No Section 271AAA Penalty Where Search Disclosure Was Proper: ITAT Kolkata

Sandip Jhunjhunwala Vs DCIT (ITAT Kolkata)

ITAT Kolkata Deletes Penalty u/s 271AAA—No Penalty Where Search Disclosure Is Properly Explained and Tax Paid

The Kolkata Bench of the ITAT allowed the appeal of Sandip Jhunjhunwala for AY 2012-13 and deleted the penalty of ₹1.44 crore levied under section 271AAA. The Tribunal held that no penalty is leviable where the assessee satisfies all three conditions prescribed under section 271AAA(2).

In the present case, during the course of search under section 132, the assessee had admitted undisclosed income of ₹14.40 crore in his statement under section 132(4), clearly specified the manner in which such income was derived (from futures & options and commodity profits), substantiated the same with seized material, and duly included the entire amount in the return of income filed post-search, paying tax along with interest. The assessment order itself accepted the disclosure made during search.

The ITAT observed that the Assessing Officer levied penalty merely because seized documents existed, without demonstrating that any income over and above the disclosed amount had been unearthed or that the explanation offered by the assessee was false. Relying on settled law, the Tribunal reiterated that penalty under section 271AAA cannot be imposed merely on the basis of admission during search when the statutory conditions for immunity are fulfilled.

Accordingly, holding that the assessee had fully complied with section 271AAA(2), the Tribunal set aside the order of the CIT(A) and directed deletion of the penalty. The appeal of the assessee was allowed in full.

FULL TEXT OF THE ORDER OF ITAT KOLKATA