Pawan Mundra Vs DCIT (ITAT Jaipur)
The issue under consideration whether AO is justified levying penalty under section 271AAB on failure to offer explanation about the source of the undisclosed investment in land?
ITAT states that during course of post search proceedings, assessee admitted an income of Rs. 6,00,000 on account of undisclosed investment in land. Out of admitted undisclosed income of Rs. 6,00,000, the income of Rs. 5,20,000 had been admitted and declared in revised return filed by the assessee. Accordingly, the assessee was asked to furnish justification for not offering balance undisclosed investment of Rs. 80,000. But, no reply was furnished by the assessee, therefore, an addition of Rs. 80,000 under section 69B was made. The penalty u/s 271AAB has been initiated only in respect of Rs 80,000/-, ITAT have carefully gone through the assessment order and are unable to agree to the contention so advanced by the ld AR. The sum and substance of para 7 of the assessment order where read in totality will show clearly that the penalty has been initiated in respect of Rs 6,00,000/- admitted by the assessee pursuant to search conducted on 13.08.2013. Given that the assessee had only disclosed a sum of Rs 5.2 lacs in the revised return filed on 9.11.2013, subsequent to date of search and thereafter, in the return filed on 16.02.2015 in response to notice u/s 153A, the Assessing officer has brought the balance amount of Rs 80,000/-to tax during the course of assessment proceedings. However, as far as initiation of penalty proceedings u/s 271AAB is concerned, the same has been initiated on the whole of the sum of Rs 6 lacs admitted by the assessee pursuant to search. As regards income of Rs. 80,000/- in addition to the fact that at no stage, including in the present appellate proceedings, has the assessee specified the manner in which the income of Rs. 80,000/- was derived, much less substantiate such manner, this income was not offered to tax in the return of income filed u/s 153A. Therefore, none of the conditions for levy of penalty at the lower rate of 10%, under clause (a) of Section 271AAB (1), are satisfied. Accordingly, it is held that in respect of the income of Rs. 80,000/- penalty is leviable at 30% under clause (a) of Section 271AAB(1). In the result, the grounds taken by the assessee are dismissed and the matter is decided in favour of the Revenue and against the assessee. The appeal of the assessee is accordingly dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
This is an appeal filed by the assessee against the order of ld. CIT(A)-2, Udaipur dated 28.06.2019 wherein the assessee has raised the following revised grounds of appeal:-
“1. That as the Learned AO has not initiated penalty u/s 271AAB on income shown suo-motto at Rs. 5,20,000/- therefore penalty on it amounting to Rs. 1,56,000/- being unsustainable needs deletion.
2. That as source of Rs. 80,000/- is well explained during assessment proceedings, penalty u/s 271AAB on it amounting to Rs. 24,000/- also being not leviable needs deletion.”
2. Regarding Ground No. 1, the ld AR drawn our reference to the findings of the Assessing in the assessment order passed u/s 143(3) r/w 153A dated 29.01.2016 which read as under:-
“7. Undisclosed income admitted and declared in the return of income
During the course of post search proceedings, the assessee had admitted an income of Rs. 6,00,000/- on A/c of undisclosed investment in Land as per documents seized from residence of Shri B.D. Mundra at 524A, Talwandi, Kota and inventorised as Exhibit-13, Page 45-49 of Annexure-AS, which is a copy of registered sale/purchase deed dated 05.04.2012, regarding industrial land purchased by the assessee. This disclosure was made through a chart furnished by Shri Anil Mundra, brother of the assessee during the course of post search proceeding on 18.11.2013.
7.1 However, the assessee had offered income of Rs. 5,20,000/- in the revised return filed on 09.11.2013 for taxation.
7.2 Out of undisclosed income admitted of Rs. 6,00,000/- by the assessee, income of Rs. 5.20 Lakh has been admitted and declared in the revised return filed. The assessee was asked to furnish justification for not offer balance undisclosed investment in Land o f Rs. 80,000/-. No reply has been furnished by the assessee on this issue therefore, an addition of Rs. 80,000/- u/s 69B of the IT Act, 1961 has been made to the total income of the assessee.
7.3 It is worthwhile to mention here that the addition made of Rs. 80,000/-covered under the provision of section 69B of the Income Tax Act, 1961 as these represents undisclosed investment which are not recorded in the books of account and assessee has failed to offer any explanation about the source of the same therefore as per section 115BBE(1)(a) the income of Rs. 80,000/- liable for tax @ 30%. Penalty proceedings u/s 271AAB is initiated separately by way of issue of notice u/s 274 r. w.s 271AAB of the Act. ”
3. It was submitted by the ld AR that on perusal of the aforesaid findings of the AO, it is clear that the penalty proceedings have only been initiated in the context of income of Rs. 80,000/- brought to tax u/s 69B of the Act and as far as the income of Rs. 5.20 lakh offered by the assessee in the revised return e-filed on 09.11.2013, the penalty proceedings were not initiated. It was accordingly submitted that the penalty so levied by the AO u/s 271AAB therefore deserves to be deleted.
4. Regarding the penalty levied by the AO on addition of Rs. 80,000/-made u/s 69B of the Act, our reference was drawn to the working of investment in the Industrial Land as per revised return of income as under:
