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Late Smt. Sudha Patni, (Through Legal Heir Sh. Mahendra Kr. Patni) Versus The Assistant Commissioner of Income-tax

2016 (11) TMI 1037 - ITAT JAIPUR

Penalty u/s 271AAA - Held that:- As in course of search in the sworn statement recorded under section 132(4) of the Act, has admitted the undisclosed income, and clearly stated the manner in which the undisclosed income (within the meaning of Explanation (a)(i) of Section 271AAA) was derived and substantiated in statement recorded in course of search. Subsequently, the assessee paid tax, together with interest in respect of the undisclosed income and filed return of income, which stand accepted .....

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(A)-4, Jaipur dated 27.10.2015 pertaining to assessment year 2012-13. The ground raised by the assessee is as under : 1. On the facts and in the circumstances of the case and in law the ld. CIT (A) erred in confirming the imposition of penalty of ₹ 27,19,188/- under section 271AAA of Income Tax Act, 1961. 2. The assessee prays for leave to add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal. 2. Briefly stated the facts are that a search a .....

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ing to Smt. Sudha Patni, the assessee on the basis of the statement recorded u/s 131 by the DDIT (Unit-III), Jaipur on 03.08.2011. The assessee further claimed in the said statement that all valuables and cash as described above which were found and seized from this locker belonged to her. Accordingly, the assessee surrendered a sum of ₹ 3,30,41,880/- as her undisclosed income for the A.Y. 2012-13. Thereafter, the assessment under section 143(3) of the I.T. Act, 1961 was framed vide order .....

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ubmissions dismissed the appeal of the assessee. 3. Now the assessee is in appeal before us. 4. The ld. Counsel for the assessee submitted that both the authorities below have failed to appreciate the facts and wrongly applied the provisions. The ld. Counsel submitted that the seized Jewellery, ornaments and stones of ₹ 2,25,69,380/- and cash of ₹ 46,22,500/-. were not acquired by the assessee out of her undisclosed income but the same were received to assessee at the time of her mar .....

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11 and 13 of statement recorded by search party. He, however, submitted that the assessee was not having any proof of receiving the Jewellery and other valuables in gift or selling of the gold biscuits. Therefore, in order to buy peace and avoid litigation she surrendered the entire Jewellery, valuables and cash found at the time of search as her income for AY 2012-13. The surrender was made in the statement recorded by DDIT. Further the assessee disclosed this income in Income Tax return filed .....

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regard, the humble assessee submits that she has satisfied all the conditions mentioned in sub-section 2 of section 271AAA and therefore, the lower authorities have not justified in levy of penalty u/s 271AAA. In this regard, the assessee submits that the following facts are not in dispute: - (i) In the statement recorded by DDI wing the assessee admitted the undisclosed income. (ii) The manner in which the undisclosed income derived was also explained. The assessee has spelled out in detail th .....

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However the assessee was not having any proof of receiving the Jewellery and other valuables in gift or selling of the gold biscuits therefore in order to buy peace and avoid litigation she surrendered the entire Jewellery, valuables and cash found at the time of search as her income for AY 2012-13. The surrender was made in the statement recorded by DDIT. Section 271AAA has been inserted by Finance Bill 2007 and is applicable in a case where search has been initiated on or after 1.6.2007 but b .....

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s 271(1)(c) is to be quantified as per 271(1)(iii) in case conditions are not satisfied. Hence case laws decided in respect of Expl 5 to 271 (1)(c) are relevant for subsection 2 of section 271AAA. While recording statement u/s 132(4), it is the duty of the authorized officer to apprise the assessee about provisions of law and if no question asked about the manner in which income has been derived, then on this ground, immunity cannot be denied. In this regard, the learned Counsel placed reliance .....

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16 (2016 (4) TMI 949) Sunil Kumar Bansl vs. DCIT (2015) 37 ITR (Trib) 0576 (Chandigarh) 4.3. The ld. Counsel submitted that all the conditions of sub-section (2) of section 271AAA have been satisfied by the assessee and consequently no penalty u/s.271AAA(1) would be leviable. In the case of the assessee, the assessee surrendered the income in her statement recorded by DDIT. She specified the source of having in possession of valuable and cash which was out of gift received to the assessee and th .....

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its obligation, penalty cannot be levied. In this regard your kind attention is drawn towards the Supreme Court decision in the case of Hindustan Steels Ltd. Vs. State of Orissa, 83 ITR 26 (SC). Hon ble Apex Court has held that - An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious .....

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hnical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. In view of the above submission, the ld. Counsel prays to cancel the penalty of ₹ 27,19,188/- levied by ld AO u/s 271AAA of Income Tax Act, 1961. 4.5 The ld. D/R supported the orders of the authorities below. 4.6. We have heard rival contentions, perused the material available on record and gone through the or .....

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the return of income for the specified year included the undisclosed income of ₹ 2,71,91,880/- which represented the unexplained money. In accordance with sub section (2) of Section 271AAA of the Act, the penalty provisions under sub-section (1) of Section 271AAA will not apply if the assessee - (i) In the course of the 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) Substantia .....

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sclosed income (within the meaning of Explanation (a)(i) of Section 271AAA) was derived and substantiated in statement recorded in course of search. Subsequently, the assessee paid tax, together with interest in respect of the undisclosed income and filed return of income, which stand accepted in assessment u/s 143(3) of the Act. On perusal of the above, it is seen that assessee has offered for tax his undisclosed income (Rs. 2,71,91,880/-) including jewellery as under :- Jewellery ₹ 2,25, .....

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ered in the case of ACIT (OSD) vs. M/s. Kanakia Spaces Pvt. Ltd. ITA No. 6763/Mum/2011 A.Y. 2007-08, wherein the Hon ble Tribunal has held as under :- 3.1. Ld. CIT (A) after considering the submission deleted the penalty by stating as under:- I have carefully considered the submissions made by the appellant in respect of the penalty levied by the ld. AO. It is seen that the ld. AO has written two sentences at para-8 to conclude that the appellant has not been able to substantiate the source of a .....

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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.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. .....

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05) 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 .....

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