ITO Vs Vaibhav Gattani (ITAT Jaipur)
Search Surrender Is Not Automatically “Undisclosed Income”: Jaipur ITAT Deletes ₹1.41-Crore Penalty Under Section 271AAB
Summary: The Revenue challenged the order of the Commissioner of Income Tax (Appeals), Jaipur-4, which had deleted penalty under section 271AAB(1)(a) of the Income-tax Act, 1961 in respect of ₹14,15,00,000 surrendered by the assessee during search proceedings. The appeal concerned Assessment Year 2016-17.
The assessee, an individual and constituent of the K.K. Gattani Group, Jaipur, was subjected to a search and seizure action under section 132 of the Act on 07.01.2016. A diary marked Annexure A-2 was seized from his business premises. In his statement recorded under section 132(4), the assessee surrendered additional income of ₹14,23,05,000, comprising ₹8,05,000 in unaccounted cash found at his residence and ₹14,15,00,000 referable to notings in the seized diary. The surrender was reaffirmed by letter dated 25.09.2017 and the entire amount was included in the return filed under section 139(1).
Assessment was completed under section 143(3) read with section 153B(1)(b) on 18.12.2017. The Assessing Officer accepted the surrendered sum as forming part of the returned income and made a separate addition of ₹16,500 towards unexplained cash. Importantly, in respect of ₹14,15,00,000, the Assessing Officer did not invoke sections 68 or 69 and did not treat the amount as income from an undisclosed source. The ₹16,500 addition was subsequently deleted by the CIT(A).
