TMI Blog2018 (12) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... t wherein Shri. Kiran Kumar Mahasamudram admitted the undisclosed income was not u/s 132(4) of the Act. The provisions of sections 271AAB(1)(a) and 271AAB(1)(b) which provides for imposition of penalty @ 10% and 20% respectively are not applicable. The view of the CIT(A), that even though the assessee had not satisfied the conditions specified in 271AAB(1)(a)(iii) of the Act, the failure to do so constitutes reasonable cause as it was due to conditions beyond the assessee s control and therefore penalty is to be levied only @ 10% and not 30% of the undisclosed income of ₹ 1,31,50,000/- admitted in this Assessment Year, is totally untenable. Section 271AAB commences with non-obstante clause overriding all other provisions of the Act and therefore the CIT(A) s attempt to read into this unambiguous Section, what is not there by importing discretion in order to reduce the penalty to be levied on the assessee is odious to say the least. We are of the view that the impugned order of the CIT(A) is factually and legally unsustainable and therefore set aside the same. We consequently, restore the order of the AO dated 30.09.2016 levying penalty of ₹ 39,45,000/- u/s 271AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy of penalty u / s 271AAB is attracted . The only issue that needs to be decided is the rate of penalty to be levied . Clause ( a ) of sec . 271AAB ( 1 ) stipulates levy of penalty at 10 % of undisclosed income if the assessee admits undisclosed income in a statement u / s 132 ( 4 ) , specified and substantiate the manner in which such income was derived and pays taxes along with interest and furnishes Return of Income within the specified date . The facts of the case are, notice u / s 153A was issued on 7 . 10 . 2014 requiring to file Return within 30 days of receipt of notice ( specified date ) , the assessee filed Return in response to notice u / s 153A dtd . 7 . 10 . 2014 only on 1 . 3 . 2016 . The taxes in respect of the same on undisclosed income were also paid on 30 . 10 . 2015 ( Rs . 32,11,300 /-) , 17 . 12 . 2015 ( Rs . 5,39,200 /-) , and 19 . 2 . 2016 ( Rs . 10,00,000 /-) . The statement where Sri Kiran Kumar Mahasamudram conceded the undisclosed income was also no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 ) for A . Y . 2014 - 15 . 12 . 2 Since the appellant had submitted his declaration and Section 132 ( 4 ) before the conclusion of search proceedings, that is before drawing the appraisal report, and while the appellant had stood firmly without any subsequent modification or retraction to the declaration made, it has to be construed that such declaration is covered by the provisions of Section 132 ( 4 ) and therefore it is found that the condition laid down u / s 271AAB ( 1 )( a )( i ) and 271AAB ( 1 )( a )( ii ) are satisfied . 12 . 3 Though the ROi for the A . Y . 2013 - 14, in response to the notice u / s 153A was not filed before the specified date, the appellant is found to comply with the condition laid down 271AAB ( 1 )( a )( iii ) also since the fact and circumstances which were beyond the control of the appellant were explained to the assessing officer . The undisclosed income was blocked through an investment in an immovable asset in the absence of liquidity, the appellant could not remit the taxes . Since the 31 filed without payment of self - assessment tax would be an invalid return, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Statement u / s 132 ( 4 ) , made during the course of the Search, substantiating the manner in which the same was derived and paying the tax together with interest and furnishes the return of income for the specified year declaring such income . 3. The Hon'ble CIT ( A ) having appreciated the fact that the Respondent fulfilled the condition laid down u / s 271B of the Income - tax Act 1961 and was therefore liable only for penalty of 10 % of the undisclosed income . 4.1 We have heard the rival contentions and perused and carefully considered the material on record in respect of the imposition of penalty u/s 271AAB of the Act for Assessment Year 2013-14. The relevant facts of the matter, as emerge from a perusal of the record, are that there was a search action u/s 132 of the Act conducted at the assessee s premises on 20.30.2014 and 08.04.2014; in the course of which the assessee admitted undisclosed income of ₹ 1,31,50,000/- for Assessment Year 2013-14. Subsequently, the AO issued notice u/s 153A of the Act dated 07.10.2014 requiring the assessee to file the return of income for Assessment Year 2013-14 within 30 days from the receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the undisclosed income of the specified 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 income furnished for the specified previous year; and ( B ) pays the tax, together with interest, if any, in respect of the undisclosed income; ( c ) a sum which shall not be less than thirty per cent but which shall not exceed ninety per cent of the undisclosed income of the specified previous year, if it is not covered by the provisions of clauses ( a ) and ( b ). 4.4 In the case on hand, the AO, after considering the assessee s submissions, levied penalty of ₹ 39,45,000/- u/s 271AAB(1)(c) of the Act @ 30% of the undisclosed income of ₹ 1,31,50,000/-. The AO was of the view that penalty u/s 271AAB(1)(c) of the Act was attracted, since the assessee had neither furnished the return of income for Assessment Year 2013-14 in response to notice u/s 153A of the Act nor paid the taxes in respect of the undisclosed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was due to conditions beyond the assessee s control and therefore penalty is to be levied only @ 10% and not 30% of the undisclosed income of ₹ 1,31,50,000/- admitted in this Assessment Year, is, in our considered view, totally untenable. Section 271AAB of the Act commences with non-obstante clause overriding all other provisions of the Act and therefore the CIT(A) s attempt to read into this unambiguous Section, what is not there by importing discretion in order to reduce the penalty to be levied on the assessee is odious to say the least. In these circumstances, we are of the view that the impugned order of the CIT(A) is factually and legally unsustainable and therefore set aside the same. We consequently, restore the order of the AO dated 30.09.2016 levying penalty of ₹ 39,45,000/- u/s 271AAB(1)(c) of the Act @ 30% of the undisclosed income of ₹ 1,31,50,000/- admitted by the assessee for Assessment Year 2013-14. 5. We have perused the cross objections filed by the assessee (supra) and find that they support the impugned order of the CIT(A) which we have reversed (supra). In this view of the matter, we find no merit in the cross objections raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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