THE DCIT, CENTRAL CIRCLE-1(4), AHMEDABAD vs. M/S. MADHAV ORGANISER, AHMEDABAD

Sole grievance of the Revenue is that the ld.CIT(A) has erred in deleting penalty of Rs.27,80,000/- for the Asstt.Year 2011-12 and Rs.22,80,000/- for the Asstt.Year 2012-13 which were imposed by the AO under section 271AAA of the Income tax Act, 1961.

Brief facts of the case are that a search and seizure action as carried out in the assessee’s group on 21.7.2011. Entire group was consisted of four sub-groups. The case of the assessee belongs to Madhav Group. During the course of search certain documents found and seized. In the assessment completed under section 153A on 31.1.2014 on the income of Rs.8,26,73,040/- including undisclosed income of Rs.2,78,00,000/- for the Asstt.Year 2011-12 and Rs.9,13,45,925/- including undisclosed income of Rs.2,28,00,000/- for the Asstt.Year 2012-13. The ld.AO has initiated penalty proceedings under section 271AAA of the Act and imposed penalty of Rs.27,80,000/- and Rs.22,80,000/- respectively for the Asstt.Year 2011-12 and 2012-13 being 10% of the undisclosed income, because according to the ld.AO the assessee has not specified the manner in which the undisclosed income offered for tax was derived nor did he substantiate the manner in which the undisclosed income was derived. Dissatisfied with the order of the AO, the assessee carried the matter in appeal before the ld.CIT(A). It was contended before the ld.CIT(A) that statement of the assessee was recorded under section 132(4) of the Act. In the statement Shri Motibhia Prajapati stated in answer to question no.7 that Rs.8 crore was received as commission by himself and other partners of the firm from sale of Gatrad land in 2010-