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Case Law Details

Case Name : Principal Commissioner Of Income Tax Vs. Smt. Ritu Singal (Delhi High Court)
Appeal Number : ITA 672/2016
Date of Judgement/Order : 12/03/2018
Related Assessment Year :
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Principal CIT Vs. Smt. Ritu Singal (Delhi High Court)

In construing Section 271AAA one must not lose sight of its essential purpose which resulted in its enactment. There is a penalty at the rate of 10% of the undisclosed amount declared, if the conditions in Section 271AAA (2) are not met with. This is quite different from the penal provision under Section 271 (1) (c) of the Act, which directs that if income is concealed or inaccurate returns are filed, which are disallowed by the AO, the penalty shall be ―three times the amount of tax sought to be evaded”. In the case of amounts disclosed during the course of search, the penalty amount is only ten percent of the undisclosed income. Parliament has, therefore, given a different treatment to the latter category. At the same time, if an assessee were to successfully urge the “escape route” so to say, of Section 271AAA (2), all three conditions mentioned in the provision, (as held in Gebilal Kanhailal in respect of pari material provisions) have to necessarily be fulfilled. In the preset case, the assessee, while declaring the “undisclosed income” also stated, that ―the surrender is being made subject to no penal action of Section 271 (1) (c)”.

That the income which was ultimately brought to tax pursuant to the disclosure made, which was voluntary on the part of the assessee is stating the obvious. The assessee merely stated that the sums advanced were undisclosed income. However, she did not specify how she derived that income and what head it fell in (rent, capital gain, professional or business income out of money lending, source of the money etc). Unless such facts are mentioned with some specificity, it cannot be said that the assessee has fulfilled the requirement that she, in her statement (under Section 132 (4)) “substantiates the manner in which the undisclosed income was derived”. Such being the case, this court is of opinion that the lower appellate authorities misdirected themselves in holding that the conditions in Section 271AAA (2) were satisfied by the assessee.

FULL TEXT OF THE HIGH COURT JUDGMENT / ORDER IS AS FOLLOWS:-

 1. The question of law in the present appeal by the revenue, framed in this case reads as follows:

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