The Income Tax Appellate Tribunal Kolkata bench, last day ruled that penalty under section 271AAA of the Income tax act, 1961 should not be levied when the assessee voluntarily offers the income to tax through revised return.
The Kolkata bench including accountant member Shri.Balaganesh and judicial member Shri S.S. Viswanethra Ravi demonstrated so by saying that assessee has complied with all the three cumulative conditions supported in Section 271AAA(2) of the Act.
The only dispute in the case was that whether the assesse should levy the penalty due to filing of undisclosed income in different assessment year.
The assesse was a proprietor of M/s Bidhan Jewelleries, where he gave a statement u/s 132(4) wherein he admitted a sum of Rs. 3 crores as an undisclosed income. The assesse however didn’t come forward to offer the aforesaid amount for the AY 2010-11 on 30.08.2011.This was followed by a revised return but he didn’t submitted the same. On second revised return he offered the amount by splitting into two assessment years. The assessment was completed based on the second revised return filed by the assessee on 01.11.2011. Penalty proceedings u/s 271AAA of the Act was initiated by the AO.
During the penalty proceedings assessee argued that he had satisfied all the three conditions prescribed in 271AAA (2) of the Act and he entitled an immunity from levy of penalty. However AO observed that since the assessee had retracted from his 132(4) disclosure statement by not offering the income of Rs. 3 crores in the original return of income, the assessee had not complied with the condition of 271AAA(2) of the Act and Also the taxes were paid belatedly. Based on these findings, he levied a penalty of Rs. 30, 36,743/- for the assessment year 2010-11.
The CIT allowed the appeal of the assessee. Aggrieved revenue contested the appeal before the appellate tribunal.
After hearing the both sides, the Tribunal observed that assessee complied the condition in 271AAA and even though retracted the 132(4) statement by not offering the undisclosed income in the original return of income and in the first revised return of income, but had voluntarily offered the undisclosed income in the second revised return of income filed on 01.11.2011 (which is within the time limit prescribed u/s 139(5) of the Act).
Moreover, bench found that Section 271AAA (2) nowhere mandates requirement of offering the undisclosed income in the return of income to be filed by the assessee and also added that wherever the legislature in its wisdom had mandated offer of undisclosed income in the return of income filed by the assessee, the same has been specifically provided in the Act itself as is provided in Section 271AAB of the Act.
Accordingly tribunal held that the assessee in indeed entitled for immunity from levy of penalty u/s 271AAA of the Act and the appeal of the revenue got dismissed.
Read the Full Text of the Order Below
