TMI Blog2018 (10) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue are dismissed. - ITA No.1100/Del/2015 - - - Dated:- 15-10-2018 - SHRI R. K. PANDA, ACCOUNTANT MEMBER ANDSHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Department : Shri Raghnath, Sr. DR For The Assessee : Shri Ved Jain, CA And Shri Ashish Goel, CA ORDER PER R. K. PANDA, AM : This appeal filed by the Revenue is directed against the order dated 29.12.2014 of the CIT(A)- 3, Gurgaon relating to assessment year 2011-12. 2. The grounds raised by the Revenue are as under :- ( i) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the total penalty levied u/s 271AAA even when the assessee was given appropriate opportunity of being heard. ( ii) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was right in granting relief to the assessee when the basic requirement of the section 271AAA is not fulfilled i.e. the assessee failed to elaborate the manner in which the undisclosed income was derived. 3. Facts of the case, in brief, are that the assessee is an individual and derives income from business. A search and seizure action u/s 132(1) of the I.T. Act, 1961 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surrendered amount was admitted u/s 132(4) and the same was disclosed in the return filed and due taxes were paid and the Assessing Officer has accepted the same. It was further argued that the amount was surrendered to buy peace and avoid litigation. It was also submitted that no specific question about substantiation was asked by the search party to the assessee during the course of search. Since the assessee had fulfilled all the three conditions i.e. surrender of income, payment of due taxes thereon and manner of substantiation of such income, therefore, no penalty u/s 271AAA is called for. Various decisions were also relied upon to the above proposition. 6. Based on the argument advanced by the ld. counsel for the assessee, the ld. CIT(A) cancelled the penalty levied by the Assessing Officer by observing as under :- I have considered the assessee's submissions as well as the impugned order. It is not in dispute that a sum of ₹ 22,00,00,000/- was surrendered u/s 132(4) on account of the following issues: ( i) ₹ 21.00 Crores on account of various payments made as advance towards purchase of agricultural land. ( ii) ₹ 50,00,000/- on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Circle-2 Chandigarh vs. Amarjit Goyal, Aditya Goyal, Krishan Kumar Goyal (ITA no.1080,1081,1082/2013). The Hon'ble High Courts of Allahabad and Delhi has also decided similar issue in favour of the assessee. Thus without much elaboration respectfully following the cases cited, the penalty levied of ₹ 2,20,00,000/- is directed to be deleted. 6. In the result the appeal of the assessee is allowed. 7. Aggrieved with such order of the ld. CIT(A), the Revenue is in appeal before the Tribunal. 8. The ld. DR relied on the order of the Assessing Officer. He submitted that the assessee during the course of assessment proceedings has not substantiated the manner of earning of the undisclosed income. Although, the assessee had declared such income and paid the due taxes thereon, however, the assessee has not fulfilled one of the three conditions prescribed u/s 271AAA of the I.T. Act. Therefore, the Assessing Officer was fully justified in levying penalty u/s 271AAA and the ld. CIT(A) was not justified in deleting such penalty. He also relied on the recent decision of Hon ble Delhi High Court in the case of Pr. CIT vs. Smt. Ritu Singal where penalty u/s 271AAA was up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relied on the decision of the Hon ble Delhi High Court in the case of CIT vs. Sudhir Jain vide ITA No.575/2013 order dated 26.11.2013. 11. So far as reliance of the decision in the case of Pr. CIT vs. Smt. Ritu Singal is concerned, he submitted that the in the said case the assessee never took a stand that there was no specific query raised from the revenue authorities. However, in the case of the assessee, it was submitted before the Assessing Officer as well as before the ld. CIT(A) that no specific query was raised by the search party to the assessee to substantiate the manner of earning of such income. 12. He further submitted that the case of the assessee does not fall under the jurisdiction of the Hon ble Delhi High Court and falls under the jurisdiction of Hon ble Punjab Haryana High Court. He submitted that when two views are possible on the same issue, the view which is favourable to the assessee has to be adopted. For the above proposition, he relied on the decision of the Hon ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. reported in 88 ITR 192. 13. We have considered the rival arguments made by both the sides and perused the material avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the revenue officer, then in that case no penalty u/s 271AAA cannot be levied. The relevant observation of the Hon'ble High Court from para 2 onwards reads as under :- 2. Issue arises in connection with the assessment year 2010-11 and pertains to penalty under section 271AAA of the Income Tax Act, 1961 ( the Act for short). The assessee is engaged in the business of manufacturing of grey fabrics and processing of yarn. Search and seizure operation was carried out at the residential and business premises of the assessee on 28.01.2010. During such search, the assessee disclosed income of ₹ 2,09,67,770/- previously undisclosed. Assessment under section 143(3) read with section 153A of the Act was finalized on 29.12.2011. The Income Tax Officer initiated penalty proceedings under section 271AAA of the Act and passed the order of penalty of ₹ 20.96 lakhs on the ground that the assessee though had disclosed the income, failed to disclose the manner of earning such income and substantiate such manner of earning the income offered to tax. 3. Commissioner of Income Tax (Appeals) as well as the Tribunal both concurrently found that all the requirements of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingal (supra), however, it is to be noted that the assessee falls under the jurisdiction of Hon ble Punjab Haryana High Court and, therefore, the decision of the Hon ble Delhi High Court is not binding on the assessee. It is the settled position of law that when two views are possible on an issue the view which is favourable to the assessee has to be accepted in view of the decision of Hon'ble Supreme Court in the case of Vegetable Products Ltd. (supra). Since the assessee in the instant case has surrendered additional income and paid the taxes due thereon and no specific query was raised by the search party at the time of search to substantiate the manner of earning such income, therefore, following the decision of the Hon ble Gujarat High Court cited (supra) and various other decisions relied on by the ld. CIT(A), we are of the considered opinion that the penalty u/s 271AAA is not leviable in the instant case. The order of the ld. CIT(A) is accordingly upheld and the grounds raised by the Revenue are dismissed. 16. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on this 15th day of October, 2018. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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