SMT. PREETI LAMBA,NEW DELHI vs. DCIT, FARIDABAD

PER R.K. PANDA, AM:

3. Facts of the case, in brief, are that the assesee is an individual and drives income from salary from M/s. Imperial Auto Industries Limited, Faridabad. The assessee also derives income from house property, business income, capital gain and income from other sources. A search and seizure operation u/s. 132 (1) of the IT Act was conducted in the group cases of M/s. Imperial Auto Industries Limited during which the residential premises as well as office premises of the assessee was also covered. The assessee filed return of income on 27.10.2010 declaring income of Rs.26,33,760/-. The Assessing Officer completed the assessment u/s. 143 (3) r/w section 143 (3) / 153 A(1) (b) of the Act on 28.12.2011 at an income of Rs.26,33,760/-. While completing the assessment, penalty proceedings u/s 271 AAA of the Act were initiated in respect of surrendered income made by the assessee on account of the following :-

1. 1. Voluntary disclosure on account of jewelery of Rs.5,00,000/- 2. Voluntary disclosure on after of income relating to property transaction /advance from property given of Rs.20,00,000/- 4. The Assessing Officer after rejecting the various explanation given by the assessee levied penalty of Rs.2,50,000/- being 10% of the surrendered income to Rs.25 lacs on the ground that the assessee failed to specify and substantiate the manner in which undisclosed income has been earned.

5. In appeal the Ld. CIT(A) confirmed the penalty so levied by the Assessing Officer on the ground that the assessee has not paid the taxes due in respect of the undisclosed income in this case in due time and therefore, the condition for non levy of penalty u/s. 271 AAA of the Act has not been fulfilled with regard to the payment of taxes by the assessee. He, however, held that the assessee has substantiated the manner of earning of the income so surrendered.

6. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal.

7. The Ld. Counsel for the assessee heavily challenged the order of the CT(A) in upholding the penalty levied by the Assessing Officer on all together a different ground. He submitted that the assesee has surrendered the income of Rs. 25 lakhs during the year under consideration and filed return of income disclosing the same. Assessee has substantiated the manner of earning of such income and paid the taxes due on such surrendered income. He submitted that while the Assessing Officer levied penalty on the ground that assessee could not substantiate the manner of earning of such income, the Ld. CIT(A) accepted the contention of the assessee that the asessee has substantiated the manner in which undisclosed income was derived. However, he had wrongly mentioned that assessee has not paid the taxes due on such surrendered income in due time. Referring to the copy of form No.26AS he submitted that the assessee has deposited the amount of Rs.7,72,500/- on 04.01.2010 which is evident from the said form No.26AS. He submitted that the Ld. CIT(A) without considering this entry has considered the other entries which were paid /deposited on various other dates. He accordingly submitted that since the manner of satisfaction of income has been accepted by the CIT(A) and since the assessee has deposited the tax due on the surrendered income prior to the date of filing of return, therefore, penalty u/s. 271 AAA cannot be levied.

In view of the facts of the case, submissions made by the appellant and following the judicial pronouncement on this issue including the above decision of Hon’ble ITAT Chandiarh Bench, the contentions of the appellant with regard to the second condition of substantiating the manner in which the undisclosed income was derived is accepted.

by the assessee are accordingly allowed.

13. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 29.05.2019.