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2019 (9) TMI 605

..... ks of account, we hold, is without any doubt the best piece of evidence against the assessee and is incriminating material enough representing undisclosed income for the purpose of levy of penalty under section 271AAB of the Act. The assessee had himself admitted to the fact of having not disclosed the income on account of brokerage and commission earned and had himself admitted to the fact that there were discrepancies and unrecorded entries in his books of account and also certain rough notings and estimates. Having himself admitted to all these facts and at no point of time having ever retracted this admission, the same constitutes incriminating material against the assessee None of the case laws are of any assistance to the assessee since in the impugned case the assessee has made specific admission of having undisclosed income relating to commission/brokerage and discrepancies in the books of accounts which has remained unretracted. We concur with the findings of the CIT(A) that the specific admission of the assessee to the undisclosed income and discrepancies in its accounts constituted incriminating material representing undisclosed income of the assessee for the purposes of .....

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..... sions of section 271AAB of the Act and also the surrender letter giving the amount and basis of surrender of additional income during search. Referring to the same, the A.O. stated that it was clear from the same that the surrender was made to cover the discrepancy found in the seized documents during search and to cover any kind of discrepancy in the regular books of account and also income yet to be recorded in the books of account. He, therefore, held that the assessee s case clearly fell under the provisions of section 271AAB(1)(a) of the Act and thus levied the penalty accordingly on the surrendered income @ 10% thereof, which amounted to ₹ 1 lac. 4. The assessee went in appeal before the CIT(A), who upheld the order of the A.O. 5. Aggrieved by the same, the assessee has come up in appeal before us, raising the following grounds: 1. That the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the levy of penalty u/s 271AAB r.w.s. 274 of the Income Tax Act, 196,1 amounting to ₹ 1,00,000/- 2. That the confirmation of penalty is against the facts and circumstances of the case. 3. That the Appellant craves leave to add or amend the grounds of appeal before .....

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..... earch either in the assessment order or in the penalty order and, therefore, there was no case of levy of penalty at all. The Ld. counsel for assessee contended that as per the definition of undisclosed income, if any entry is found to be false, the same also qualifies as undisclosed income but even that has not been found in assessee s case. The Ld. counsel for assessee relied upon the following case laws in support of his contention that in the absence of any undisclosed income no penalty u/s 271AAB was leviable: 1. DCIT Vs. Hari Singh, ITA No.598/CHD/2017 CHD-TRIB 2. DCIT Vs. Manish Agarwal, ITA No.1479/KOL/2015 KOL-TRIB 3. DCIT Vs. Amit Agarwal, ITA No.1471/KOL/2015 KOL-TRIB 4. ACIT Vs. S.Martin, ITA No.2382/CHENY/2016 CHENAI-TRIB 5. DCIT Vs. M/s Aryan Mining & Trading Corporation Ltd., ITA No.1601/KOL/2017 KOLTRIB 6. DCIT Vs. Rashmi Cement Ltd., ITA No.1606/Kol/2017 KOL-TRIB 7. DCIT Vs. Rashmi Metaliks Ltd., ITA No.1608/Kol/2017 KOL-TRIB 8. The Ld. DR at this juncture countered by drawing our attention to the surrender letter of the assessee reproduced in the penalty order as under: The Joint/Additional Director of Income Tax (Inv.), Ludhiana Dt. 11-4-2014 Sir, Re: Search .....

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..... rch. The income for the Assessment Year 2013-2014 is being offered subject to no penalty U/s 271(1)(c) of the Income Tax Act, 1961 and the same may please be accepted. 2. Sh Deepak Singal 2014-15 2013-14 2012-13 2011-12 2009-10 2008-09 6,70,00,000.00 10,00,000.00 16,00,000.00 60,00,000.00 60,00,000.00 21,00,000.00 Offered as Business' income to cover any discrepancies in the seized documents as found and seized during the course of search as per various Annexure and for any kind of discrepancy in the regular books of accounts and the above income was earned in the same manner as reflected in my return of income. The above income is reflected in various personal assets including amount spend on construction, cash and to cover any investment in the immovable/moveable asset. The income for the Assessment Year 2008-2009 to 2013-2014 is being offered subject to no penalty U/s 271(1)(c) of the Income Tax Act, 1961 and the same' may please be accepted. 3. Smt. Sunita Singal 2014-15 15,00,000.00 Offered income earned from sale or purchase of property and the same income reflected in construction/invest merit to immovable assets and to cover any other asset or, documents as found du .....

