Chetan Hasmukhbhai Vs ACIT (Central) Circle (ITAT Pune)
ITAT Pune held that penalty under section 271AAA of the Income Tax Act leviable as assessee failed to substantiate the source as well as the manner of the undisclosed income.
Facts- These assessees’ twin appeals both dated 19.12.2022 involving proceeding u/s 271AAA of the Income Tax Act.
The assessees’ identical sole substantive grievance that arises for our apt adjudication is correctness of lower authorities action in imposing penalties under Section 271AAA of the Income Tax Act.
Conclusion- We are constrained to conclude that he has very well fallen short of substantiating the manner of having derived his undisclosed income in question i.e., the second limb in sec.271AAA penalty proceedings and therefore, there is hardly any reason for us to disturb both the lower authorities’ findings. The case law quoted at the assessee’s behest supports the Revenue’s case rather wherein their lordships’ hold in identical terms that an assessee has to substantiate the manner after the Authorised Officer puts specific queries to him regarding source and manner of the undisclosed income in issue. We thus affirm CIT(A)’s findings extracted in the penalty proceedings upholding the Assessing Officer’s action imposing the impugned penalties in these twin assessment years.
FULL TEXT OF THE ORDER OF ITAT PUNE
These assessees’ twin appeals ITA.Nos.205 & 206/PUN./2013, for assessment years 2011-2012 and 20122013, arise against the CIT(A), Pune-11, Pune’s separate Din & Order Nos. ITBA/APL/S/250/2022-23/1048081831(1) & 1048081851(1), both dated 19.12.2022, involving proceedings u/s. 271AAA of the Income Tax Act, 1961 (in short “the Act”); respectively.
Heard both the parties. Case files perused.
2. It emerges during the course of hearing that the assessees’ identical sole substantive grievance that arises for our apt adjudication in both these appeals is that of correctness of the learned lower authorities action imposing penalties of Rs.3,20,000/- and Rs.1,80,100/-, case-wise respectively. The CIT(A)’s identical lower appellate discussion reads as under :
3. Learned counsel vehemently argued during the course of hearing that both the lower authorities have erred in law and on facts in imposing the impugned penalty(ies) despite the fact that the taxpayer had duly admitted the undisclosed income during the course of search after explaining the manner, substantiation thereof followed by payment of taxes thereupon. He quoted various judicial precedents i.e., PCIT vs. Phoenix Mills Ltd., [2019] 307 CTR 700 (Bom.) and PCIT vs. Mukeshbhai Ramanlal Prajapati [2017] 398 ITR 170 (Guj.) that it is incumbent on the part of the Authorised Officer during the course of search to specifically put the relevant questions to the searched party before the impugned penalty mechanism u/s.271AAA is sought to invoked at the department’s behest.
4. The Revenue has placed strong reliance on the Ld. CIT(A)’s detailed discussion affirming the impugned penalties.
5. We have given our thoughtful consideration to the vehement rival stands and find no merit in assessee’s arguments. Suffice to say, we find from a perusal of the assessment discussion dated 28.03.2014 that the departmental authorities had indeed put specific question no.6 to the assessee regarding source of the foregoing undisclosed income wherein he could only reply that the same had been derived from land dealing business. Learned counsel could not throw any further light by producing before us the corresponding search statement(s) that the assessee had indeed filed all the relevant details regarding his land dealing business concerned. That being the case, we are constrained to conclude that he has very well fallen short of substantiating the manner of having derived his undisclosed income in question i.e., the second limb in sec.271AAA penalty proceedings and therefore, there is hardly any reason for us to disturb both the lower authorities findings. The case law quoted at the assessee’s behest (supra) supports the Revenue’s case rather wherein their lordships’ hold in identical terms that an assessee has to substantiate the manner after the Authorised Officer puts specific query(ies) to him regarding source and manner of the undisclosed income in issue. We thus affirm CIT(A)’s findings extracted in the penalty proceedings upholding the Assessing Officer’s action imposing the impugned penalties in these twin assessment years. Ordered accordingly.
6. No other ground or argument has been pressed before us.
7. These assessees’ twin appeals ITA.Nos.205 & 206/PUN./2023 are dismissed in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in Open Court on this the 28th day of April, 2023.
