TMI Blog2019 (10) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty levied in the present appeal U/s 271AAB of the Act is deleted. - Decided in favour of assessee - ITA No. 123/JP/2018 - - - Dated:- 21-10-2019 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Rajnikant Bhatra (CA) For the Revenue : Smt. Ronni Pal (JCIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 21/11/2017 of ld. CIT(A)-4, Jaipur arising from the penalty order passed U/s 271AAB of the Income Tax Act, 1961 (in short, the Act) for the A.Y. 2015-16. The assessee has raised following grounds of appeal: 1. That the notice issued by the A.O. for initiating the penalty U/s 271AAB of the IT Act, 1961 is not in accordance with law not being specifically pointing out the default for which the Ld. A.O. sought to impose penalty U/s 271AAB. 2. That without prejudice to the ground No. (1) above on the facts and in the circumstances of the case, the ld. CIT(A) is wrong, unjust and has erred in law in confirming penalty of ₹ 13,00,000/- imposed by the ld. A.O. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement recorded U/s 132(4) of the Act, therefore, all the conditions have required U/s 271AAB of the Act for levy of penalty are satisfied. The A.O. has levied penalty at minimum rate of 10% of the undisclosed income. She has relied upon the orders of the authorities below. 5. We have considered the rival submissions as well as relevant material on record at the outset, we note that this Tribunal in case of Shri Surajmal Bansal HUF and others including Shri Navneet Bansal Vs DCIT who is husband of the assessee, has considered the issue of levy of penalty U/s 271AAB of the Act arising from the disclosure and surrender made by the other family members of the assessee under the same search and seizure action conducted on 05/02/2015. In the case in hand, the surrender was made in respect of entries found regarding the advance in names of certain persons for land and otherwise which are identical entries as in case of other family members and particularly in the case of the husband of the assessee Shri Navneet Bansal Vs. DCIT. The Tribunal vide order dated 08/04/2019 has discussed this issue in para 11 to 21 as under: 11. We have heard the rival conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may direct the assessee and the assessee shall pay the penalty as per clause (a) to (c) so satisfied in sub-section (1) to Section 271AAB. Further, as per sub-section (3) of Section 271AAB, the provisions of section 274 and section 275 as far as may be applied in relation to penalty under this section which means that before levying the penalty, the Assessing officer has to issue a show-cause granting an opportunity to the assessee. Thus, the levy of penalty is not automatic but the Assessing officer has to decide based on facts and circumstances of the case. Similar view has been taken by the various Co-ordinate Benches and useful reference can be drawn to the decision of the Co-ordinate Bench in case of ACIT vs Marvel Associates (supra) wherein it was held as under: 5. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. During the appeal hearing, the Ld. A.R. vehemently argued that the A.O. has levied the penalty under the impression that the levy of penalty in the case of admission of income u/s 132(4) is mandatory. The Ld. A.R. further stated that penalty u/s 271AAB of the Act is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays 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). (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). Section 158BFA(2): (2) The Assessing Officer or the Commissioner (Appeals) in the course of any proceedings under this Chapter, may direct that a person shall pay by way of penalty a sum which shall not be less than the amount of tax leviable but which shall not exceed three times the amount of tax so leviable in respect of the undisclosed income determined by the Assessing Officer under clause (c) of section 158BC: Provided that no order imposing penalty shall be made in respect of a person if- (i) such person has furnished a return under clause (a) of section 158BC; (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble A.P. High Court in the case of Radhakrishna Vihar in ITTA No.740/2011 while dealing with the penalty u/s 158BFA held that 'we are of the opinion that while the words shall be liable under sub section (1) of section 158BFA of the Act that are entitled to be mandatory, the words may direct in sub section 2 there of intended to directory'. In other words, while payment of interest is mandatory levy of penalty is discretionary. It is trite position of law that discretion is vested and authority has to be exercised in a reasonable and rational manner depending upon the facts and circumstances of the each case. Plain reading of section 271AAB and 274 of the Act indicates that the imposition of penalty u/s 271AAB of the Act is not mandatory but directory. Accordingly we hold that the penalty u/s 271AAB is not mandatory but to be imposed on merits of the each case. 15. Therefore, we agree with the contentions of the ld AR that the levy of penalty under section 271AAB is not mandatory. In the instant case, it therefore needs to be examined whether there is any basis for levy of penalty or non-levy thereof and the same will depend upon the facts and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artner in two partnership firms and derives income from share in the profit and interest from such partnership firms which it has reported in its return of income and therefore, as far as maintenance of books of accounts is concerned, the assessee HUF not carrying on any business is thus not required to maintain regular books of accounts. The diary found during the course of search and seizure at the premises of the assessee contains the entries of advances given for purchase of land and therefore, the said amount of advance given for purchase of land can be recorded in the capital account of the assessee. Thus the transactions found recorded in the diary are to be recorded in the capital account of the assessee as well as in the balance sheet prepared as on 31.03.2015 and not on the date of search as on 5.02.2015. These transactions are recorded in a diary which is nothing but other documents maintained in the normal course, then it cannot be presumed that the assessee would not have disclosed the same in the return of income to be filed after the date of search. Another question that arise for consideration is whether the advances so given for purchase of land qualify as undis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, where it talks about income by way of any entry in the books of account or other documents or transactions found in the course of a search under section 132 , what perhaps has been envisaged by the legislature is an inflow of funds in the hands of the assessee which has been found by way of any entry in the books of accounts or other documents, and which has not been recorded before the date of search in the books of accounts or other documents maintained by the assessee in the normal course and not vice-versa. We are also conscious of the fact that there are deeming provisions in terms of section 69 and 69B wherein such amounts may be deemed as income in absence of satisfactory explanation. In our view, the deeming fiction so envisaged under Section 69 and Section 69B cannot be extended and applied automatically in context of section 271AAB. It is a well-settled legal proposition that the deeming provisions are limited for the purposes that have been brought on the statute book and have therefore to be applied in the context of provisions wherein they have been brought on the statue book and not otherwise. In the instant case, the deeming provisions contained in section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 found during the course of search. 17. As far as jewellery valued at ₹ 49,62,554 which has been physically found in possession of the assessee, and which is in excess of what has been disclosed in the wealth tax return, during the course of search is concerned, there cannot be any dispute that the same represents undisclosed income so defined in section 271AAB and which has not been disclosed on or before the date of search. Regarding the contention of the ld AR that such jewellery is personal jewellery of the assessee and his family members and has been purchased out of past savings and/or has been received as gift in the past on various festivities and other auspicious occasions, these are contentions which are relevant for determining the nature and source of such undisclosed income for the purposes of determining the quantum of penalty which can be levied and which we find that the lower authorities have duly considered while levying penalty @ 10%. In the result, we confirm the levy of penalty @ 10% on the undisclosed income of ₹ 49,62,554. 18. Regarding levy of penalty on cash advances of ₹ 1,00,50,000 towards purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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