TMI Blog2018 (11) TMI 1619X X X X Extracts X X X X X X X X Extracts X X X X ..... reby deleted. - Decided in favour of assessee - I.T.A. No.157, 158/Rjt/2017 (Assessment Year : 2013-14) - - - Dated:- 15-11-2018 - Shri Waseem Ahmed And Ms. Madhumita Roy, JJ. Appellant by: Shri M. J. Ranpura, A.R. Respondent by: Shri Jitendra Kumar, CIT-D.R. ORDER Ms. Madhumita Roy, Both the appeals have been filed before us by the assessee against the order dated 01.02.2017 passed by the Commissioner of Income Tax (Appeals)-11 for Assessment Year (A.Y.) 2013-14 arising out of the order dated 16.07.2015 passed u/s 271AAB of the Income Tax Act (the Act) by the Assistant Commissioner of Income Tax, Central Circle1, Rajkot, whereby and whereunder the penalty levied by the assessing officer has been upheld by the first appellate authority. Since, both the appeals pertain to same orders those are heard analogously and are being disposed by a common order. ITA No.157/Rjt/2017 is being taken up as the lead case by us. Following grounds has been taken in this appeal: 1.0 The grounds of appeal mentioned hereunder are without prejudice to one another. 2.0 The learned Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particular provision of Section 271AAA of the Act. 4. Considering the same, the ld AO issued a corrigendum dated 25.06.2015 to the order u/s 143(3) dated 12.03.2015 and served the same was upon the assessee stating that the penalty proceedings be read as initiated u/s 271AAB instead of section 271AAA of the Act. The assessee again filed a reply quoting that the penalty u/s 271AAB could not be imposed in the absence of any incrementing material in the form of cash, gold, valuables of any document/ data evidencing the undisclosed income found. He further added that the family head namely Shri Jitendra T. Aghara made his statement u/s 132(4) of the Act voluntarily admitting the additional income of ₹ 10.80 crores on ad-hoc basis on behalf of the family members and group concerns as a whole, out of which, the assessee has considered the income of ₹ 75,55,392/- on ad-hoc basis in his return of income filed for the assessment year under consideration in order to avoid long drawn litigation and to buy peace of mind. In that view of the matter, the assessee asserted that such return of income on ad-hoc basis cannot be said to be undisclosed income particularly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the learned assessing officer particularly stating that the assessee made disclosure of unaccounted income during the course of search in his statement recorded u/s 132(4) of the Act. The search was conducted on 17.01.2013 and therefore the provision of Section 271AAB would be applicable and the assessee is liable for imposition of penalty @10% of the undisclosed income of the specified previous year. Further that the income since disclosed and admitted u/s 132(4) and the assessee also paid tax along with interest thereon before the specified date mentioned in the notice u/s 153A for furnishing return of income and furnishes his return of income for the specified previous year declaring such undisclosed income fulfills the conditions imposed by clause (a) of Section 271AAB. Being aggrieved by and/or dissatisfied with the said order of penalty which subsequently was confirmed by the first appellate authority the instant appeal has been filed before us by the assessee. At the time of the hearing of the matter, the Ld. Representative of the assessee vehemently argued against the order impugned before us. He contended the AO has assessed the income u/s 143(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/s 271AAB of the Act. The Ld Counsel for the assessee further relied upon the orders passed by the Co-ordinate Bench in IT(SS)A No.1, 2 3/Rjt/2017 for A.Y/ 2013-14 in support of his argument for quashing the penalty. On the contrary, the ld representative of the department relies upon the order passed by the authorities below. Further that he has argued that since the assessee has himself admitted certain income during the search proceedings and included the same at part of the return penalty u/s 271AAA as significance thereof cannot be escaped. 5. We have heard the learned counsel appearing for the parties, have perused the order passed by the authorities below as also the order passed by the Co-ordinate Bench relied upon by the Ld representative of the assessee. The moot point involved in this particular case in this as to whether in the present facts and circumstances of the case the imposition of penalty u/s 271AAB is justifiable. It appears from the records and other documents that the assessee has declared income in question to the tune of ₹ 75,55,392/- towards his shares on the basis of the statement recorded u/s 132(4) of the Act made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards ad-hoc declaration and therefore there is no element of undisclosed income as defined in the Explanation below section 271AAA of the Act. (ii) In the alternative, in any event, the incidence of penalty under section 271AAA cannot exceed ₹ 9 lakhs (10% of ₹ 90 lakhs) attributable to ad-hoc income. 8.2 To buttress its point of view, the assessee has strongly harped on the statutory definition of undisclosed income . It would therefore be apposite to reproduce section 271AAA of the Act for ready reference:- 271AAA. Penalty where search has been initiated.-(1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 271AAA thus revolves within the sphere of undisclosed income . 8.4. A plane reading of the aforesaid definition of undisclosed income clearly shows that the undisclosed income should be represented by money, bullion jewellery or other valuable articles or things or any unrecorded entry as per documents found or any false entry recorded in the books of account etc. No such reference or nexus of disclosure to such specified items were made in the assessment order or in the penalty order. In view of the statutory definition of undisclosed income, a disclosure made merely to buy peace does not tantamount to undisclosed income per se. The applicability of section 271AAA is dependent upon the income falling within the sweet of clear and express definition of expression undisclosed income . An ad-hoc and lumsum declaration as a consequent of search without any reference made by A.O towards any money, bullion, jewellery or other valuable articles or thing or any entry in the books of account etc. cannot be deemed to be automatically an undisclosed income for the purposes of imposition of penalty under section 271AAA of the Act. The onus is on A.O to bring on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial capacity cannot be endorsed. The penalty order is thus vitiated due to non application of mind also. The order of the Assessing Officer dated 16.07.2015 towards imposition of penalty under section 271AAB is therefore set aside and consequently, the Assessing Officer is directed to delete the penalty so imposed. 12. In the result, appeal of the assessee in ITA No. 01/Rjt/2017 is allowed in part. 13. We shall now advert to other captained appeals in IT(SS) Nos 02 03/Rjt/2017 involving identical issue. In the absence of any change in facts pointed out in the course of hearing by either side, our view in IT(SS) No. 01/Rjt/2017 shall apply mutatis mutandis. Thus, while the additional grounds raised in this appeals are dismissed, the main grievance towards imposition of penalty on merits is adjudicated in favour of the assessee. The penalty of ₹ 2,21,350/- in IT(SS) No. 02/Rjt/2017 ₹ 2,00,000/- in IT(SS) No. 03/Rjt/2017 stands deleted. Thus identical question of law has been decided by the Co-ordinate Bench on the identical facts as referred above which finally concluded that in the absence of any reference to tangible material, me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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