ITAT confirms Penalty levied u/s 271AAA on Admission of Undisclosed Income by Assessee [Read Order]

The Income Tax Appellate Tribunal (ITAT), Chennai confirmed the penalty levied under Section 271 AAA on the ground of admission of undisclosed income by the assessee.

The assessee, Dr. (Late) S.F.V. Selvaraj Represented by L/H Dr. Kamala Selvaraj, Dr. Deepu Rajkamal Selvaraj, and Dr. Priya Selvaraj, is an individual and Doctor by profession. A search action under section 132 of the Act was conducted on the premises of the assessee on 24.11.2011. During the course of the search, cash of ₹.3,45,45,000/- was found and seized. In the sworn statement, the assessee has explained that the amount of ₹.3,45,45,000/- found in his room was his income earned over a period of time which was not accounted for. Thus, the Assessing Officer has made the addition of ₹.3,45,45,000/- towards unexplained cash.

The assessee carried the matter in appeal before the CIT(A) and submitted that though the assessee has admitted the amount of ₹.3,45,45,000/- as unaccounted income. The CIT(A) considered the entire explanation of the assessee and confirmed the order of the Assessing Officer. Aggrieved the assessee is in appeal before the Tribunal.

The Counsel for the assessee, G Baskar submitted that there were cash deposits as well as cash withdrawals from the said bank account, and based on the bank entries, the seized cash deposits were ₹.3,51,64,905, where the withdrawals were ₹.38,73,50,000/-. It was also argued that the cash found is from the cash on hand in the CDC Portfolio Management – unaccounted share trading. It was further submitted that a total sum of ₹.32,13,03,687/- represents the exempt undisclosed income of the assessee for the assessment years 2006-07 to 2011-12.

The bench consisting of V. Durga Rao, Judicial Member, and G. Manjunatha, Accountant Member held that “During the course of the search, in a statement recorded under section 132(4) of the Act, the assessee has admitted the undisclosed income, but failed to offer in the return filed and pay tax thereon consequent upon the search. Since the addition made by the Assessing Officer on account of cash seized clearly falls within the ambit of undisclosed income and thereby warranting levy of penalty under section 271AAA of the Act.”

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