Case Law Details
As per section 271AAA(2)(i), one of the conditions for obtaining relief from the imposition of penalty under section 271AAA is that the assessee in the statement recorded under section 132(4) of the Act admits the undisclosed income and ‘specifies the manner’ in which such income has been derived. Section 271AAA(2)(ii) casts obligation on the part of the assessee to ‘substantiate the manner’ in which the undisclosed income was derived. Thus, sub-section (2)(ii) finds its genesis from sub-section 2(i) of the Act. Admittedly, the Revenue is not aggrieved by the condition stipulated in sub-section 2(ii) of the Act. Impliedly, the Revenue admits that the assessee has not failed to substantiate the manner in which the undisclosed income derived. This being so, it follows by necessary implication that the assessee has not failed to specify the manner at the first place when substantiation thereof has not been called into question by the Revenue. Thus, the case of the Revenue requires to be summarily dismissed on this ground alone. Notwithstanding, we further note that the assessee has replied to the query raised while recording the statement as called for. The revenue does not appear to have quizzed the assessee for satisfying the manner in which the purported undisclosed income has been derived. The income considered as an undisclosed income in the statement under section 132(4) has been duly incorporated in the return filed pursuant to search. Therefore, the revenue in our view now cannot plead deficiency on the part of the assessee to specify the manner which has not been called into question at the time of search. We simultaneously note that no where in the assessment order or in the penalty order, the revenue has made out a case that the manner of earning undisclosed income was enquired into post search stage either. The revenue has not pointed out any query which remained unreplied or evaded in the course of search or post search investigation. Therefore looking from any angle, it is difficult to hold in favour of the revenue. Accordingly, we decline to interfere in the order of the Commissioner (Appeals).
Full Text of the ITAT Order is as follows:-
The present appeal by the Revenue is directed against the order of the Commissioner (Appeals)-II, Ahmedabad [CIT(A) in short] dated 30-9-2013 for the assessment year (AY) 2010-11 wherein penalty imposed under section 271AAA of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) Rs. 20 lakhs was deleted by the Commissioner (Appeals).
2. Briefly stated, the assessee is an individual engaged in the business of manufacturing and trading of textiles. A search action under section 132 of the Income Tax Act was carried out on 11-3-2010 in the case of assessee. During the course of search, the assessee admitted an unaccounted income of Rs. 2 crores and included the aforesaid unaccounted income while filing the return of income pursuant to notice under section 153A of the Act. The income returned at Rs. 2,21,69,566 under section 153A of the Act was assessed at the same figure and penalty under section 271AAA was imposed by the assessing officer (AO) for assessment year 2010-11 vide order dated 29-5-2012 on the ground that conditions specified in section 271AAA for exoneration from penalty has not been satisfied by the assessee. He accordingly imposed penalty of Rs. 20 lakhs on the undisclosed income found as a result of search at Rs. 20 lakhs.
3. The assessee preferred appeal against the aforesaid penalty order of the assessing officer before the Commissioner (Appeals).
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