TMI Blog2021 (10) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions mentioned in section 271AAA(2) of the Act and once the assessee has complied with all the conditions the assessee should not be called upon to pay a penalty under this section. As assessee has complied with the conditions of section 271AAA(2) of the Act, the assessee is not liable for penalty under this provision. Appeal of the assessee is allowed. - ITA No. 258/Mum/2018 - - - Dated:- 30-9-2021 - Shri Mahavir Singh, VP And Shri S. Rifaur Rahman, AM For the Appellant : Shri Dharmesh Shah, AR For the Respondent : Smt. Leena Srivastava, CIT DR ORDER PER MAHAVIR SINGH, VP: This appeal of the assessee is arising out of order of the Commissioner of Income Tax (Appeals)]-48, Mumbai [in short CIT(A)], in Appeal No. CIT(A)-48/I.T-195/DCCC-2(4)/2016-17 vide dated 16.11.2017. The Assessment was framed by the Dy. Commissioner of Income Tax, Central Circle 2(4) (in short ITO/ AO) for the A.Y. 2009-10 vide order dated 26.12.2016 under section 143(3) of the Income-tax Act, 1961 (hereinafter the Act ). The penalty was levied by the DCIT, Central Circle-2(4), Mumbai under section 271AAA of the Act vide order dated 26.12.2016. 2. At the out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee of ₹ 2.25 crore, as income from business and the relevant computation is given in Para 3 of the assessment order at page 11 which reads as under: - 6. 3. Subject to the above remarks. The income of the assessee is computed as under: I Income from Business or Profession Net profit as per Profit and Loss Account (-) 6,17,43,478 Less: Considered Separately: a. Income Declared (-) 2,25,00,000 b. Property Dealing Income (-) 1,18,34,820 (-)9,60,78,298 Add: Considered Separately A. Depreciation 9,36,801 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and every discrepancy accounts and records. The disclosure accepted was at ₹22,50,000/- as declared by assessee. The Assessing Officer initiated the penalty proceedings under section 271AAA of the Act read with section 274 of the Act. The Assessing Officer levied the penalty by stating that assessee during the course of statement has neither specified the manner in which such income was derived nor substantiate the manner in which the undisclosed income was derived. Therefore, according to Assessing Officer, the assessee has not fulfilled the conditions stipulated in Section 271AAA of the Act and levied the penalty at 10% of the amount of income disclosed and thereby penalty worked out was ₹ 22.50 lakh. Aggrieved, assessee preferred the appeal before CIT(A). 8. The CIT(A) noted that the assessee has not disclosed modes of application of unaccounted amount of ₹22.50 lakhs and in the manner in which it was earned and further assessee did not pay any taxes on the undisclosed income, actually disclosed. The CIT(A) s finding is also that even assessee has neither substantiate the manner in which he has earned this income nor pay taxes on it. Hence, the CIT(A) conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oming forward with the above disclosure of ₹2.25 crores that I will be protected fully from penalty proceedings and prosecution under the Income Tax Act, 1961 (hereinafter referred to as 'Act'), 1961. Q4. Do you have anything else to say? Ans. That my above referred additional income of rs.2.25 crores over and above my current years regular income for AY 2009-10 includes my excess above my current years regular income for AY 2009-10 includes my excess cash balance of ₹ 12.8 lacs, gold ornaments lying in locker No.14 at M/s Siddhi Safe Fault Pvt. Ltd. of ₹3.2 lacs, the amounts of ₹34 lacs spent on renovation of 12 bungalow at lonavala which I want to sell after completion of entire renovation and the balance of ₹1,785 crores is my stock in trade, janghad, receivable etc. To substantiate the above mentioned facts, I am giving three post dated cheques of Standard Charted Bank, Fort Branch, Mumbai for above mentioned amount which will be honoured by me. 10. Further we noticed that Shri Yogin P. Jhaveri, Director of the assessee company wrote a letter to the investigation wing, giving bifurcation of this declaration to cover up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y requetst you to adjust the seized cash of ₹12.80 lacs towards Advance Tax payment 11. We also noted that the assessee is engaged in the business of trading in rough cut and polished diamonds, gold bars jewellery and property. The assessee purchases property, carries out renovation thereon, makes the title of the property marketable and sale the same in the market for consideration. The assessee also gives its property on rent till the sale is affected. The assessee has huge stock of gold hence, they also gives its gold stock on rent popularly known as on Janghad Basis for earning Jhangad Rent/ Jhangad Commission in Metal Terms. The assessee maintains Composite Books of Accounts of the company on computer at its Accounting office away from its Head office, Branch office, property units at Ravindra Niwas. The assessee maintains books of accounts at Ravindra Niwas for the period under consideration. The directors, executives, outdoor salesman, supervisors are reporting the business Tranactions carried out by them from time to time to the Accounting office at Ravindra Niwas and hence, the books of accounts of the current year are not fully complete till the Accounting ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he end of the year as a Janghad Stock representing the Rent / Commission Income in Metal Terms receivables. The assessee also explained that the renovation is under process at Lonavala Twelve Bunglow Project by contactor/Supervisor for which the payment is pending and the said renovation is accounted for at the end of the year as a renovation expense which increase the value of the property which is to be sold at higher price after renovation is completed in due course of time. The assessee also explained that there is some cash sales by our Outdoor salesman who sends cash to the office through Angadia and then reports the details of cash sales transactions to the accounts department. The cash balance of ₹ 12.80 lakhs is on account of cash sales etc. The assessee has explained to the officer that for using the name of RONAK in the name of the company Ronak Gems Pvt. Ltd. the assessee has given gift of Gold Ornaments to the RONAK a daughter of one of the Director Mr. Yogin P. Jhaveri. The said Gold ornaments were given on the occasion of marriage of Ronak and were in the custody of the Ronak daughter of Yogin P. Jhaveri which was kept in the locker of her Mother Smt. Mala Yogi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee specify the manner in which such income has been derived and substantiate the manner in which the undisclosed income was derived. (iii) The assessee should pay the taxes together with interest in respect of undisclosed income. In term of the above provision, in the present case the assessee has disclosed the entire source of income and manner of undisclosed income earned, which is noted in Para 14 and 15 of this order. The assessee has also paid the taxes and the details are noted in Para 13 of this order. The assessee has admitted the undisclosed income of ₹ 2.25 crores and voluntarily declared the same under section 132 (4) of the Act on the basis of accounting records consisting of its income from all the sources. It means that the assessee has complied with all the conditions mentioned in section 271AAA(2) of the Act and once the assessee has complied with all the conditions the assessee should not be called upon to pay a penalty under this section. 17. This position has been deliberated in detail by the co-ordinate Bench of this Tribunal in the case of DCIT vs. Salasar Stock Broking Ltd. (2016) 47 ITR (Trib.) 616 (Kolkata), wherein the Tribunal has discussed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty pursuant to the search subject to fulfillment of certain conditions stipulated in the said section . Hence in view of the above, we hold that the levy of penalty is not automatic and assessee is clearly entitled for immunity from levy of penalty. 8.2. We also find that the decision of the Hon'ble Supreme Court in the case of Sudarshan Silks Sarees v. CIT [2008] 300 ITR 205/169 Taxman 321 supports the case of the assessee. The brief facts of this are as below:- 3. A search was conducted on the premises of the assessee on 14 and 15-10- 1987 and incriminating documents evidencing concealment of income by the assessee were unearthed apart from cash and jewellery found at the time of search. It was found that the appellant was maintaining double set of books and was accounting for only 50 per cent of sales in the regular set of books. This fact was admitted by Shri 1.S. Ramesh, a partner of the firm in the statement recorded under section 132(4) of the Act. Shri 1.S. Ramesh is the person-in- charge of the entire group. The total turnover suppressed by the assessee for the assessment year 1987-88 was found to be to the tune of ₹ 44,07,783. These have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argue before us that a change of heart might have taken place as a result of which Sri Ramesh came forward with all the disclosures for different years voluntarily. But looking into the hard facts of life and the general experience of mankind, especially with regard to financial affairs, it would be difficult to accept such a proposition. Evidently, huge amount of unexplained investments including unexplained stock was found at the time of search. Ultimately, almost the same amount of income was offered by the assessees over a number of years. As the tax rates over the entire period was more or less the same, the tax effect, either from the point of view of the Department, or the assessee would have more or less the same, had the entire undisclosed assets been subjected to tax in the year of search or the entire income was spread over a number of years as has been done in the present assessments. In view of the deposition given under section 132(4) followed by the cooperating attitude of the assessee in paying up the tax, it would be clear that no penalty under section 271(1) would have been leviable had the entire undisclosed income been assessed in the year of search. Instead of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of the CIT(Appeals) and Tribunal restored. It is held that in the facts and circumstances of the case, penalty under section 271(1)(c) was not exigible. The appeals are accepted with costs. 8.3. We find that the following decisions support the case of the assessee :- (a)Decision of co-ordinate bench of Cuttack Tribunal in the case of Pramod Kumar Jain v. Dy. CIT [2013] 33 taxmann.com 651 (Cuttack - Trib) '6. We have heard the rival contentions and perused the material available on record. On consideration of the facts and circumstances of the case, we are inclined to hold that no definition could be given to the specified manner insofar as the very statement on oath u/s. 132(4) specifies the manner on which the assessee is prepared to pay tax thereon. The inscribing in the books of account was taken care of by the assessee when he filed the returns in pursuance to notice u/s. 153A accounting the assets. Therefore, the case laws cited at the Bar clearly indicate that the penalty is not automatic if one of the purported condition is not fulfilled although all the conditions have been agreed to of having fulfilled by the Assessing Officer insofar as the ..... 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