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Income Tax Appellate Tribunal, CHANDIGARH BENCH “B”, CHANDIGARH
Before: Sh. SANJAY GARG, JUDICIAL MEMEMBER & DR. B.R.R. KUMAR
आदेश/Order
PER DR. B.R.R. KUMAR, A.M
The present appeal has been filed by the Assessee against the order of the Ld. CIT(A)-3, Gurgaon dt. 26/09/2016.
In the present appeal Assessee has raised the following grounds:
That in the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) is not justified in upholding the levy of penalty under section 271AAA of Rs. 82,395/-. The penalty so imposed is illegal and has wrongly been upheld..
Facts taken from the order of the Ld. CIT(A) are that a search & seizure 3. operation u/s 132(1) of the I.T. Act, l961 was conducted on 08.10.2010 in Popli Group of cases. The assessee had filed return u/s 139 of the Income Tax Act,1961 on 07.07.2012 showing a total income of Rs. 8,94,195/-.
During the search an amount of Rs. 21,46,150/- has been found at the premises belonging to the assessee out of which an amount of Rs. 640503/- was treated as undisclosed income. Further jewellery valued Rs. 10,85,530/- was found out of which an amount of Rs. 183450/- was treated as undisclosed income.
At the outset we find that the addition on account of jewellery was made on protective basis and hence the penalty erroneously confirmed by the Ld. CIT(A) is hereby directed to be obliterated.
Regarding the amount of Rs. 640,503/- treated as undisclosed income, it was submitted by the Assessee that the amounts belongs to four entities which are as under:
“a) Cash as per the books of Shri. Rajesh Popli, Prop. M/s New Shimla Hardware Rs. 3,71,084.77 b) Cash as per the books of Hemant Popli Rs. 13,45,647.07 c) Cash of the daughter of the assessee Jyoti Khajuria Rs. 3,00,000.00 d) Cash of Shri. Vijay Kishan Sharma Rs. 1,50,000.00 Rs. 21,66,731.84
During the assessment proceedings it was found that the extract of cash book of HP Traders and Contractors on the date of search was Rs. 145647/- instead of Rs. 13,45,647/- as claimed by the Assessee. Similarly the proprietary concern of Hemant Popli , Shimla Hardware and Welding Works has shown cash balance of Rs. 71,084/- instead of Rs. 3,71,084/- . After reconciliation of the balance sheet the Assessing Officer has made addition of Rs. 8,00,503/-. The Tribunal after examination of all the facts allowed further relief of Rs. 160,000/- and the balance of Rs. 6,40,503/-has been confirmed. We have carefully gone through the arguments taken by the assessee before the lower authorities. Section 271AAA reads as under:
Section 271AAA of Income-Tax Act, 1961 deals with Penalty where search has been initiated
(1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year.
(2) Nothing contained in sub-section (1) shall apply if the assessee,—
(i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived;
(ii) substantiates the manner in which the undisclosed income was derived; and
(iii) pays the tax, together with interest, if any, in respect of the undisclosed income.
(3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1).
(4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section.
Explanation.—For the purposes of this section,—
(a) “undisclosed income” means—
(i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has—
(A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or
(B) otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of search; or
(ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted;
(b) “specified previous year” means the previous year—
(i) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or
(ii) in which search was conducted.
In the instant case we find that the amount of Rs. 640503/- has not been a matter of disclosure under sub section 4 of Section 132 and hence the provisions of 271AAA(2) are not applicable. The amount of Rs. 6,40,503/- can be treated as undisclosed income as per the provisions of sub section 4(a) of Section 271AAA and also the explanation of the assessee has been found to be false on going through the entire business affairs and books of accounts in the case of the assessee is squarely covered by the abovementioned provisions. Hence, we hereby decline to interfere in the order of the Ld. CIT(A) on this ground.
In the result, appeal of the Assessee is partly allowed.
Sd/- Sd/- संजय गग� डा. बी.आर.आर, कुमार, (SANJAY GARG ) ( DR. B.R.R. KUMAR, AM) �या�यक सद�य/ Judicial Member लेखा सद�य/ Accountant Member 06/05/2019 आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :
अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File
आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar