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Anand Kumar Bansal Versus DCIT, Central Circle II, Faridabad

2016 (9) TMI 643 - ITAT DELHI

Penalty u/s 271AAA - Department has accepted the quantum of surrender made by the assessee in his statement recorded u/s 132(4) of the Act. The taxes due thereon have also been paid - Held that:- On having gone through the queries raised while recording the statement of the assessee u/s 132(4) of the Act, it is evident that nowhere has the Authorized Officer asked a specific question with regard to the manner in which the undisclosed income has been derived. Thus in absence of query raised by th .....

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ITAT, KOLKATA ) for confirming the penalty is misplaced as in this case the coordinate Kolkata Bench has held that where the entire tax and interest has been duly paid well within the time-limit for payment of notice of demand u/s 156 and well before the penalty proceedings were concluded, the assessee could not be denied immunity u/s 271AAA(2) only because the entire tax, along with interest, was not paid before filing of income tax return or, for that purpose, before concluding the assessment .....

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der dated 22/01/2013 passed by the ld. Commissioner of Income Tax(Appeals), Central, Gurgaon for AY 09-10, wherein the ld. Commissioner of Income Tax (Appeals) has confirmed the penalty of ₹ 5,804,925/- imposed u/s 271AAA of the Income Tax Act, 1961 (in brief The Act ). 2. The brief facts of the case are that a search was conducted at the residential and business premises of the assessee on 5th March, 2009 and concluded on 6th March, 2009. The assessee filed a return declaring an income of .....

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assessee surrendered a sum of ₹ 65,000,000/- as his undisclosed income in the form of following undisclosed assets found during the search - i. Unaccounted cash ₹ 2,600,000/- ii. Unaccounted investment in jewellery ₹ 3,200,000/- iii. Unaccounted income under miscellaneous income ₹ 1,200,000/- iv. Advance for land ₹ 45,500,000/- v. On a/c of share capital ₹ 12549250/- Total ₹ 65,049,250/- 2.1 While completing the assessment u/s 153B (i)(b) of the Act, the .....

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the manner in which the undisclosed income was derived; iv. That the assessee had paid the entire taxes within the financial year and; v. That there was hardly any difference between the returned income and the assessed income. 2.3 However, the AO was of the opinion that the assessee had not been able to fulfill the conditions specified in sub-clause (ii) of sub-section (2) of section 271AAA of the Act which refers to the substantiation of the manner in which the undisclosed income has been deri .....

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45.50 lacs being 10% of the undisclosed income of ₹ 4.55 crores pertaining to advances given to various persons. On similar footing, the AO also held that the assessee had not been able to prove the source of making unexplained investments in the share capital amounting to ₹ 12,549,250/- and accordingly, imposed a penalty @ 10% on amounting to ₹ 1,254,925/- on this amount also. 2.4 Aggrieved the assessee preferred an appeal before the ld. CIT (Appeals). The ld. CIT(Appeals) obs .....

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ity from the provision of sec. 271AAA could not be claimed. The ld. CIT (Appeals) was of the opinion that merely stating that the sums had been earned as commission in land deals and in property business was too general an explanation to be accepted. The ld. CIT (Appeals) relied on the decision of the Kolkata Bench of the ITAT in DCIT vs. Pioneer Marbles and Interiors Pvt. Ltd., 144 TTJ (Kol.) 663 and confirmed the imposition of penalty by holding that the assessee had failed to discharge the on .....

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. 24 and the name Neel Gagan printed on it onm page no. 2 of this annexure A2. There are certain details of transaction relating to each payment of share application. Please state in whose hand these entries are written and explain the entries involved? Answer: These entries are written in my own hand and these relate to cheque received against the cash paid by me for share application amounting to ₹ 1,24,25,000/- which has been taken by me in the current year i.e. between 01.04.08 to 31.0 .....

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ndition that no penalty or prosecution proceedings be initiated against me. The surrender has been made in terms of section 271AAA of the Act. Question No. 24: I am showing you annexure A2 pages 7,9,11, 12, 14 and 16 which shows certain advances given to certain individuals on certain dates. Please state in whose hand these entries have been written and also explain the nature of these entries. Answer: These entries are in my hand writing and total of these entries is ₹ 4,55,00,000/-. This .....

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dings are initiated against me. The surrender has been made by me in terms of section 271AAA of the Act. Question 25: I am showing you annexure A2 pag nos. 7,9,11,12,14 & 16; which shows certain advances given to certain individuals on certain dates. Please state in whose hand these entries have been written and also explain the nature of these entries? Answer: These entries are in my hand writing on total of these entries is 4,55,00,000/- this is the amount given by me as advance to various .....

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e ld. AR submitted that the assessee s statement u/s 132(4) of the Act was recorded by the Authorized Officer in question and answer form. Thus, any question regarding the specification and manner in which such income has been derived has to be raised by the Authorized Officer recording the statement. The person searched cannot on his own put words in the mouth of the Authorized Officer to elicit the explanation envisaged in the provisions contained in section 271AAA which would satisfy the Depa .....

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uthorized Officer was satisfied about the reply. 3.2 The ld. AR further submitted that the assessment had been framed purely on the basis of surrender made by the assessee who had made the surrender to avoid protracted litigation and to buy peace. It was submitted that de hors the surrender made by the assessee, the Department has not been able to prove the existence of any undisclosed income during the course of the search and that the returned income has been accepted with a minor variation on .....

