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TMI Blog2019 (10) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... als; and (iv) Rs. 50,000/- as unexplained expenditure for lawyer fees and court expenses. The matter travelled up to ITAT and the ITAT deleted the additions of lawyer's fee and court expenses claimed of Rs. 50,000/- and low withdrawals of Rs. 60,000/-. However, with regard to the issue of unexplained money of Rs. 5,00,000/- u/s 69A of the Act, low withdrawals of Rs. 60,000/- and unexplained investment in Serilingampalli property at Rs. 1,15,000/-, the ITAT set aside the same to the file of the A.O with a direction to frame the assessment afresh after considering the arguments of the assessee. The A.O therefore, required the assessee to explain with proper evidence as to how the notes of denomination of Rs. 1,000 (containing serial numbers) were found at the time of search if it were the old cash balances available with the assessee. The assessee submitted that he has no evidence to prove that the cash available was from explainable sources. Therefore, the A.O confirmed the addition of Rs. 5 lakhs u/s 69A of the Act. Aggrieved, the assessee preferred an appeal before the CIT(A) who confirmed the additions made by the A.O and the assessee filed second appeal before the ITAT and the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys the tax, together with interest, if any, in respect of the undisclosed income. * (3) 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). * (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. * Explanation.-For the purposes of this section,- * "undisclosed income" means- * any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has- * not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or * otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of search; or * (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has not submitted any explanation to the show cause notice dated 14.3.2012 issued u/s 271AAA r.w.s. 274 of the Act. The assessee has not filed any explanation even before the CIT(A), except for the cash book for the period 1/4/2007 to 31/3/2008 submitting that the opening balance of Rs. 13,37,026.75 as the source for the cash found. We find that the CIT(A) has clearly brought out that the sources for cash found and the investment are not explained by the assessee. Therefore, assessee's argument that the assessee's explanation has not been found to be false and, therefore, penalty is not sustainable is not acceptable. Further, we also find that the assessee has not fulfilled the conditions under Sub-Section (2) of Sec.271AAA of the Act to be out of the ambit of sub-section(1) of sec.271AAA of the Act. Therefore, penalty u/s 271AAA of the Act can be levied as the undisclosed income found during the course of search has not been substantiated by the assessee and it is also not proved that taxes have been paid thereon. The addition has also been confirmed by ITAT. Therefore, we cannot agree with the contentions of the Ld. Counsel for the assessee that the penalty u/s 271AAA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of income and concealment of income and hence, the satisfaction is incorrect. In case the assessment order and observations of the Assessing Officer are read, then he is only talking about additional income offered by the assessee. He also while concluding states that the additional / total income was offered for taxation only as a result of search action and since it was so offered, penalty proceedings under section 271AAA of the Act were initiated. Though, he mentions concealment of income and furnishing of inaccurate particulars of income but that limb does not decide the action undertaken by the Assessing Officer under section 271AAA of the Act and at best it is superfluous. 15. Coming to the order levying penalty under section 271AAA of the Act. Vide para 8, it is clearly mentioned that where the assessee had disclosed the income in the statement recorded under section 132(4) of the Act but taxes on the undisclosed income were not paid, that the assessee had not fulfilled the conditions of clause (iii) of sub-section (2) of section 271AAA of the Act. Hence, the Assessing Officer talks about the 'undisclosed income' which was basis for levying penalty under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. However, he failed to specify the manner in which the income was derived. Vide question No.25, he was specifically asked to explain the investments made in land / plots and movable & immovable assets, considering the non filing the income tax returns. In reply, he does not give any explanation about the said investments and the sources from where he has made the said investments but he voluntarily declared sum of Rs. 2.30 crores towards his capital in Home Corporation, investment in movable and immovable assets, unexplained expenditure, drawings, etc. He also admitted that he would file yearwise breakup in due course, which he consequently, filed and the said breakup is tabulated at page 2 of the assessment order. The assessee in assessment years 2005-06 to 2011-12 in all, declared sum of Rs. 2.39 crores as his additional income out of which sum of Rs. 1.02 crores related to assessment year 2011-12. In the absence of assessee having satisfied the manner in which the income was derived and also specifying the manner, clause (i)(part) and clause (ii) under sub-section (2) of section 271AAA of the Act are not fulfilled. 18. The assessee in this regard has placed reliance on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the order levying penalty under section 271AAA of the Act was passed on 20.09.2013. The assessee till the date of passing of penalty order under section 271AAA of the Act had not deposited the taxes due on the return of income. Even in the written submissions filed before the Assessing Officer in penalty proceedings under section 271AAA of the Act, the assessee has pointed out that he had only made part payment of taxes due. The assessee having defaulted to make the payment of taxes which were due, cannot be said to have fulfilled the conditions laid down in clause (iii) of sub-section (2) of section 271AAA of the Act. The learned Authorized Representative for the assessee had placed reliance on the ratio laid down by the Hon'ble Supreme Court in ACIT Vs. Gebilal Kanhaialal HUF (supra), wherein it has been held that while levying penalty under section 271(1)(c) of the Act, Explanation 5 is attracted in cases of search proceedings. The Hon'ble Supreme Court held that to grant immunity from payment of penalty, no time limit for payment of taxes is prescribed under clause (ii) of Explanation 5 to section 271(1)(c) of the Act. In the facts of said case, the apex court noted t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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