TMI Blog2016 (11) TMI 1434X X X X Extracts X X X X X X X X Extracts X X X X ..... AMARJIT SINGH, ACCOUNTANT MEMBER:- This assessee's appeal for A.Y. 2010-11, arises from order of the CIT(A)-IV, Ahmedabad dated 14-08-2013 in appeal no. CIT(A)- IV/36/RJT/CC-1/12-13, in proceedings under section 271AAA of the Income Tax Act, 1961; in short the Act . 2. The asssessee has raised following grounds of appeal:- 1. The grounds of appeal mentioned hereunder are without prejudice to one another. 2. The learned Commissioner of Income Tax (Appeals)-IV, Ahmedabad erred on facts as also in law in holding that appellant is not eligible to avail immunity u/s. 271AAA(2) of the Act and thereby confirming the levy of penalty u/s. 271AAA of the Act of ₹ 27,20,443/-. The penalty u/s. 271 AAA of the Act may kindly be deleted. 3. In this case, a search action u/s. 132 of the act was carried out at the premises of the assessee on 15th September, 2010. During the course of search, various materials were found and seized, therefore, proceedings u/s. 153A of the Act was initiated for Assessment Year 2004-05 to 2009-10. The assessee is engaged in the business of travel agent and broker. After verification, the total income was determined at ₹ 2,72,04,430/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax due to the action of the department. You are therefore requested to drop the penalty proceeding u/s. 271AAA of the Act. 4. The Assessing Officer has not accepted the explanation of the assessee and stated that following provision of section 271AAA were attracted:- (a) where the undisclosed income offered is other than the amount covered in the statement recorded u/s 132(4) and (b) Though amount is declared in the statement recorded u/s 132(4) but the assessee has not specified the manner in which such income has been derived; and (c) Where the assessee fails to substantiate the manner in which such income is derived; and (d) Where the assessee failed to pay the tax together with interest, if any, in respect of the undisclosed income The Assessing Officer observed that assessee was not eligible and immunity is available to the assessee if all the above conditions are cumulatively fulfilled. He also stated that in the present case in the statement recorded u/s. 132(4), assessee had admitted a sum of ₹ 60 lacs as his unaccounted income whereas such disclosure of unaccounted income was worked out to ₹ 272.4 lacs in the return of income filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this section, specified previous year has been defined, so as to mean 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. 'Undisclosed income' has also been defined, so as to mean any income of the specified previous year found during the course of search represented by (i) Undisclosed assets (ii) Undisclosed transactions representing undisclosed income: which has not been recorded before the date of search in the books of account or other documents maintained in the normal course or otherwise not disclosed to the CCIT / CIT before the date of search ii) False or bogus expenses claimed, detected as a result of search: which are recorded in the books of accounts or other documents maintained in the normal course. From the bare reading of provisions of S.271AAA, it is clear that S.271 AAA is applicable with respect to undisclosed income of the specified previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s seen that the appellant was confronted by asking specific questions related to entries recorded in seized materials and his replies were also confined to the notings mentioned in those documents. On the basis of such documents, appellant disclosed ₹ 60,00,000/- in the statement recorded u/s 132(4) of the Act. Subsequently, after receiving copies of the entire material and take care of all the possible errors, discrepancies and transactions that may be found, in any manner, on any statement, entries, documents etc. forming part of the material, the disclosure was by the appellant from ₹ 60,00,000/- to ₹ 3,60,00,000/- voluntarily by filing a dtd. 30-11- 2009. The was conducted on 15-09-2009 and there is a gap of only 40-45 days and this much time is definitely required by any to go through the material thoroughly and to calculate the quantum of undisclosed income on the of material. Further, the disclosure has not been enhanced by the appellant because of any queries and further investigation from the side of the Department, it is purely voluntary enhancement of disclosure by the appellant and this fact has also not been challenged by the AO in the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... setting in which such statement is being recorded, as noted by Allahabad High Court in case of Radha Kishan Goel (SUpra) 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 by Exception No. 2 while making statement under 132(4) of the Act. The view by the Tribunal as well as Allahabad High Court to the effect that even if the 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 under Exception No.2 in Explanation 5 is commendable. 6.4 Now coming to the third condition of tax payment, the details of tax payable and paid are as below: Particulars Amount (Rs.) Total Tax Interest payable 91,13,090/- Taxes paid 36,47,878/- Tax payable till date 54,65,212/- From the above, it can be seen that even till date the appellant has not paid the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration. Once, the assessee had requested for appropriation of seized cash to department, the liability of assessee to that extent got discharged. In this connection, he placed reliance on the case of Ram S. Sharda vs. DCIT 13 ITR 457. The reliance was also placed on the decision of hon'ble Supreme Court in the case of ACIT vs. Gevilal Kanhailal (HUF) 348 ITR 561 (SC). ITAT Kolkata Bench 'A' in the case of DCIT vs. Pioneer Online Limited (2012) 52 SOT 94 (Kolkata) wherein it was held that once entire tax and interest has been duly adjusted out of seized cash or otherwise paid in deference to notices of demand, well before the penalty proceedings were concluded, the assessee could not be denied the immunity u/s. 271AAA. He also relied in the case of DCIT vs. Pioneer Marbles Interior Pvt. Ltd (2012) 14 ITR (Trib) 608 (Kol) wherein it was held that once the entire tax and interest has been duly paid within well before the conclusion of the impugned penalty proceedings, the assessee cannot be denied immunity u/s. 271AAA. The learned counsel has also requested for proportionate relief from the penal provision. The learning Counsel contended that to pay the outsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or after the 1st day of June, 2007, 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 contained in sub-section (1) shall 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) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income. (3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation.--For the purposes of this section,-- (a) undisclosed income means-- (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to substantiate the manner in which the income was earned and he placed reliance on the decision of Hon'ble High Court of Gujarat in the case of Mahendra C.Shah(2008)229 ITR 305 (Guj) Now we are coming to the third condition which required that the assessee to pays the tax, together with interest, if any, in respect of the undisclosed income. 11. In this connection we have seen that total tax interest payable was ₹ 91,13090/ and the assessee had paid taxes only to the extent of ₹ 36,47,878/. We have also considered the various judicial pronouncement quoted by the assessee and found that in all those cases the entire tax and interest was duly paid. The conditions stated as (supra) are mandatory and there is a no relaxation available to the assessee in proportionate basis as claimed by the assessee. Section 271AAA provides for a mandatory levy of penalty except where the assessee satisfies the conditions of section 271AAA(2). Even the saving upon proving a reasonable clause, as provided under section 273B, is not applicable for a penalty imposable u/s.271AAA, which is only in respect of undisclosed income, so that what alone is relevant is the applicability o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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