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substantiate the manner in which undisclosed income was derived. He submitted that during the course of statement recorded u/s 132(4) of the Act, the assessee accepted the unaccounted income but did not substantiate its source. The ld. DR relied heavily on the findings recorded by the ld. CIT (Appeals) and submitted that the penalty has been rightly confirmed. 5. We have heard the rival submissions and perused the material on record. We find that the ITAT Delhi E Bench has discussed an identical .....

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the course of search makes a statement under sub section (4) of section 132 that any money, bullion, jewellery or other valuable article or things found in his possession or under his control has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub section (1) of section 139 and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest .....

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undisclosed income (ii) specifies and substantiates the manner in which such income has been derived, and (iiii) pays the tax together with interest, if any, in respect of the undisclosed income. From the reading of both these penal provisions we find that one requirement is common for non attraction of the penal provisions under both the sections i.e. if the assessee in his statements recorded u/s 132(4) of the Act admits the undisclosed income and specifies in the statement the manner in which .....

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n 5 thereto is applicable in such cases where search u/s 132 was initiated before 1.6.2007 whereas u/s 271 AAA, the provisions therein are applicable in a case where search u/s 132 of the Act has been initiated on or after 1.6.2007 but before 1.7.2012. Thus the intention of the legislature is clear to this extent that in a case wherein search was initiated before 1.6.2007, provisions u/s 271(1)© will be applicable and in search initiated after 1.6.2007 (but before 1.7.2012) provisions u/s 2 .....

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hrough the decisions relied upon by the Ld. AR, we find that in the case of ACIT vs. GEBILAL Kanhialal (HUF) (supra) before the Hon ble Supreme Court the Karta of the asseseee HUF had made a statement u/s 132 (4) admitting concealed income in the course of search and specified the manner in which such income stood derived. In this statement the Karta also surrendered an amount of ₹ 42,32,000/-. The Karta however neither filed return of income u/s 139 (1) on due date nor paid due tax on the .....

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to the assessee the benefit of immunity under clause (2) of Explanation 5 to section 271(1)© of the Act. According to the department the assessee had complied with all the conditions of clause 2 of Explanation 5 except payment of tax in time. Hon ble Supreme Court pleased to hold that no time limit has been prescribed for payment of tax under clause 2 of Explanation 5 and the assessee having paid tax upto the date of payment in respect of the undisclosed income surrendered by it in the cour .....

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he further question raised was as to whether in a case manner in which income has been derived has not been stated in the statement u/s 132(4) but is stated subsequently, that amounts to compliance with Explanation 5 (2) to section 271(1)© and no penalty would be leviable under said section.. Both these questions have been replied in affirmative in the decision of the Hon ble Allahabad High Court. As per the decision mere non statement of manner in which undisclosed was derived would not ma .....

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t has been discussed as per which the first requirement is disclosure in statement made u/s 132(4) and payment of tax before the assessment was completed. Following ratio laid down in this decision of Hon ble Gujarat High Court, Pune Bench of the Tribunal in the case of DCIT vs. Shri Inderchand Surajmal Bothra (supra) wherein penalty u/s 271(1)© was levied held that it is not required to specify the manner in which the income was earned in respect of the amount offered to tax in the return .....

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from business and department had accepted these returns and accordingly passed the assessment order. Penalty u/s 271 AAA was levied. It was held that undisputedly the assessee had shown the undisclosed income under the head income from business in the returns filed by them and that was accepted by the department by passing the assessment orders accordingly, therefore the case of the assessee falls exactly within the purview of sub section 2 of section 271 AAA. Thus the impugned penalty levied co .....

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the penalty on the basis that there is no prescribed method to indicate the manner in which income was generated where the definition of undisclosed income has been defined in the Act itself when no income of the specified previous year represented either wholly or partly which onus lay upon the assessee stood discharged. The Delhi Bench of the Tribunal in its recent decision in the case of Mother Pride Education Personna Pvt. Ltd,.vs. DCIT (supra) while placing reliance on its earlier decision .....

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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, that amounts to the compliance with Explanation 5 (2) to Section 271 (1) (C) of the Act. It was further held that in case there is nothing to the contrary in the statement recorded u/s 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 inferr .....

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ent of the manner in which such income was derived would not make Explanation 5 (2) inapplicable, held the Hon ble High Court. 12. The Hon ble Gujarat High Court in the case of CIT vs. Mahendra C. Shah has been pleased to held as under: In so far as the alleged failure on the part of the assessee to specify in the statement u/s 132(4) of the Income Tax Act 1961 regarding the manner in which such income has been derived, suffice it to state that when the statement is being recorded by the authori .....

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stipulated by the provisions considering the setting in which such statement is being recorded, as noted by the Allahabad High Court in the case of CIT Vs. Radha Kishan Goel (2005) 278 ITR 454. Secondly, considering the illiterate, to be specific and to the point regarding the conditions stipulated by exception no.2 while making statement u/s 132(4) of the Income tax Act, 1961. The view taken by the Tribunal as well as the Allahabad High Court to the effect that even if the statement does not sp .....

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