No Penalty since Assessee surrendered Income during Assessment Proceedings: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that penalty under Section 271AAA of the Income Tax Act, 1961 cannot be levied if assessee surrendered the income during the course of assessment proceedings.

The assessee was engaged in the manufacturing of ingots of spring steel and sale purchase of land. During the course of the search in the business premises of the assessee, they surrendered a total sum of Rs. 22 crores of which Rs.7 crores was in the hands of the assessee. While passing the assessment order, the Assessing Officer initiated penalty proceedings u/s 271AAA.

The first appellate authority deleted the penalty.

While dismissing the appeal filed by the Revenue, the Tribunal noticed that the Tribunal in the case of Director of the assessee Company deleted the penalty levied u/s 271AAA for the same Assessment Year on which the surrender took place.

It was observed that the Assessing Officer himself has recorded the statement of Shri Mohinder Kumar Gupta in the assessment order, wherein the Director of the Company has elaborated the transaction which was also confirmed by Mr. Kailash Chandra Agarwal.

“The assessee Company through its reply has also explained the manner in which the income was derived. Thus, the assessee in our opinion has explained substantially the income which was surrendered during the assessment proceedings. Therefore, Section 271AAA of the Income Tax Act will not be applicable in the present case,” the Tribunal said.