M/S. SHREE VALABHA DEVELOPERS,VADODARA vs. DCIT CENTRAL CIRCLE-2, VADODARA

ITA Nos.1873 & 1874/AHD/2018 M/s. Shree Vallabha Developers Assessment Years: 2013-14 & 2014-15 2. The Ld. Authorized Representative for Assessee (AR), at the outset, placed on record the decision of co-ordinate bench in the case of group entity namely Bharatkumar N.Parikh V/s DCIT, vide common order dated 23/09/2019. The Ld. AR submitted that penalty u/s 271AAB has been deleted by the bench which was imposed on similar facts and circumstances and therefore, the issue would stand covered in assessee’s favor. The Ld. DR, while relying on the order of lower authorities, could not controvert the said facts.

In the above background, we find that the assessee was assessed for year under consideration u/s 143(3) r.w.s. 153A on 19/02/2016 wherein the returned income filed in response to notice u/s 153A was accepted. During search proceedings, the assessee admitted disclosure of Rs.200 Lacs for AY 2013-14 and Rs.150 Lacs for AY 2014-15. The disclosure was on account of inflated expenses. The said disclosure was reflected in the returns of income for these years. Consequently, penalty proceedings u/s 271AAB, as applicable for the period of search, was initiated and the assessee was saddled with impugned penalties vide separate orders both dated 22/08/2016. The same, upon confirmation by Ld. CIT(A), is under appeal before us.

Upon perusal of the cited order passed in the case of group entity, we find that penalty imposed on similar facts and circumstances has been deleted by the co-ordinate bench on the opinion that lower authorities failed to establish that the assessee had disclosed the income with reference to any specific loose papers / assets etc. The AO had & 1874/AHD/2018 M/s. Shree Vallabha Developers Assessment Years: 2013-14 & 2014-15 failed to substantiate that the disclosure made u/s 132(4) was on the basis of any incriminating material. Therefore, the requirement that there must be undisclosed income in terms of Explanation (c) to Sec. 271AAB was not fulfilled.

We find that a total disclosure of Rs.10.51 Crores was made with respect to various entities including assessee as well as Bharatkumar Parikh besides other entities. In the case of assessee, the disclosure was on account of inflated expenses. However, no incriminating material was found during search operations and the undisclosed income was not represented by any money, bullion, Jewellery or other valuable article or thing or any entry in the books of accounts. None of the entries in the books was found to be false and the disclosure was voluntary. Therefore, the same would not fall within the term undisclosed income as defined in Explanation-c(ii) to Sec.271AAB. Hence, the factual matrix do not convince us to confirm the impugned penalties. By deleting the same, we allow both the appeals.

Both the appeals stand allowed in terms of our above order.