November 2019

Section 271AAB – Mere disclosure and surrender of income in statement recorded u/s 132(4) would not ipso facto lead to the conclusion that the amount surrendered by the assessee was undisclosed income in terms of section 271AAB of the Act, when the entry and the income were duly recorded in the books of accounts

Jagdish T.Punjabi | Devendra Jain | Tejaswini Ghag
Chartered Accountants

4.  [2019] 71 ITR 518 (Trib.) (Jai.) DCIT vs. Rajendra Agrawal ITA No.: 1375 (Jaipur) of 2018 A.Y.: 2015-16 Date of order: 22nd March, 2019

 

Section 271AAB – Mere disclosure and surrender of income in statement recorded u/s 132(4) would not ipso facto lead to the conclusion that the amount surrendered by the assessee was undisclosed income in terms of section 271AAB of the Act, when the entry and the income were duly recorded in the books of accounts

 

FACTS

The assessee, an individual, filed his return of income declaring total income at Rs. 12,01,09,200 which included, inter alia, surrendered income of Rs. 10,87,68,470 on account of long-term capital gain. The assessment was completed u/s 143(3) read with section 153A of the Income-tax Act, 1961 at the total income of Rs. 12,24,18,200. The AO also initiated proceedings for levy of penalty u/s 271AAB.

 

The AO passed the order imposing penalty u/s 271AAB(1) @ 30% of the undisclosed income. But the CIT(A) reduced the penalty from 30% to 10%. Aggrieved, the Revenue filed an appeal to the Tribunal. The assessee also filed a cross appeal.

 

HELD

The question before the Tribunal was whether the surrender made by the assessee in the statement recorded u/s 132(4) will be regarded as undisclosed income without testing the same against the definition as provided under clause (c) of the Explanation to section 271AAB of the Act.

 

It observed that the term ‘undisclosed income’ has been defined in the Explanation to section 271AAB and, therefore, the penalty under the said provision has to be levied only when the income surrendered by the assessee constitutes ‘undisclosed income’ in terms of the said definition. It observed that in various decisions the Tribunal has taken a consistent view that the penalty u/s 271A

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