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TMI Blog2016 (10) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... income of Rs. 3,57,72,163/-. The breakup of the disclosure of income declared in the course of search and was as under:- Sr. No. Description AY 2009-10 (as per 132(4) As per ROI Difference 1 Jewellery 3,00,000 3,00,000 NIL 2 Cash Seizure 10,00,000 10,00,000 NIL 3 Brokerage 7,50,000 7,50,000 NIL 4 Cash Credit by way of loan 3,78,81,099 3,35,31,393 43,49,166 5 Miscellaneous 25,00,000 NIL 25,00,000 6 Total 4,24,31,099 3,55,81,933 68,49,166 2.2 In the course of assessment proceedings, the assessee explained the difference of Rs. 43,49,166/- on account of reduced disclosure of cash credit which was accepted by the Assessing Officer ('AO'). In respect of the difference of Rs. 25,00,000/- on account of 'Miscellaneous income' the assessee submitted that this amount was declared by the assessee during search to cover any shortfall in the declaration made u/s 132(4) of the Act and since later on, at the time of filing of the return of income, it was found that there was no shortfall in the undisclosed income beyond Rs. 3,55,81,933/-, the same was not offered in the return of income filed for Asst. year 2009-10. The assessee's explanation, however, did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order of the CIT(Appeals)-33, Mumbai dt. 15/07/2014 deleting the penalty of Rs. 35,58,193/- levied u/s 271AAA of the Act for Asst. year 2009-10, has preferred this appeal raising the following grounds:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty of Rs. 35,58,193/- levied by the Assessing Officer u/s 271AAA of the Income Tax Act, 1961, without considering the fact that the assessee had failed to 'Specify' and 'Substantiate' the manner in which the undisclosed income has been derived despite the fact that u/s 271AAA(2) onus lies on the assessee to specify and substantiate the manner in which undisclosed income was derived. 2. The appellant prays that the order of the CIT(A) on the above grounds be reversed and that of the Assessing Officer be restored. 3. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary. 4.2 The Ld. DR for Revenue was heard in support of the grounds raised (supra), submitting that the only issue challenged was the order of the Ld. CIT(A) deleting the penalty of Rs. 35,58,193/- levied by the A.O u/s 271AAA of the Act for Asst. year 2009-10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,00,000 Total Rs. 4,24,31,099 4.4.2 It is seen that in the return of income filed thereafter for Asst. year 2009-10 on 03/05/2010, the assessee declared undisclosed income as under:- Sr. No. Description Amount (Rs.) 1 Jewellery 3,00,000 2 Cash Seizure 10,00,000 3 Brokerage 7,50,000 4 Cash credit by way of loan 3,35,31,933 Total 3,55,81,933 The difference between the declaration u/s 132(4) of the Act and that admitted in the return of income filed was; (i) Rs. 43,49,100/- on accounts of cash credit by way of loan, the assessee's explanation for which was accepted by the A.O; and (ii) an amount of Rs. 25,00,000/- on account of 'Miscellaneous' which was added to the assessee's income when the order of assessment was finalized u/s 153A rws 143(3) vide order dt. 03/11/2010. 4.4.3 Penalty proceedings were initiated u/s 271AAA of the Act simultaneously in the order of assessment for Asst. year 2009-10. It is seen that the A.O proceeded to levy penalty of Rs. 35,58,193/- @ 10% of the returned undisclosed income of Rs. 3,55,81,933/- admitted by the assessee u/s 132(4) of the Act and declared in the return of income for A.Y. 2009-10, on the ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is squarely covered by the decision of the jurisdictional ITAT in the case of M/s Kanakia Spaces Private Limited (supra) wherein the Hon'ble ITAT has held as under :- "The fact of the matter is that the requirement on the part of an assessee to substantiate the source of income cannot be taken to mean that all evidences in the respect has to be produced. The very fact that the disclosure is made in respect of undisclosed income, all that can be required of an assessee is that the proximate nature of acquisition can be mentioned by him. It cannot be the case that very minute detail thereof would be preserve with evidence which is possible only for the regular income being disclosed by him The requirement as per' Section (2) of Section 271AAA is only that the manner of earning income should be specified so that undue advantage of telescoping or some other income being brought within the total ambit of undisclosed income surrendered does not happen. From the order of the Ld. A.0 also, it is apparent that the penalty is not levied by him on account of some conviction but has been just levied to complete the proceedings. In fact there are no material facts warranting the levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted; (b) "specified previous year" means the previous year- (i) which has ended before the date of search, but the date of filing the return of income under sub-section(1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date;or (ii) in which search was conducted.) 4.4.5 From a perusal of the provisions of section 271AAA of the Act(supra), the finding of the Ld. CIT(A)(supra) and the material on record, we concur with the Ld. CIT(A)'s observation that the undisclosed income of Rs. 3.55 crores representing various items as cited therein are liable to be considered in terms of the provisions of Explanation (a)(ii) to Section 271AAA of the Act. As per the material on record and as observed by the Ld. CIT(A), we find that it is an undisputed fact that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Ld. A.O also, it is apparent that the penalty is not levied by him on account of some conviction but has been just levied to complete the proceedings. In fact there are no material facts warranting the levy of penalty and, accordingly, the penalty of Rs. 55,00,000/- levied under section 271AAA is directed to be deleted." 4. After considering the rival submissions, we do not see any reason to interfere with the order of CIT(A). The order is in tune with the principles laid down by various co-ordinate Benches and High Courts particularly with reference to disclosure made under section 132(4). In the case of CIT vs. Mahendra C. Shah (299 ITR 305) 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 statement. The reason is not far to seek. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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