SANJAY BABASAHEB PATIL,KOLHAPUR vs. ASSISTANT COMMISSIONER OF INCOME-TAX, (CENTRAL) CIRCLE -KOLHAPUR, KOLHAPUR

This assessee’s appeal for assessment year 2012-13 arises against the CIT(A)-11, Pune’s order dated 31.05.2018 passed in case no. Pn/CIT(A)-11/ACIT Cen. Cer. Kolhapur/Kol/973/2014-15, involving proceedings u/s 271AAA of the Income Tax Act, 1961; in short “the Act”. Heard both the parties. Case file perused.

We notice at the outset that the assessee’s sole substantive grievance challenging correctness of both the learned lower authorities’ action imposing section 271AAA penalty of Rs.3,59,200/-; hardly requires us to delve deeper in the relevant factual matrix. We make it clear that the impugned penalty provision comes into play when an assessee concerned fails to satisfy the three conditions of admitting the undisclosed income followed by the manner of having derived the sums, substantiation thereof and payment of taxes; as the case may be. 3. We keep in mind the foregoing statutory provision and proceed to deal with the facts of the instant case. We make it clear that the department had carried out the search in issue on 25.08.2011. The assessee had disclosed unaccounted investment of Rs.5,49,000/- therein. There is further an issue of foreign unexplained expenses amount of Rs.3,63,482/- as well. It is these two heads which form subject matter of penalty imposed herein u/s 271AAA of the Act. We find from a perusal of the Assessing Officer’s penalty order dated 17.12.2014 and CIT(A)’s order that the Revenue has not been able to pinpoint any specific averment of violation the foregoing three statutory conditions in their respective orders. Mr. Jasnani quoted PCIT vs. Smt. Ritu Singal [2018] 92 taxmann.com 224 (Delhi) that it is not a mandatory condition for the department to raise any specific query regarding the above three conditions whereas hon’ble Gujarat high court in PCIT vs. Mukeshbhai Ramanlal Prajapati [2018] 99 taxmann.com 447