TMI Blog2016 (12) TMI 1352X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER SHRI VIKRAM SINGH YADAV, A.M. This is an appeal filed by the Revenue against the order of Ld. CIT(A), Central, Jaipur dated 14.08.2014 wherein the Revenue has taken following grounds of appeal: 1. On the facts and in the circumstances of the case the ld. CIT(A)(Central), Jaipur is not justified in deleting penalty of ₹ 11,93,110 u/s 271AAA of the IT Act, 1961 ignoring the fact the assessee failed to specify the manner in which undisclosed income of ₹ 1,19,31,102/- had been derived by it. 2. On the facts and in the circumstances of the case the ld. CIT(A)(Central), Jaipur is not justified ignoring the fact that the assessee failed to substantiate the manner in which undisclosed income had been derived. 2. The brief facts of the case are that a search action u/s 132 of the Income-Tax Act, 1961 was carried out on the UDB Group on 28.01.2009 and cash, jewellery, books of account and certain loose papers were found and seized from the residential and business premises of the assessee and the groups concerns. During the course of search, statements of the assessee and his family members were recorded, wherein certain undisclosed incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee recorded u/s 132(4) of Income Tax Act, 1961, during the course of search, it would transpire that the assessee has duly admitted the additional income and explained the mode and manner in which the said income has been derived. Further, the manner in which the undisclosed income was derived has also been substantiated and the tax thereon alongwith interest also stands paid. Therefore, penalty u/s 271AAA could not at all have been imposed in the facts and circumstances of the case. It is pertinent here to make a reference to clause (2) of section 271AAA for which the provisions as contained in section 271AAA are reproduced herein below for ready reference: 271AAA. (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, 2007 43[but before the 1st day of July, 2012], the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) Nothing contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Schedule BP is also not supported and have no corroborative figures from Item 43 of item 51d of Part A-P L. As such under these facts and circumstances, it is very much clearly established that though the assessee surrendered undisclosed income of ₹ 1,16,81,103/- but failed to specify the manner of earning and to substantiate the same from any documentary corroborative evidence. Therefore, the case of assessee clearly comes under the ambit of section 271AAA of the IT Act, 1961 for the undisclosed income referred. From a perusal of aforementioned observations of the Ld AO in the penalty order, two things are noted which are as under: 1. That, the Ld. AO accepts in the penalty order itself that the assessee had admitted and surrendered the undisclosed income and also declared the same in return of income and paid taxes thereon. 2. But, he has wrongfully mentioned that the assessee failed to specify the manner of earning the undisclosed income and to substantiate the same from any documentary corroborative evidence. In this regard, it is submitted that, firstly, the Ld. AO failed to appreciate the statements rendered by assessee as well as of family members of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income so admitted by him in statements recorded u/s 132(4). Therefore, Ld. AO had committed a gross error in imposing penalty on the basis of these wrong observations and which fact was pointed out before the Ld. CIT(A) who was well justified in deleting the penalty imposed by Ld. AO. It is submitted that in the present case, all of the abovementioned three conditions stand fulfilled and therefore, no penalty u/s 271AAA is leviable. It may be noted that in the statements recorded u/s 132(4) of the assessee as well as of his family members, the undisclosed income has duly been admitted and also the mode and manner of acquiring the said income alongwith substantiation thereof has been explained. The Ld. AO has grossly erred in observing that the Assessee has not declared the undisclosed income in his statements. While, the actual fact is that the assessee has admitted the undisclosed income and has explained / substantiated the mode and manner of acquisition of the said income which is clearly reflected in the statements of Sh. Ravinder Singh recorded u/s 132(4) during search, on which, the assessee has relied. Thus, since the mode and manner of acquisition of undisclosed income st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied 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 acquisition of the movable assets. 