TMI Blog2018 (12) TMI 1513X X X X Extracts X X X X X X X X Extracts X X X X ..... as per specific requirement in the Act. - Decided in favour of assessee. - ITA No.1605/Kol/2017 And C.O.No.99/Kol/2017 - - - Dated:- 26-12-2018 - Shri S.S.Godara, Judicial Member And Shri, M. Balaganesh, Accountant Member For The Assessee : Shri Radhyey Shyam, CIT-DR For The Respondent : Shri A.K. Tibrewal, AR ORDER PER S.S.Godara, Judicial Member:- This Revenue s appeal and assessee s cross objection for assessment year 2013-14 arise from Commissioner of Income Tax (Appeals)-20, Kolkata s order dated 21.03.2017 passed in case No.264/CIT(A)-20/CC-2(2)15-16 partly reversing Assessing Officer s action imposing penalty of ₹27,91,507 in proceedings u/s 271AAB of the Income Tax Act, 1961; in short the Act . Heard both the parties. Case file(s) perused. 2. It is noticed at the outset that the Revenue s instant appeal ITA No.1605/Kol/2017 suffers from 25 days delay in filing. The Revenue/appellant has preferred a condonation petition dated 06.07.2017 quoting reasoning thereof to various procedural formalities and compilation of necessary records. Learned authorized representative is very fair in not disputing the same during the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed assets 1 items that had been found / inventorised by the Department. Hence, such suo moto offering of ₹ 2,60,00,0001- does not come under the purview of undisclosed income as explained in Explanation (c) of Section 271AAB and hence the penalty provision cannot be invoked on such figure of Rs. ₹ 2,60,00,000/-. Further, such suo moto offering of Rs. ₹ 2,60,00,000/- has been made in order to buy peace, to avoid unnecessary long drawn litigations with the department and to demonstrate utmost cooperative attitude with the department. g) However; the Assessing Officer did not pay any heed to such submission and went on to pass an order u/s 271AAB of the Act considering the offered amount of ₹ 2,79,15,065/- as undisclosed income and imposed a penalty of ₹ 27,91,507/-. 5. Because of the act of the AO of imposing penalty u/s 271AAB(1)(a) in this case, this appeal has been filed. In the penalty order the AO has brought it on record that the contention of the assessee that the aforesaid amount of ₹ 2,60,00,000/- is not ' undisclosed income ' is contrary to the fact that the said additional income of ₹ 2,60,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be exercised on the part of the Assessing Officer, keeping the relevant factors in mind. In this regard, I would like to state that assessment has been completed based on the explanations given and documents produced during the course of assessment without making any further addition on the ground of disclosure. I had been a cooperative assessee during the course of assessment proceeding. 7. I have considered the findings given by the AO in the penalty order and submissions made by the AR during the appellate proceeding. I find .hat the AO has taken the undisclosed income of the assessee found during the search operation u/s 132 (for which evidences, documents/papers, stock, cash ctc were found) along with the amount declared suo moto by the assessee (for which no evidence, papers/documents, stock, cash etc were found during the search operation) in order to buy peace of mind and avoid any further litigation. The assessee has brought on record the case law of Drlip N Shroff vs CIT (2007) 291 ITR 519 (SC). In this case law the Hon'ble Supreme Court has held that imposition of penalty is not automatic. Levy of penalty is not only discretionary in nature, but such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement recorded at the time of search. Form the ratio decided by the Hon'ble Supreme Court in the case of Sudarshan Silk Saries (supra), it is clear that only the statement of the assessee without any corroborating evidence cannot be the only basis for levying penalty. Here it is also clear that from the statement of the assessee one cannot point out which amount of undisclosed income pertains to which specified previous year. In this situation, where nothing is clear from assessee s statement to levy penalty u/s. 271AAB(1) on the amount offered by the assessee suo moto to buy peace of mind, cannot be justified. The Hon'ble Supreme Court has also categorically decided the ratio that penalty cannot be levied on the amount offered by the assessee in order to buy peace of mind [ in the case of Sudarshan Silk Saries (supra) ]. Thus, respectfully following the ratio decided by the Hon'ble Supreme Court, the AO is directed to calculate and levy penalty u/s 271AAB(1)(a) on ₹ 19,15,065/- only. Accordingly, assessee s appeal on grounds no 1, 2 and 3 are partly allowed. 4. Learned CIT.DR vehemently contends during the course of hearing that the Assessing Officer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in the case of Sudarshan Siik Saries (supra), it is clear that only the statement of the assessee without any corroborating evidence cannot be the only basis for levying penalty. Here it is also clear that from the statement of the assessee one cannot point out which amount of undisclosed income pertains to which specified previous year. In this situation, where nothing is clear from assessee's statement recorded at the time of search, the action of the AO to levy penalty u/s 271AAB(1)(a) on the amount offered by the assessee suo moto to buy peace of mind, cannot be justified. The Hon'ble Supreme Court has also categorically decided the ratio that penalty cannot be levied on the amount offered by the assessee in order to buy peace of mind (in the case of Sudarshan Silk Saries (supra)]. Thus, respectfully following the ratio decided by the Hon'ble Supreme Court, the AO is directed to delete the penalty u/s 271AAB(1)(a). Accordingly, assessee's appeal on grounds no 1, 2 and 3 are allowed. 4. Learned Departmental Representative argued that the Assessing Officer had rightly imposed the impugned penalty in assessee's case @ 10% of his undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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