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2018 (3) TMI 947

he assessee had admitted the undisclosed income in respect of the deposits of the employees, exemployees in their bank accounts. The assessee admitted the peak deposit in the accounts of employees as his undisclosed income amounting to ₹ 56,74,868/-. At the time of search, the assessee has submitted before the A.O. that the bank accounts are not belonged to the assessee and they were belonged to the employees who opened the accounts and operating the same. However, the assessee had admitted peak deposits u/s 132(4) - A.O. did not make any further enquiries and accepted the admission given by the assessee. Though peak deposits were admitted by the assessee as additional income u/s 132(4) of the Act, the A.O. has not established that the impugned bank accounts were belonged to the assessee, therefore, we hold that there is no undisclosed income in respect of the deposits in the name of the employees of the assessee. - Decided in favour of assessee - Unexplained source of acquisition of gold and jewellery - Held that:- On the day of the search and subsequently, the assessee has categorically explained the source of acquisition of gold and jewellery stating that the said gold .....

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admitted additional income for the assessment year 2013-14 with the following breakup: Sl. No. Description Amount 1 Cheques deposited into the bank account of my employees (present & former) 56,74,868.00 2 Gold jewellery weighing 1530.40 gms 55,94,482.00 3 22 carats of diamonds 11,79,350.00 4 Silver articles weighing 13.28 kg 7,43,568.00 5 Income from business of construction of apartment complex in the name of Sanjeevini Mansion 30,01,421.00 6 Income admitted towards any other discrepancies 1,79,502.00 Total 1,63,73,191.00 The AO has imposed the penalty of ₹ 49,11,957/-@ 30% on the above income under section 271AAB of IT act. 3. (i) With regard to item No.5 and 6 i.e. income from business of construction of apartment complex in the name of Sanjeevini Mansion and the income admitted by the assessee towards discrepancies amounting to ₹ 30,01,421/- and ₹ 1,79,502/-, the Ld. CIT(A) deleted the penalty imposed by the A.O., holding that the financial year was not yet complete and the A.O. has not made out a case that the assessee would not have disclosed the profit from sale of apartments and the revenue has not preferred any appeal. 3 (ii) With regard to the gold .....

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d income. Similarly, with regard to the cash deposits, the assessee argued before the assessing officer that he has no connection with the bank accounts and they are opened and operated by the employees themselves. He came forward and admitted the peak deposits as his income only to buy peace and save himself from protracted litigation. Therefore, requested to drop penalty proceedings. The A.O. not being convinced with the explanation of the assessee imposed the penalty @ 30% of the undisclosed income. The A.O. was of the view that once the search is conducted u/s 132 of the Act, as per the provisions of section 271AAB of the Act, levy of penalty is mandatory. 5. Aggrieved by the order of the A.O., the assessee went on appeal before CIT(A) and the Ld. CIT(A) held that the imposition of penalty is not mandatory. Mere admission of income u/s 132(4) of the Act cannot automatically lead to penalty u/s 271AAB of the Act. The Ld. CIT(A) relied on the decision of ITAT Kolkata Bench in the case of SSP Steel and Power Limited Vs. CCIT 171 TTJ 749 (2015), which reads as under: 13. In view of the above facts and circumstances, and legal position discussed above, the penalty to be levied for u .....

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ence or no evidence at all. Therefore, the finding of the Tribunal that the provisions of s. 271(1) were not attracted was not erroneous. Similarly, the Hon'ble Madras High Court in case of CIT vs. M. Pachamuthu 295 ITR 502 (Mad) held:- Mere addition agreed to by the assessee during the course of survey would not empower the Assessing Officer to levy the penalty under section 271(1)(c) of the Income-tax Act, 1961 -.. The fact that the assessee had agreed to additions to income was not proof of concealment. Even Hon ble Kerala High Court in the case of CIT vs. M. George & Brothers 59 CTP. 298 (Kel) held that: where the assessee for one reason or the other agrees or surrenders certain amounts for assessment, the imposition of penalty solely on the basis of the assessees surrender will not be well-founded. Depending upon the facts and circumstances of each case the Court has to decide whether penalty is justified. It is always for the Revenue to bring the case under the ambit of Sec. 271(1)(c) by establishing there is concealment on the part of the assessee. The Explanation to sec. 271(1)(c) inserted w.e.f. 1st day of April, 1964 merely raises a rebuttable presumption but the .....

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spect of section 158BFA(2) in the case of Sadhu Ram Goyal Vs. DCIT 128 ITD 436 (2011). 7. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. During the appeal hearing, the Ld. A.R. vehemently argued that penalty u/s 271AAB of the Act is not mandatory but discretionary. The provisions of section 271AAB of the Act is parimateria with that of section 158BFA(2) of the Act relating to block assessment and accordingly argued that the levy of penalty under section 271AAB is not mandatory but directory. When there is reasonable cause, the penalty is not exigible. The Ld. A.R. has taken us to the section 271AAB of the Act and also section 158BFA(2) of the Act and argued that the words used in section 271AAB of the Act and the words used in section 158BFA(2) of the Act and sub section (1) of section 271AAB of the Act are identical. Hon ble courts in respect of penalty u/s 158BFA held the penalty is not mandatory but discretionary. Hence, argued that the penalty under section 271AAB of the Act penalty is also not automatic and it is on the basis of merits of the case. For ready reference, we extract hereunder section .....

