TMI Blog2016 (10) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... d be sufficient. We too, agree with the finding of the Ld. CIT(A) that the A.O has not identified which of the conditions have been violated by the assessee, that invite the levy of penalty u/s 271AAA of the Act in the case on hand; Nor has any reason has been rendered for the levy thereof - Decided in favour of assessee - ITA No. 6261/MUM/2014 - - - Dated:- 5-10-2016 - SHRI JASON P. BOAZ (AM) AND SHRI SANDEEP GOSAIN (JM) For The Appellant : Shri. Rajnesh K. Arvind Respondent : Shri. Sunil Kumar Tiwari ORDER PER JASON P. BOAZ, AM This appeal by revenue is directed against the order of the CIT (Appeals)-33, Mumbai dt. 15/07/2014, deleting the penalty of ₹ 35,58,183/-levied u/s 271AAA of the Income Tax Act, 1961 (in short the Act ) for Asst. Year 2009-10. 2. The facts of the case, briefly, are as under:- 2.1 The assessee is an individual engaged in business of real estate as builder and developer. A search and seizure action u/s 132 of the Act was conducted by the I.T. Department in the Gajra group on 19/02/2009, wherein the assessee along with his partner Shri.Ramesh Gajra disclosed collectively additional income of ₹ 15 crores in thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no appeal has been preferred by the assessee against the order of assessment for Asst. year 2009-10 dt. 03/11/2010 and therefore the matter attained finality. 3.1 The A.O initiated penalty proceedings u/s 271AAA of the Act simultaneously in the order of assessment for Asst. year 2009-10 dt. 03/11/2010, requiring the assessee to show cause as to why penalty be not levied there under in the case on hand. In reply dt. 23/05/2011, the assessee objected to the said proposal of the A.O submitting, inter alia, that the A.O had accepted the disclosure of ₹ 3,55,81,933/- made by the assessee and that the only addition made to the returned income was ₹ 25,00,000/-purely on estimate basis. The explanation put forward by the assessee were not accepted by the A.O and proceeded to levy penalty of ₹ 35,58,193/-; being 10% of the returned income of ₹ 3,55,81,933/- vide order dt. 30/05/2011 due to non compliance with the conditions specified u/s 271AAA of the Act. 3.2 Aggrieved by the order levying penalty of ₹ 35,58,193/- u/s 271AAA of the Act for Asst. year 2009-10 vide order dt. 30/05/2011, the assessee preferred an appeal before the Ld. CIT(Appeals)-33, Mumba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and that of the A.O be restored. 4.3 Per contra, the Ld. AR for the assessee supported the impugned order of the Ld. CIT(A) deleting the penalty of ₹ 35,58,193/-levied u/s 271AAA of the Act, as being in order. Submissions put forward before authorities below were reiterated. According to the Ld. AR, the assessee had fulfilled the conditions, as required by the provisions of sec. 271AAA of the Act, and both specified and substantiate d u/s 132(4) of the Act, the manner and source from which the undisclosed income of ₹ 4,24,31,099/- had been earned before the Addl. DIT (Inv.) Kalyan vide letter dt. 12/04/2009, which item wise break up finds mention at pages 1 and 2 of the order of assessment of for Asst. year 2009-10. It was contended that in view of the above, penalty u/s 271AAA of the Act was not leviable or sustainable in the case on hand and was correctly deleted by the Ld. CIT(A). In this regard reliance was, inter alia, placed on the decision of the Co-ordinate bench of this Tribunal in the case of Kanakia Spaces Pvt. Ltd. ( ITA No. 6763/Mum/2011 dt. 10/07/2013.) which the Ld. AR contends covers the issue in this appeal in favour of the assessee. 4.4.1 We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty 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 ₹ 35,58,193/- @ 10% of the returned undisclosed income of ₹ 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 that the assessee had not complied with the provisions specified under Section 271AAA of the Act for non-levy of penalty there under. On appeal by the assessee, we find that the Ld. CIT(A) after considering the submissions of the assessee, the A.O s views and the material on record, has deleted the penalty levied u/s 271AAA holdings under at paras 2.6 to 2.8 of the impugned order :- 2.6 I have considered the details on record filed by the A.O as well as by the appellant on various dates. I have also perused the assessment order and the impugned penalty order. The first contention of the appellant that the income offered under 132(4) does not fall within the definition of the term undisclosed income is incorrect. The appellant was found in possession of cash and jewellery which he could not explain. Similarly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould 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 penalty and, accordingly, the penalty of ₹ 55,00,000/- - levied under section 271AAA is directed to be deleted. 2.8 It is also important to mention here that the disclosure made by the appellant has been duly accepted by the AO and detailed in the Assessment Order by the AO. Therefore, there is no occasion to levy penalty u/s 271AAA. I direct the AO to delete the impugned penalty. The appellant succeeds in appeal and the penalty stands deleted. 4.4.4 The provisions of Section 271AAA of the Act read as under:- 271AAA (Penalty where search has been initiated. (1). The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 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 ₹ 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 assessee has, during the course of search proceedings, apart from declaring the undisclosed income; has also given the detailed break up of the same, item wise and giving the proximate manner in which and source the same have been earned/derived from. This is therefore, in our view, substantiated. The above facts find mention by the A.O in the order of assessment at 2 to 4 thereof, inter alia giving the dates on which these cash credit are credited in the books of accounts. It is not a requirements on the part of the assessee that all evidences in respect of the undisclosed income have to be produced to substantiate the source of income; a proximate nature of acquisition would be sufficient. We too, agree with the finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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 environment it is not possible to expect from an assessee, whether literate or illiterate, to be specific and to the point regarding the conditions stipulated in the second exception while making statement under section 132(4). Even if the statement does not specify the manner in which the income is derived, if the income is declared and tax thereon paid, there would be substantial compliance not warranting any further denial of the benefit. 4.1 In this case, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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