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Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI BHAVNESH SAINI, & SHRI N.K. BILLAIYA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the Revenue is preferred against the order of the Commissioner of Income Tax [OSD], Gurgaon dated 26.02.2015 pertaining to Assessment Year 2011-12.
The solitary grievance of the assessee is that the CIT(A) erred in deleting the entire penalty levied u/s 271AAA of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short].
Briefly stated, the facts of the case are that search and seizure operations were carried out at the residential as well as office premises of M/s Kundan Rice Mills Ltd and Jai Bhagwan Garg Group, Panipat on 16.03.2011.
During the course of search proceedings, the father of the assessee disclosed additional income of Rs. 15 crores over and above the regular income of the group companies/ associates/individuals in his statement u/s 132(4) of the Act.
Taking a leaf out of this, the Assessing Officer was of the opinion that the assessee, though declared Rs. 15 crores and has paid taxes thereon, but has not explained the manner in which the income was derived. The Assessing Officer was of the firm belief that the assessee has failed to substantiate the manner of undisclosed income derived and, therefore, is liable for penalty u/s 271AAA of the Act, and accordingly levied penalty of Rs. 75 lakhs.
The assessee carried the matter before the ld. CIT(A) and vehemently contended that it has fulfilled all the mandatory conditions given in section 271AAA of the Act and, therefore, the Assessing Officer was not justified in levying the penalty.
After considering the facts and submissions, the ld. CIT(A) was convinced that the assessee has fulfilled all the mandatory conditions laid down in section 271AAA of the Act and, accordingly, deleted the penalty of Rs. 75 lakhs. The relevant findings of the ld. CIT(A) read as under:
“6. I have considered the assessee's submissions as well as the impugned order. It is the case of the AO that the manner in which the income was derived was not substantiated with supporting evidence. This persuaded the AO hold that the assessee did not fulfill all the conditions as laid down in section 271AAA and proceeded to levy the penalty of Rs. 75,00,000/-.
Before me, the assessee reiterated that the surrendered amount was admitted in the statement recorded of Shri Pradeep Garg, Director in the statement recorded u/s 132(4). The disclosure of the surrendered amounts in the returns filed by the respective parties as per the bifurcation provided to the ADIT (Inv) was accepted by the AO. It was further stated that the due taxes also stood paid. It was also stressed that the surrender of the additional income was admittedly earned from various business transactions carried out in the past outside the books of accounts. In other words, it is assessee’s contention that all the three conditions as laid down in sub section (2) of section 271AAA was fulfilled. Reliance was also placed on various judgments.
I find that the facts of the case at hand, apart from those cited by the assessee, are also covered by the various decisions of the Hon’ble Chandigarh Bench of the Tribunal viz ACIT vs. Munish kumar Goyal reported in 45 Taxmann.com 563; AC1T. CC. Patiala vs. Gian Chand Gupta/ Mohinder Gupta/ Sanjay kumar Gupta in DCIT Central Circle-2, Chandigarh vs. Amarjit Goyal, Aditya Goyal, Krishan Kumar Goyal (ITA no. 1080,1081,1082/2013). The High Court of Allahabad (2014) 222 TAXMAN 26 (Allahabad) in Crossings Infrastructure Pvt Ltd. vs Commissioner of Income Tax (Central) also decided in assessee's favour in which the surrendered amount was disclosed in the revised return filed with taxes paid thereon. Thus without much elaboration, respectfully following the cited orders of the higher judicial forum, the penalty levied of Rs. 75,00,000/- is directed to be deleted.”
Before us, the ld. DR strongly supported the findings of the Assessing Officer.
Per contra, the ld. counsel for the assessee reiterated what has been stated before the lower authorities.
We have given thoughtful consideration to the orders of the authorities below. It is not in dispute that income of Rs. 15 crores was offered as additional income in the statement recorded u/s 132(4) of the Act. The relevant question and answers read as under:
“Q, Do you wish to say anything?
Ans. I wish to state that I, Pradeep Garg, in the capacity as Director of M/s Kundan Rice Miils Ltd. offer voluntary disclosures of additional income of Rs. 15.0 Crores (Rs. Fifteen Crores Only) over and above the regular income of the group companies/associaes/ individuals u/s 132(4) read with section 271 AAA of the Income Tax Act, 1961 for the financial year 2010-11 i.e. relevant assessment year 2011-12. This additional income is being disclosed to buy peace of mind and to avoid litigation and subject to no penalty under Income Tax Act, 1961 This disclosed amount i$~mainly earned from business income. I offer to pay the taxes on this disclosed amount before the due date of filing of return for Assessment Year 2011-12. The bifurcation of this disclosed income will be furnished within weeks time.”
It can be seen from the above that in the statement itself, the assessee has made it very clear that disclosed income is earned from business income. This is further substantiated from the fact that in its profit and loss account, which is at page 4 of the paper book, the assessee has shown income from operations/sales at Rs. 18,130 lakhs which included declared business income of Rs. 75 lakhs as per Schedule 1 at page 8 of the paper book.
In its reply, filed on 25.04.2011, the assessee once again made it clear that additional income is being offered for A.Y 2011-12 and this income was earned as a result of various business transactions, which were not accounted for in the books of account.
This reply was filed before the DIT [INV], Panipat and submissions were reiterated before the ACIT, Central Circle, Karnal on 13.02.2013 and the reply is placed at pages 21 to 23 of the paper book.
Considering these facts on record, we are of the considered view that the assessee has fulfilled all the conditions laid down in section 271AAA of the Act. Therefore, no interference is called for.
In the result, the appeal filed by the Revenue in is dismissed.
The order is pronounced in the open court on 08.01.2020.