TMI Blog2017 (6) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... see will get a relief of ₹ 35, 10,172/-. Appeal filed by the Assessee is partly allowed. - ITA. No: 97/AHD/2016 - - - Dated:- 3-4-2017 - SHRI RAJPAL YADAV, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER For The Appellant : Shri R. B. Shah, AR For The Respondent : Shri K. Madhusudan, Sr. D.R. ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. Aggrieved and not satisfied with the order of the ld. CIT(A)-4, Surat dated 11.12.2015 pertaining to A.Y. 2011-12, the assessee is in appeal before us. 2. The only grievance of the assessee relates to the levy of penalty of ₹ 42, 33,139/- u/s. 271AAA of the Act which is upheld by the ld. CIT(A). 3. Representatives of both the sides were heard at length. After hearing the rival contentions, we have carefully perused the orders of the authorities below. 4. Briefly stated the facts of the case are that a search action u/s. 132 of the Act was carried out on 08.06.2010 in the case of Builder Group of Surat. One of the persons of the group is the assessee. 5. During the course of the search operations, the statement of the assessee was recorded u/s. 132(4) of the Act in which he made a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has not fulfilled all the mandatory conditions mentioned in Section 271AAA of the Act. The A.O. was of the opinion that the assessee has failed to specify and substantiate the manner in which the undisclosed income was derived in spite of the opportunity given at the time of assessment proceedings also. 11. The A.O. concluded by stating that though the assessee has offered undisclosed income of ₹ 4,23,31,392/- during the search operation but has not fulfilled the conditions for immunity from the penalty. The A.O. accordingly levied penalty @ 10% of offered undisclosed income of ₹ 4,23,31,392/- and computed the penalty at ₹ 42,33,139/-. 12. Assessee carried the matter before the ld. CIT(A) but without any success. 13. Before us, the ld. counsel for the assessee vehemently stated that the assessee has given complete details of the holding of the agricultural land along with the details of the agricultural income derived there from. It is the say of the ld. counsel that there is no undisclosed income in the sense that the assessee has declared the income voluntarily and has also complied with the conditions specified under clause 2 of Section 271AAA and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner before the date of search; or (ii) any income of the specified previous 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counted income and I assure to pay on time tax on it. Q:23 You have answered in Q. No. 2 that you are engaged in the agricultural activities so tell us that what you have grown during the year ? A:23 Me and my family members are mainly engaged in growing mangoes, chikoo, sugarcane, dangar and vegetables. 18. If the aforementioned statement is considered in the light of the decision of the Hon ble Jurisdictional High Court of Gujarat in the case of Mahendra C. Shah (supra) there remains no doubt that no specific question was asked by the search party relating to the manner in which the income has been derived. The Hon ble Allahabad High Court in the case of Radha Kishan Goel 278 ITR 454 has accepted that unless the authorized officer puts a specific question with regard to manner in which income has been derived. It is not expected from the person to make a statement in this regard. 19. Though the assessee has tried to explain the source as agricultural income but this seems to be illogical and not acceptable. For the simple reason that no prudent person will accept undisclosed income derived from agricultural sources and offer the same for taxation knowing fully well that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cash found at the time of search which totals to ₹ 72,29,667/-. 22. Although, the assessee has offered undisclosed income of ₹ 42,33,13,92/-, in our considered opinion and on the basis of the facts on record only to the extent of ₹ 72,29,667/- undisclosed wealth was found. 23. In our understanding of the law, wherever and whenever there is a voluntary offer of undisclosed income during the course of the search operation, the same should have a nexus with the unaccounted wealth unearthed. In the case in hand, the declaration of the undisclosed income is far more in excess of the undisclosed and unexplained wealth found during the course of the search operation. The voluntary offer of the assessee is not in consonance with the meaning of undisclosed income given under the explanation to Section 271AAA of the Act as mentioned elsewhere. 24. The sine qua non for the levy of penalty, be it u/s. 271AAA of the Act or under erstwhile 271(1)(c) read with Explanation 5A of the Act, is that the assessee should be found to be the owner of any money, bullion, jewellery or other valuable article or thing and the undisclosed income of the assessee is found to be inve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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