By JAGDISH T. PUNJABI I DEVENDRA JAIN I TEJASWINI GHAG
Chartered Accountants
Section 271AAA
– If the search party does not put any question to the assessee about the
source of income, any adverse inference for the levy of penalty u/s. 271AAA
cannot be drawn.
FACTS
The assessee, in the course of search and seizure action on
Hitcons & Pranay group of cases, voluntarily declared amounts aggregating
to Rs. 70,03,525 as his undisclosed income.
In the return of income filed, he declared total income of Rs.
90,65,390. The Assessing Officer (AO)
passed order u/s. 143(3) assessing the total income of the assessee to be Rs.
1,11,28,815. Penalty proceedings under
section 271AAA were initiated for disclosure of Rs. 70,03,525.
The AO levied penalty under section 271AAA on the ground that
though the assessee had admitted undisclosed income of Rs. 70,03,525 in his
statement recorded u/s. 132(4) of the Act, he failed to specify as well as
substantiate the manner in which undisclosed income was derived.
Aggrieved, the assessee preferred an appeal to CIT(A) who
relying upon the judgment of the Allahabad High Court in the case of CIT vs.
Radha Kishan Goel [2005] 278 ITR 454 (Allahabad) and the decision of the
Gujarat High Court in the case of CIT vs. Mahendra C. Shah [2008] 299 ITR
305 (Guj.) as also the decision of the Nagpur Bench of the Tribunal in the
case of Concrete Developers v. ACIT [2013] 34 taxmann.com 62 (Nagpur-Trib.) allowed
the appeal filed by the assessee.
Aggrieved, revenue preferred an appeal to the Tribunal where it,
interalia, contended that the decision of Nagpur Bench of Tribunal,
relied upon by the CIT(A), has not been accepted by the Revenue and appeal has
been filed and admitted against the said decision of Nagpur Bench of Tribunal.
HELD
The Tribunal observed that the assessee has made a disclosure
of undisclosed income in the course of search and has shown such undisclosed
income in the return of income and has paid taxes thereon and the AO has
accepted the income returned and the source of the same. However, the AO has levied penalty u/s.
271AAA of the Act. The Tribunal observed
that CIT(A) relying on the ratio laid down in the decision of the Allahabad
High Court and the Gujarat High Court has elaborately considered the issue and
has passed an order deleting the levy of penalty. It observed that the ratio emanating out of
these two High Court decisions is that if the search party doesn’t put any
question to the assessee about the source of income, any adverse inference for
levy of penalty u/s. 271AAA cannot be drawn. The Tribunal also noticed that the
revenue has in the grounds mentioned about a decision of Nagpur Bench of the
Tribunal in favor of the assessee which has not been accepted by the revenue
but the department is in appeal before the High Court. The Tribunal observed that since no contrary
decision was pointed out by the Revenue, the Tribunal upheld the order passed
by CIT(A).
The appeal filed by the Revenue was dismissed.