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 27IAAA 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. In fact there are no material facts war ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fund flow statement prepared to compute the additional income as a result of search and after including the said amount of ₹ 1.00 crore a sum of ₹ 1,16,31,103/- was computed as income for the year under consideration which fact was accepted the AO in the assessment order passed u/s 143(3) of the Income Tax Act, 1961. After considering these facts this Hon ble Tribunal was of the opinion that the assessee has not made any undisclosed investment in the after making disclosure of ₹ 1.16 crores, the relevant observations in para 4.7 at page 7 are reproduced herein below for ready reference : We have carefully considered the submissions of the ld. representatives of the parties and the orders of the authorities below. We observed that the assessee has made sufficient withdrawals in the preceding assessment years, the details of which are mentioned by the Ld. CIT(A) in the impugned order. However, it is a fact that at the time of preparing inventory no valuation report was obtained by the department and only an estimated addition has been made for ₹ 5.00 lacs by the AO which has been reduced to ₹ 3.00 lacs by the Ld. CIT(A). The said addition has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A) whose findings are reproduced as under: I have carefully perused the order of the AO and submissions of the appellant alongwith the assessment order, statement of the appellant and his son Shri Ravindra Singh taken u/s 132(4). On perusal of the facts on record, I consider with the submissions of the appellant on the following grounds: (i) Search/survey and seizure operation were carried out at the business and residential premises of the appellant on 28.01.2009. It is seen that the appellant filed his return of income of 20.9.2010 declaring total income at ₹ 1,28,55,850/- prior to issue of notice u/s 143(2) dated 13.10.2010. (ii) While filing this return the assessee disclosed an amount of ₹ 1,16,31,103/- as the undisclosed income component of his income from business. (iii) The returned income was accepted in the assessment order passed on 29.12.2001. On perusal of the assessment order it is seen that the AO hads not given any adverse remarks with respect to the income disclosed by the assesee under the head income from business and profession, in fact, the income declared in the return of ₹ 1,28,55,850/- has been taken as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n manager of all the business activities of the group, and the son of the appellant it is seen that documentary evidence were found during the course of search and he was confronted with the same during the course of taking the statement u/s 132(4). On perusal of the statement it is seen that each and every paper was confronted and he either got these documents verified from the regular books of accounts or surrendered the amount during the course of statement taken during search on 28.1.2009 or subsequently on 9.2.2009 in the post search inquiries. The relevant excerpts of the statement is being produced herewith for reference: On perusal of the statement it is seen that specific documents were found and annexurised as A-11 during the course of search and seizure. The son of the assessee was confronted with these documents who have gave specific answer regarding the details of accounted and non accounted transactions with reference to the projects Southern Heights, Unique Harmony, Unique Builders (Reality) and Unique Builders and Developers (Ajit) and RNB Investment. Given the above fact, I am not inclined to agree with the observations of the AO that the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment and was confronted with the appellant, during the course of statements on the basis of which he made the surrender. ix) Reliance is placed on the finding of the Hon. ITAT, Cuttack Bench, in the case of Pramod Kumar Jain vs. DCIT (2012)77 DTR 244. The facts of the case are that the AO initiated penalty proceedings in A.Y. 2008-09 . The AO after issuing show cause u/s 271AAA observed that the assessee has made disclosure for respective amounts but failed to specify manner in which such income had been derived and therefore imposed penalty being 10% of amount surrendered u/s 132(4). The Hon ble ITAT observed that there is no prescribed method to indicate manner in which income was generated when definition of undisclosed income has been defined in Act itself when no income of specified previous year represented either wholly or partly which onus lay down assessee stood discharged . Therefore, levy of penalty u/.s 271AAA is not justified and penalty so levied u/s 271AAA for A.Ys under consideration in case of respective assessee is cancelled . The observations of the Hon ble ITAT are applicable to the facts of the case of the appellant. Regarding the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore the penalty of ₹ 11,93,110/- lakh is deleted. 4. We have heard the rival contentions and perused the material available on record. The limited issue under consideration relates to whether the appellant is eligible for immunity from penalty in terms of section 271AAA(2) of the Act. In particular, having satisfied rest all conditions, whether the appellant has specified the manner in which such undislosed income has been derived and substantiates the manner in which such income was derived. In this regard, the ld AR has submitted that it satisfies the said condition as the undisclosed income as represented by the seized papers was duly admitted in the statements recorded u/s 132(4) and the assessee had agreed to pay tax on the income which will be arrived at after deriving the exact amount of income represented by seized papers. Thus, the income on the basis of seized papers was calculated vide a fund flow statement and was duly submitted before the Ld. AO during assessment proceedings, and tax thereon was paid accordingly and a copy of the said fund flow statement has been placed at APB 98. Further, we refer to following findings of fact by ld CIT(A) which rema ..... X X X X Extracts X X X X X X X X Extracts X X X X
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