THE DY. CIT, CENTRAL CIRCLE-1,, BARODA vs. SHRI MAHENDRABHAI J. SHAH,, BARODA

Aggrieved by the imposition of penalty, the assessee preferred appeal before the CIT(A).

In the first appeal, the CIT(A) found merit for non-imposition of penalty as pleaded by the assessee. The CIT(A) took note of the case made out by the AO that while the assessee has offered the undisclosed income and has paid taxes thereon, it has failed to specify any particulars/details/specification of such unaccounted income and consequently, has failed to specify the manner of determining undisclosed income and substantiation thereof. The CIT(A) accordingly deleted the penalty imposed after analyzing the factual position in the light of judicial precedents. Without reproducing the text of the order of the CIT(A), it is observed that the CIT(A) essentially held that the case of the assessee is squarely covered by the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Mahendra C. Shah & Sidhnath Goel and concluded that the assessee has made effective and sufficient compliance to the immunity conditions of Section 271AAA(2)(ii) of the Act also. The CIT(A) accordingly deleted the penalty imposed under s.271AAA of the Act.

Aggrieved by the action of CIT(A) towards cancellation of penalty imposed by the AO, the Revenue preferred appeal before the Tribunal.

The learned DR for the Revenue submitted that the conditions with regard to providing the ‘manner’ in which the undisclosed income has been derived and ‘substantiation’ thereof has not been done by the assessee as contemplated by Section 271AAA(2) of the Act. The learned DR thus submitted that in view of the nonfulfillment of mandatory conditions as provided in the exit clause, the assessee cannot be exonerated from the liability of penalty under s. 271AAA of the Act. The learned DR accordingly submitted that the penalty order of the CIT(A) cancelling penalty wrongly requires to be set aside and the penalty order passed by the AO requires to be restored.

Learned AR, on the other hand, referred to the relevant extract of the statement recorded under s.132(4) of the Act as reproduced in the order of the CIT(A) at para no.3 of its order and submitted that the manner of deriving undisclosed income was answered in a plausible manner. No specific questions were asked to the assessee regarding the substantiation of the manner while recording the statement under s.132(4) of the Act or at any later stage in the course of assessment proceedings. The learned AR thus submitted that without being put to any query on this subject it was not possible for the assessee to visualize the same. The learned AR adverted our attention to the decision of the co-ordinate bench of the Tribunal in the case of (i) DCIT vs. Anilbholabhai Patel ITA No.481/Ahd/2016 order dated 09.08.2018 (same group case) (ii) Shri Jagdishbhai B Chandarana vs. ACIT ITA No. 2199/Ahd/2016

We have carefully considered the rival submissions and perused the penalty order passed by the AO and the appellate order passed thereon by the CIT(A) and the case laws cited across the bar. The short controversy that arises for determination in the present case is whether the assessee, in the facts of the case, has fulfilled the conditions for exclusion from clutches of penalty under s.271AAA of the Act or not. The thrust of the case of the AO is that the assessee has failed to specify the manner in which the undisclosed income has been derived as well as failed to substantiate the manner as contemplated under s.271AAA(2) of the Act. It is the case of the assessee on the other hand that the order of the AO imposing penalty was not sustainable as rightly held by the CIT(A) since the prerequisites specified under s.271AAA(2) of the Act are broadly complied to claim immunity from the imposition of penalty. In this regard, we straightway find that the issue is squarely covered in favour of the assessee by the decision of the

In the result, the appeal of the Revenue is dismissed.

The impugned appeal also arises from same search proceedings on Anilbholabhai Group under s.132 of the Act where the impugned assessee was also covered. The Revenue in the captioned appeal has

In the result, the appeal of the Revenue is dismissed.

In the combined result, both captioned appeals of the Revenue are dismissed.