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..... come Tax Act and this offer is being made Subject to no penalty u/s 271AAA/ 271AAB/271(1)(c) and prosecution and the above income shall be declared by our group concerns in respective years. While filing the return in the relevant years over and above. 9. Referring to the same the Ld. DR pointed out that the assessee had surrendered an amount o ₹ 10 lacs in his case and as per the surrender letter it was on account of discrepancy in the books of account of the business of the assessee and certain entries not recorded in the regular books of account which were noted during search. The Ld. DR pointed out that the assessee had even stated in the surrender letter that it had derived income from commission/brokerage from property on account of which the surrender had been made. Our attention was drawn to para-1 of the surrender letter pointing out that the above facts had been stated therein. The Ld. DR thereafter drew our attention to para-3 of the letter pointing out that the assessee had reiterated the fact that the surrender was being made on account of discrepancies in the seized records and other documents found during the course of search including rough notes/assessments a .....

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..... ot 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). (2) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub section (1). (3) ... As admitted by the AR also, that the income of ₹ 10,00,000/- was surrendered during the search. Regarding the basis it was admitted (as per the surrendered letter reproduced by the AO in the penalty order) by the assessee that cover all the documents as found during the course of search and the income has been derived from commission/brokerage from property dealing". The AO has rightly mentioned that in this case the income of ₹ 10,00,000/- was disclosed by the assessee in the return of income and the same was not disclosed to the Department till the search action. The assessee has surrendered this amount under section 132 on 11.04.2014. Therefore, provisions of section 271AAB are applicable. It is also not in dispute that the case of the assessee is covered under sub-section (l)( .....

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..... her, the assessee has never retracted the surrender so made; on the contrary, he has disclosed the amount surrendered as his business income in the return of income filed and accepted the assessment of the same as such, by the A.O. All the above facts have remained uncontroverted before us. This specific unretracted admission of the assessee of earlier undisclosed income and discrepancies in the books of account, we hold, is without any doubt the best piece of evidence against the assessee and is incriminating material enough representing undisclosed income for the purpose of levy of penalty under section 271AAB of the Act. The assessee had himself admitted to the fact of having not disclosed the income on account of brokerage and commission earned and had himself admitted to the fact that there were discrepancies and unrecorded entries in his books of account and also certain rough notings and estimates. Having himself admitted to all these facts and at no point of time having ever retracted this admission, the same constitutes incriminating material against the assessee and there was no further requirement for the Revenue in such circumstances to have unearthed evidence supportin .....

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..... ssee for the purposes of levy of penalty under section 271AAB of the Act. We, therefore, uphold the order of the Ld. CIT(A) confirming the levy of penalty. In view of the above the appeal filed by the assessee is dismissed. 14. Now, taking up the appeal of the assessee in ITA No.936/CHD/2018, the facts of the case we find are identical, with the assessee, Smt. Sunita Singal, also being one of the persons searched in the Deepak Singal group of cases and the assessee having surrendered an amount of ₹ 15 lakhs during the course of search, on which penalty under section 271AAB of the Act was levied. The arguments of the Ld.Counsel for the assessee, against levy of penalty were identical as in the case of Sh. Vishal Singal in ITA No.935/CHD/2018 dealt with us above, that no incriminating material representing undisclosed income was found during the course of search. 15. In this case, we have noted from the surrender letter of the assessee reproduced above in para , that the surrender of ₹ 15 lakhs was identical as in the case of Vishal Singal in ITA No.935/CHD/2018 to cover all documents found during the course of search and to cover the income derived from sale or purchase .....

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