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

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ITA 751/AHD/2016Status: DisposedITAT Ahmedabad08 April 2019AY 2012-132 pages

In favour of the Revenue: the Revenue's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had substantiated the manner in which the undisclosed income was derived in their statement recorded under Section 132(4). Therefore, the penalty imposed under Section 271AAA was deleted.

What were the facts?

During a search and seizure operation on the assessee's group, undisclosed income was found for assessment years 2011-12 and 2012-13. The Assessing Officer (AO) imposed penalties under Section 271AAA for failure to specify and substantiate the manner in which the undisclosed income was derived.

What were the issues?

Whether the penalty under Section 271AAA is leviable when the assessee has substantiated the source of undisclosed income in a statement recorded under Section 132(4).

Which sections of the Income-tax Act were involved?

Section 271AAA,Section 132(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘B’

Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH

For Respondent: Shri Mudit Nagpal, Sr.DR
Hearing: 02/04/2019Pronounced: 8/04/2019

PER RAJPAL YADAV, JUDICIAL MEMBER : These are two appeals by the Revenue against two separate orders of the ld.CIT(A)-11, Ahmedabad of even dated i.e. 3.12.2015 passed for the Asstt.Years 2011- 12 and 2012-13. Since the issue in both the appeals is common, both the appeals are disposed of by this consolidated order.

ITA No.751 & 92/Ahd/2016 - 2 - 2. None appeared on behalf of the assessee, therefore we proceed to dispose of the appeals, after hearing the ld.DR and considering material available on record.

3.

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.

4.

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-

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