TMI Blog2020 (12) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case there was no such evidences were found evidencing undisclosed income. We are unable accept the contention of the AO that the penalty is liveable irrespective of unearthing any evidence of earning undisclosed income which fits in to the definition of undisclosed income. Since, the undisclosed is defined in the act for the purpose of penalty u/s. 271AAB, it is incumbent up on the department to show that the impugned addition falls under the definition of undisclosed income. In the instant case the department failed to establish that the additional income admitted represents the undisclosed income. Therefore, as rightly held by the ld. CIT(A), the additional income admitted by the assessee does not fall under the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had initiated penalty proceedings u/sec. 271AAB and issued show cause notice to the assessee calling for it's explanation as to why the penalty should not be levied u/sec. 271AAB of the Act. In response to the notice issued u/sec. 271AAB, the assessee submitted it's explanation stating that no undisclosed income was found during the course of search. The additional income admitted was purely to purchase peace with the department on estimation basis though there was no evidence was found indicating the additional income during the course of search. The assessee further stated that no incriminating material or undisclosed stock, money bullion, jewellery was found during the course of search within the definition of undisclosed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the appeal hearing, ld. DR argued that in the instant case, the assessee had claimed the excess purification loss of around 21% against the industry average of 13% and excess loss claimed by the assessee was admitted in the statement recorded u/sec. 132(4), therefore argued that additional income admitted by the assessee falls under the definition u/sec. 271AAB of the Act. Thus, argued that AO rightly levied the penalty and requested to set aside the order of ld. CIT(A) and allow the appeal of the Revenue. 5. On the other hand, ld. AR argued that the assessee has admitted the additional income only to purchase peace from the department and there was no excess stock, money, bullion, jewellery or any other valuable article or things or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Q6. During the Search a Seizure operation conducted at the business premises of M/s. Khan Mohammed Diamond Jewellers Pvt. Ltd. On 20.09.2016 the regular books of accounts maintained have been seized. From the books, it is noticed that the company has purchased huge quantity of old gold from its customers during the F.Y. 2015-16 a 201617 (till date of search). The company has shown purification loss varies from 13 to 20% for converting the old gold into new one which is quite higher when compare to industry average Hence the excess purification toss shown may be arrived as under: Sl No F.Y. Old gold purchases in gms Purification loss shown as per books of a/c in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 271AAB. The Undisclosed Income for the purpose of levying penalty for the purpose of section 271AAS is as under: (c) undisclosed income means- (i) 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-- (A) 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 (B) otherwise not been disclosed to the chief commissioner or Commissioner before the date of search; or (ii) any income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dences. The assessee submitted that the additional income was admitted only to purchase peace and to avoid litigation with the department even though there was no evidence. The claim of loss was found from regular books of accounts maintained by the assessee which were duly accounted. If the department contention is accepted, the income generated out of excess loss claimed by the assessee should be available in the form of undisclosed assets or money, bullion, jewellery or any other valuable article or thing. Though search u/sec. 132 was conducted, no such evidence was found by the department in the hands of the assessee. Thus, it is established that the additional income admitted by the assessee was purely on estimation and not supported b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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