The Income Tax Appellate Tribunal Bangalore bench held that penalty under section 271AAA of the Income Tax Act should not be levied if the assessee admitted his income during the search proceedings and paid the tax.
The Appellant tribunal comprising of accountant member Shri A.K.Garodia and judicial member Shri George George K held so while upholding the order of the CIT (A).
The case was developed when a search proceedings u/s 132 of the Act in the premises of the assessee on 20.12.2011 happened. During the course of search proceedings revenue found the cash on which managing director of the company was unable to reconcile the difference between the actual cash found and the figures recorded in the books of account. Then the MD offered such unaccounted cash to be brought to tax for the assessment year 2012-2013 in the hands of the assessee-company.
Similarly there was a discrepancy in the expenditure claimed by the assessee, which was not supported by proper vouchers / bills. The assessee was unable to substantiate the claim of expense incurred and the source of unaccounted cash. Accordingly, the amount was brought to tax.
Thereafter AO imposed a penalty u/s 271AAA of the Act. During the course of penalty the assessee made his objection through his appeal to the CIT and submitted that the undisclosed income was offered for taxes and interest was duly paid. The AO before the first appellant authority contended that while imposing penalty, the Managing Director of the assessee was unable to substantiate the expenses which was offered for taxation.
On first appeal, the CIT(A) held that penalty cannot be imposed on the facts and circumstances of the case, and allowed the appeal of the assessee.
After hearing both sides, the Tribunal restored the statement of CIT(A) and declared that as the assessee had disclosed the concealed income while giving the statement u/s 132(4) of the Act in the course of search and also paid the due tax and interest, no penalty is leviable.
Read the full text of the Order below.
