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2016 (9) TMI 913 - ITAT HYDERABAD

2016 (9) TMI 913 - ITAT HYDERABAD - TMI - Penalty 271AAA(2) - disclosure of undisclosed income - money found during search u/s 132 - Held that:- As per the provision, to avoid penalty, assessee had to admit the undisclosed income and specify the manner in which income was derived, he has to substantiate the manner in which income was derived and pay tax, together with interest in respect of the undisclosed income. In the present case, the assessee had disclosed the income and specified as well a .....

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are of the view that the assessee has fulfilled the requirement of sub-section (2) of section 271AAA. Hence, the penalty levied u/s 271AAA is accordingly deleted. - Decided in favour of assessee - ITA No. 470/Hyd/2016 - Dated:- 10-8-2016 - SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Assessee : Shri B. Shanthi Kumar For The Revenue : Shri K.E. Sunil Babu ORDER PER S. RIFAUR RAHMAN, A.M.: This appeal is preferred by the assessee against the order of t .....

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hat as per the provisions of Sec. 132(4A) of IT Act, money found in possession of the person is held to belong to him i.e., in this case the money was in control of the assessee. The assessee vide letter dated 25.03.2013, stated that the cash belonged to him. Accordingly the assessee filed his return of income for A.Y. 2013-14 on 26.04.2013 declaring income of ₹ 49,95,043/- . 2. The AO issued a Notice U/s. 143(2) issued on 31.10.2013 to the assessee. Thereafter, an order U/s. 143(3) of the .....

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gard on 06.05.2014. The assessee made his submissions vide letter dated 06.05.2014 . 4. In reply to penalty notice U/s. 271AAA for A.Y. 2013-14 dated 22.04.2014, assessee explained how the income was earned, the manner in which the income earned and about payment of taxes thereon as under: The assessee has taken premises in the building known as City Center in Plot bearing No. 7 Sy. No. 7 (7/C), situated at Margadarsi Colony.Kotnapet, Hyderabad, from M/s. SIRI MAHAMART TRADING PRIVATE LIMITED, h .....

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ct Judge, Ranga Reddy District. The matter was compromised between the parties before the Lok Adalat held at L.B. Nagar, Ranga Reddy, District, on 26.05.2012. The suit was disposed off by the Lok Adalat in terms of compromise as per order dated 26.05.2012. On the day of compromise, the plaintiffs paid ₹ 50 lakhs to the defendants viz., (1) Wah Magna Retails Pvt. Ltd., (2) assessee Mirza Farhatullah Baig and (3) Y. V. Ramana. 5. After considering the submissions of the assessee, the AO obse .....

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ii) , the penalty u/s. 271AAA is charged @ 10% on the undisclosed income of ₹ 49,95,004/-, which comes to ₹ 4,99,504/-. 6. When the assessee carried the matter in appeal before the CIT(A), the CIT(A) upheld the penalty levied by AO by observing as under: It is seen that from the assessment order dt. 22-04-2014 that this case has been handled and monitored Investigation Wing, Unit-II, Hyd. As per order u/s. 271AAA dt. 28.05.2014, it is categorically said that, though the cash was foun .....

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IT(Appeals) erred both in law and on facts in confirming the penalty of ₹ 4,99,504/- levied u/s 271AAA. 2. The CIT(Appeals) erred in confirming the penalty without taking into consideration the facts of the case and the grounds of appeal raised. 3. The CIT(Appeals) ought to have appreciated that penalty under section 271AAA is not attracted in the facts and circumstances of assessee's case. 4. The CIT(Appeals) ought to have cancelled the penalty of ₹ 4,99,504/- in the facts and c .....

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ssessee explained the facts and the manner in which the income was derived both before the police personnel and the Income Tax Department. Referring to the provisions of section 271AAA, ld. AR submitted that the amount of ₹ 49,95,000/- is the lone receipt and the assessee has no other income during the previous year. He has no books of account or other documents or transactions. The impugned income was assessable in Asst. Year 2013-14 and the assessee filed the Return of Income on 26.04.20 .....

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losed the same on 26.04.2013 itself. The cash was received on26-05-2012 and seized on 26-05-2012 while taking to his place of business. There is no time for the assessee neither to declare nor to bring into books before the seizure of the cash by the police. Therefore, it is unfair and premature to term the amount of ₹ 49,95,000/- as undisclosed income. 8.1 Ld. AR submitted that the assessee has clearly stated both before the police personnel as well as the Income Tax Department officials .....

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y Income Tax Department and taken custody of. Thus, the assessee fulfilled his obligation of substantiating the manner in which the income was derived. This income was admitted in the Return of Income filed on 26.04.2013 for the relevant Asst. Year. Therefore, the AO's remark that the assessee could not substantiate the manner in which income was earned is not correct. This is particularly so in view of the AO himself clearly mentioned in assessment order that the income returned was found t .....

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liged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to .....

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