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ade in respect of a person if- (i) such person has furnished a return under clause (a) of section 158BC; (ii) the tax payable on the basis of such return has been paid or, if the assets seized consist of money, the assessee offers the money so seized to be adjusted against the tax payable. (iii) Evidence of tax paid is furnished along with the return; and (iv) An appeal is not filed against the assessment of that part of income which is shown in the return: Provided further that the provisions of the preceding proviso shall not apply where the undisclosed income determined by the Assessing Officer is in excess of the income shown in the return and in such cases the penalty shall be imposed on that portion of undisclosed income determined which is in excess of the amount of undisclosed income shown in the return. 8. Careful reading of section 271AAB of the Act, the words used are AO may direct and the assessee shall pay by way of penalty . Similar words were used section 158BFA(2) of the Act. The word may direct indicates the discretion to the AO. Further, sub section (3) of section 271AAB of the Act, fortifies this interpretation and the same reads as under; Sub section (3) of sect .....

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rovisions of this Act, direct that, in a case where search has been initiated under section 132 on or af ter the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,- (a) a sum computed at the rate of ten per cent of the undis closed Income of the spec i f ied prev ious year, i f such as sessee- (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 ) substant iates the manner in which the undis closed income was der ived; and (iii ) on or before the specified date- (A) pays the tax, together with interest, if any, In respect of the undisclosed income; and (B) furnishes the return of income for the spec i f ied previous year dec lar ing such undis closed income therein; (b) a sum computed at the rate of twenty per cent of the undisclosed income of the specif ied previous year, if such assessee- (i) in the course of the search, In a statement under sub-section (4) of section 132. does not admit the undisclosed income; and (ii) on or before the specified date- (A) declares such Income in the return of .....

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of the Act need not be undisclosed income and every undisclosed income need not necessarily be admitted by the assessee u/s 132(4) of the Act. 11. In the assessee s case, the assessee had admitted the undisclosed income in respect of the deposits of the employees, exemployees in their bank accounts. The assessee admitted the peak deposit in the accounts of employees as his undisclosed income amounting to ₹ 56,74,868/-. At the time of search, the assessee has submitted before the A.O. that the bank accounts are not belonged to the assessee and they were belonged to the employees who opened the accounts and operating the same. However, the assessee had admitted peak deposits u/s 132(4) of the Act. The A.O. did not make any further enquiries and accepted the admission given by the assessee. Though peak deposits were admitted by the assessee as additional income u/s 132(4) of the Act, the A.O. has not established that the impugned bank accounts were belonged to the assessee, therefore, we hold that there is no undisclosed income in respect of the deposits in the name of the employees of the assessee. The Ld.CIT(A) also has expressed the same view. For ready reference, we extract .....

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stained the penalty to the extent of ₹ 27,41,676/- as under: I have considered the submissions of the appellant, perused the facts of thecase and gone through the proceedings of search and seizure operations. Though the appellant claimed that except 10.400 grams of jewellery belongs to him, the rest of the jewellery belonged to his wife, his sister-in-law and his brother's daughter, he could not furnish any specific evidence in this regard. At the same time, a part of the jewellery can certainly be held to be belonging to them. In the absence of specific evidence in this regard, I would consider 500 gms as belonging to the wife of the appellant and 250 gms as belonging to Ms.Sarat Chandrika who was staying with the appellant even at the time of search and seizure operations. Jewellery of brother's wife cannot be given credit in the hands of the appellant. Therefore, to the extent of 750 gms, though the appellant admitted income u/s 132(4), the same would not fall within the scope of 'undisclosed income' as defined in S.271AAB of the Act. The Assessing Officer is directed to cancel the penalty u/s 271AAB with regard to value of 750 gms of gold jewellery i.e., & .....

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llant. It was further explained that marriage of Ms.Sarat Chandrika was scheduled for 1 11h May, 2013 and she stays in their house only as she was brought up by him and his wife right since her childhood. The jewellery of 770 grains was kept ready for her marriage and the said jewellery does not belong to the appellant. Likewise, the appellant submitted that the remaining jewellery also did not belong to him. Further, the appellant submitted that the admission was given in anticipation that the jewellery will be released once the same is admitted as income and the taxes are paid. 6.9) I have considered the submissions of the appellant, perused the facts of the case and gone through the proceedings of search and seizure operations. Though the appellant claimed that except 10.400 grams of jewellery belongs to him, the rest of the jewellery belonged to his wife, his sister-in-law and his brother s daughter, he could not furnish any specific evidence in this regard. At the same time, a part of the jewellery can certainly be held to be belonging to them. In the absence of specific evidence in this regard, I would consider 500 gms as belonging to the wife of the appellant and 250 gms as .....

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