No Penalty since Assessee surrendered Additional Income and paid Due Taxes: ITAT [Read Order]

no penalty

The New Delhi bench of Income Tax Appellate Tribunal ( ITAT ) has ruled that the penalty cannot be levied since Assessee surrendered additional income and paid all the tax dues.

The Assessee, an individual who derives income from business, had filed his return of income declaring 21 crores over and above his normal income as a result of search and seizure operation held in the office and residential premises of Assessee.

Following the search operations, many jewelleries and cash which also been surrendered by the assessee, and the same was filed by him under the head income from other sources. Assessee was asked to five explanation regarding the application of provision under section 271 AAA and he failed to substantiate the manner in which he earned the above undisclosed income.

Not satisfied with the various explanation given by Assessee, the Assessing Officer applied the provision of 271AAA for levying penalty on 10% of undisclosed income.

Before the CIT (A), the assessee challenged the order and contended that in order to avoid litigation assessee surrendered the undisclosed income under section 132 (4). Assessee also added that he had completed the three conditions viz: surrender of income, payment of tax due and substantiation of such income, therefore, no penalty u/s 271AAA is called for.

Accordingly, CIT (A) deleted the penalty levied by the assessing officer and aggrieved revenue contested the same before this tribunal. The counsel for revenue contended that Assessee has not substantiated the manner in which undisclosed income earned and failed to accomplish these among the three conditions.

The counsel for Assessee also relied on the decision of CIT (A) and reiterated the submissions made before lower authorities.

The bench including judicial member Sudhanshu Srivastava and accountant member R.K Panda heard the rival submission and observed as “Since the assessee in the instant case has surrendered additional income and paid the taxes due thereon and no specific query was raised by the search party at the time of search to substantiate the manner of earning such income, therefore, following the decision of the Hon’ble Gujarat High Court cited (supra) and various other decisions relied on by the ld. CIT(A), we are of the considered opinion that the penalty u/s 271AAA is not leviable inthe instant case.”

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