cannot be accepted because the assessee himself made disclosure of unaccounted income while recording the statement u/s.132(4) of the I.T. Act. He has also admitted that undisclosed income was invested in land, unaccounted cash, jeweler and receivables and undisclosed income was not recorded n the books of accounts. The disclosure made by the assessee for undisclosed income of ₹ 2,00 .....

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of income tax act. The AO has levied the penalty u/s 271AAA of the Act because the first two conditions of section 271AAA(2) are not fulfilled by the appellant. The three conditions provided in sub section (2) of section 271 AAA are reproduced as under: (i) In the course of 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 der .....

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and disclosed total income of ₹ 20.23 Crores out of which undisclosed income of ₹ 2.00 crores belonged to the assessee firm. In the same question the authorized Officer himself stated "in these transactions it mainly appears that receipts of onmoney from various residential projects by your group companies," clearly implies that the income is earned from onmoney. The assessee in his statement recorded u/s 132(4) disclosed ₹ 2.00 crores on account of net income from on .....

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income of ₹ 20.23 Crores and has provided bifurcation of undisclosed income in different hands and made disclosure of ₹ 2.00 crores in the hands of the assessee firm. In the same question the Authorized Officer mentioned that it was established that the assessee earned income from on money received from booking of residential properties and substantiated the manner in which unaccounted income was earned. 5.3 The principles laid down by the Hon'ble High Courts in the cases of CIT .....

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cerned and the authorized officer cannot stop short at a particular stage so as to permit the revenue to take advantage of such lapse in the statement. The reason is not far to seek. In the first instance, the statement is being recorded in the question and answer form and there would be no occasion for an assessee to state and make averments in the exact format stipulated by the provisions considering the setting in which such statement is being recorded. Secondly, considering the social enviro .....

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the Hon'ble Allahabad High Court gave similar findings and laid down similar principles as under:- "...From a perusal Explanation 5, it is evident that the circumstances which otherwise did not attract the penalty provisions of section 271(1)(c), now by a deeming provision attract penalty provisions. But an exception is provided in clause (2) of Explanation 5 where the deeming provision will not apply if during the course of search the assessee makes the statement under sub-section (4) .....

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ected from the person to make a statement in this, regard and in case in the statement the manner in which income has been derived, has not been stated but has been stated subsequently, it amounts to compliance with Explanation 5(2). If there is nothing to the contrary in the statement- recorded under section 132(4) of the Act, in the absence of any specific statement about the manner in which such income, has been derived, it can be inferred that such undisclosed income was derived from the bus .....

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inapplicable. "(P. 454)." . 5.4 After going through the statement recorded under section 132 (4) of the IT Act and the principles laid down by the Honourable Gujarat High Court and Allahabad High Court, it is held that the AO has wrongly rejected the assessee's arguments on the ground that the decision was rendered in reference to explanation 5 of section 271(1)(c) and not with regard to the section 271AAA. The Honourable courts have laid down the principle that the authorized Offi .....

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the payment of tax along with interest on undisclosed income admitted in the course of search. It is undisputed fact that the tax and interest had been paid by the assessee. The Assessing Officer himself stated the same in the penalty order. The assessee has made disclosure of unaccounted income while recording statement under section 132(4) of the Income tax Act and paid the taxes with interest. The disclosure was neither made against any money, bullion, jewellery or other valuable articles or .....

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d from the textile business. In view of the above circumstances and on the basis of principles laid down by the Honourable jurisdictional High Court and by the Allahabad High Court in the above cited cases the assessee can be said to have substantially discharged the onus of explaining and substantiating the manner of earning undisclosed income because the Assessing Officer made assessment of disclosure made by assessee on the basis of actual income and not on the basis of the investment/expendi .....

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.O. himself was satisfied about the disclosed income offered in return of income. In view of these facts and circumstances of the case and the principles laid down in the decisions by the Hon'ble High Courts narrated above in paras 4.1 and 5.3 of this order, it is held that the Assessing Officer was not justified in levying the penalty u/s 271AAA of the Act and hence the same is deleted. 5. Aggrieved by the aforesaid order of the CIT (A), the Revenue is now in appeal before us. 6. Before us .....

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