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 271AAB is not
automatic but the AO has to decide whether a disclosure constitutes
‘undisclosed income’ as defined in the Explanation to section 271AAB of the
Act.
The Tribunal
observed that the assessee had established that the transactions were recorded
in the books and had also proved their genuineness with documentary evidence.
In such a scenario, mere disclosure and surrender of income 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. The Tribunal
observed that the document found during search was not an incriminating
material when the entry and the income were duly recorded in the books of
accounts. The Tribunal also held that the statement of the assessee recorded
u/s 132(4) would not constitute incriminating material and said the income
disclosed by the assessee could not be considered as undisclosed income in
terms of section 271AAB of the Act.
The penalty levied
u/s 271AAB of the Act was deleted. The appeal filed by the assessee was
allowed.
