ACIT Vs Marvel Associates Visakhapatnam (ITAT Visakhapatnam)
The appeal filed by the revenue concerns the order of the CIT(A)-3, Visakhapatnam, relating to Assessment Year 2013-14 and the levy of penalty under section 271AAB of the Income Tax Act. A search under section 132 was conducted on 20 December 2012, during which the assessee admitted additional income of ₹4.80 crores as additional sales for financial year 2012-13 onwards. For the relevant assessment year, the additional income admitted was ₹1,48,84,142. The assessee filed the return accordingly, and assessment was completed with a disallowance under section 40(a)(ia). The Assessing Officer initiated penalty proceedings under section 271AAB and later imposed penalty at 30% on the alleged undisclosed income of ₹44,65,543.
In response to the penalty notice, the assessee stated that the additional income was voluntarily admitted to avoid litigation, that the books were regularly maintained, and that no incriminating material indicating undisclosed income or expenditure was found during search. It argued that the additional income represented additional sale price worked out at ₹500 per sq.ft. based on area sold or booked up to the search date. The assessee maintained that the loose sheet found during the search did not evidence undisclosed receipts.
The CIT(A) partly accepted the appeal and reduced the penalty to 10%, holding that the loose sheet marked as page 107 of Annexure A/GS/MA/1 indicated cost per sq.ft. at ₹3571, higher than the ₹2200–2300 per sq.ft. stated by the assessee, and therefore constituted incriminating material. CIT(A) observed that the assessee admitted additional income only after the AO pointed out the discrepancy, and concluded that this was a case of concealment, but falling under the 10% penalty category due to the explanation provided.
