TMI Blog2021 (10) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... w that reasons given by the Assessing Officer to levy penalty of 30% of undisclosed income is in accordance with law and thus, we are inclined uphold order of the learned CIT(A) and dismiss appeal filed by the assessee. - I.T.A.No.328/Chny/2020 - - - Dated:- 26-10-2021 - Shri Duvvuru Rl Reddy, Judicial Member And Shri G. Manjunatha, Accountant Member For the Appellant : None For the Respondent : Ms.R.Anita, Addl.CIT ORDER PER G.MANJUNATHA, AM: This appeal filed by the assessee is directed against the order of the learned CIT(A)-18, Chennai dated 23.12.2019 and pertains to assessment year 2014-15. 2. The assessee has raised following grounds of appeal:- 1.The order dated 23.12.2019 passed by the learned Commissioner of Income-tax, (Appeals-)-18, Chennai, is erroneous, opposed to law and facts of the case. 2. The learned Commissioner of Income-tax, (Appeals)-18, erred in dismissing the appeal without appreciating the fact the appellant had filed an application seeking adjournment of the hearing posted on 23.12.2019. 3. The learned Commissioner of Income-tax, (Appeals)-18, erred in not affording a final opportunity to the appellant of be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails. The assessee has filed revised return after initiation of scrutiny proceedings on 23.03.2016 admitting total income at ₹ 3,42,16,440/-, including additional income of ₹ 1.00 crore which was offered to tax at the time of search. The assessment has been completed u/s.143(3) r.w.s 153B(1)(b) of the Act on 28.03.2016 and accepted returned income. 4. Subsequently, penalty proceedings u/s.271AAB of the Act was initiated and accordingly, notice u/s.274 r.w.s 271AAB dated 28.03.2016 was issued and served on the assessee. In response, the assessee has filed his written submissions and challenged initiation of penalty proceedings on the ground that admission of undisclosed income without any reference to incriminating material does not warrant levy of penalty u/s.271AAB of the Act. The Assessing Officer was not convinced with the explanation furnished by the assessee and according to him, penalty u/s.271AAB is mandatory, when the assessee has admitted additional income during the course of search in the statement recorded u/s.132(4) of the Act and thus, opined that it is a fit case for levy of penalty and hence, levied penalty of ₹ 30 lakhs being 30% of undisclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of search operation and the scope of the said income is not limited to the additions made in scrutiny assessment. The unaccounted income as admitted by the assessee was based on the material found during the course of search and also gold and jewellery and cash found. Further the AO has brought in the relevant extracts of the sworn statements recorded and the answers given by the assessee in para 3 of his penalty order wherein it was admitted by the assessee the unaccounted income of ₹ 1 crore for this assessment year. 5.2 Thus the AO levied penalty u/s. 27IAAB of ₹ 30 lakhs observing that undisclosed income has been admitted by the assessee during the course of search and in a statement u/s. 132(4) of the Act but the assessee failed to admit the income in the return filed originally but admitted the income by filing a revised return on 23.3.2016 only after initiation of proceedings u/s. 143(2). 6. I have gone through the facts of the case and materials available on record. The AO has levied penalty u/s. 271AAB on the admission of additional income of ₹ 1 crore for the AY under consideration. The addition relating to unaccounted cash remunerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished for the specified previous year; and (B) pays 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 (h). (2) No penalty under the provisions of section 270A or] clause (c) of sub-section (1) of section shall be imposed upon the assessee in respect of the undisclosed income referred to in subsection (1) 4 [or sub-section (IA)]. (3) The provisions of sections 274 and 275 shall., as far as may be, apply in relation to the penalty referred to in this section. Explanation.-For the purposes of this section,- (a) specified date means the due date of furnishing of return of income under sub-section (1) of section 139 or the date on which the period specified in the notice issued under section 153A for furnishing of return of income expires, as the case may be; (b) specified previous year means the previous year- (i) which has ended before the date of search, but the date of furnishing the return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the sworn statement recorded u/s 132(4) of the Act. However, the appellant failed to admit the income of ₹ 1 crore (that was admitted by the appellant during the course of search for the AY under consideration) in the return filed for the A.Y. 2014-15 and had admitted only after initiation of proceedings u/s. 143(2) by filing a revised return on 23.3.2016. 10. As per the section, the impugned AY is a specified year in terms of Explanation (b).The appellant did not offer his return of income admitting the undisclosed income deposed by him during search proceedings. The nature of undisclosed income admitted represented unaccounted cash remuneration in his profession as film artiste which income had been utilized for unaccounted investment and outgoings that were not recorded in the books of account. The admission as mentioned above was made by the appellant only by filing the revised return much beyond the due date as specified in Explanation (a) of the section, The specified date as per the aforementioned explanation means the due date of furnishing of the appellant s return of income u/s 139(1) of the Act or the date on which the period specified in the notice issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch undisclosed income has been derived, then the provisions of S 271 AAB of the Act would automatically get attracted. 13. The Hon ble High Court of Delhi in the case of Principal Commissioner of Income-tax Vs Smt.Ritu Singal [2018] 92 taxmann.com 224(Delhi), though in the context of S.27IAAA of the Act, held that 14. In construing Section 271AAA one must not lose sight of its essential purpose which resulted in its enactment. There is a penalty at the rate of 10% of the undisclosed amount declared, f the conditions in Section 27IAAA (2) are not met with. This is quite different from the penal provision under Section 271(1) (c) of the Act, which directs that if income is concealed or inaccurate returns are filed, which are disallowed by the AO, the penalty shall be - three times the amount of tax sought to be evaded. In the case of amounts disclosed during the course of search, the penalty amount is only ten percent of the undisclosed income. Parliament has, therefore, given a different treatment to the latter category. At the same time, if an assessee were to successfully urge the escape route so to say of Section 271AAA (2), all three conditions mentioned in the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in dispute that as on date of search i.e. 01.08.2012, the assessee had not entered the commodities transaction in its books of accounts. Hence, as per the definition of undisclosed income given in Explanation C to Section 271AAB of the Act, the additional income disclosed by the assessee indeed takes the character of undisclosed income. We also find that the legislature in its wisdom had consciously omitted to include Section 271AAB of the Act in the provisions of section 273B of the Act. Hence there is no requirement to look into any reasonable cause adduced by the assessee warranting grant of any immunity from levying of penalty u/s 271AAB of the Act. Hence, even assuming that the mistake lies on the part of the Accountant by not entering the entries in the books of accounts regarding the commodities transaction, which might tantamount to reasonable cause, the assessee would still be exigible for levy of penalty as no immunity could be claimed in terms of Section 273B of the Act. W find that the Ld. CIT (A) had looked into irrelevant circumstances for deleting the levy of penalty in the instant case forgetting the fact that the levy of penalty u/s 27IAAB of the Act is automatic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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