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Section 253 of the Act inter-alia provides that any assessee aggrieved by any of the orders mentioned in sub-section (1) of the said section may appeal to the Appellate Tribunal against such order.
Aforesaid appeal by the assessee is against order dated 28th December 2015, passed by the learned Commissioner (Appeals)–37, Mumbai, confirming penalty under section 271(1)(c) of the Income-tax Act, 1961 (for short the Act) for the assessment year 2010–11.
It is a manifest procedure that before filing of the Income Tax return for the assessment year 2007-2008 by the petitioner, the same is scrutinized, firstly, by the auditors of the company. Secondly, by the directors of the company before endorsing their signatures on the final Balance Sheet. Therefore, it cannot be considered as a mere accounting mistake.
it has been submitted that assessment proceedings before the AO were earlier being taken care of by the tax counsel, who, however, stopped attending the proceedings without intimating the assessee as differences had developed between the assessee and the counsel.
On reading the provisions of section 221 conjointly with the definition of “tax” as detailed under section 2(43), the irresistible conclusion that can be drawn is that the phraseology tax in arrears as envisaged in section 221 of the Act would not take within its realm the interest component.
The appellant has admitted in his sworn statement about this undisclosed income, has filed the return of income showing the same as his income & has paid the necessary taxes on this. From the case laws mentioned above, it is clear that on similar facts of the case, penalty u/s 271AAA has been cancelled. Therefore, humbly following the case laws as cited supra, the penalty u/s 271AAA is cancelled.
Merely for the reason that the assessee had admitted additional income in the course of search for taxation, it cannot be said that such admitted income was undisclosed income within the meaning of ‘undisclosed income’ provided in Explanation to section 271AAA of the Act to impose the penalty.
If a claim made by the assessee has been allowed at one stage and later on has been disallowed, ostensibly, the assessee can said to have some bona fide belief for making such a claim.
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).
Section 271AAA imposes an additional condition of the assessee having to substantiate the manner in which, the undisclosed income was derived. This requirement, however, must be seen as consequential to or corollary to the base requirement of specifying the manner, in which, the undisclosed income was derived. It is only when such declaration is made, the question of substantiating such disclosure or claim would arise.
