M/S RIVER VALLEY FLOUR MILLS PVT LTD,PATNA vs. ACIT, CENTRAL CIRCLE-1, PATNA

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ITA 14/PAT/2025Status: DisposedITAT Patna10 March 2025AY 2015-164 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty levied under Section 271AAB of the Income Tax Act, 1961, was not sustainable. The Tribunal noted that while the assessee was subjected to a search, the amount of ₹86,51,551/- offered and disclosed in the return of income for AY 2015-16 was not part of any disclosure made under Section 132(4) of the Act during the search. The Tribunal found that this disclosure was purely voluntary and not linked to any incriminating material found during the search or any statement recorded under Section 132(4). Therefore, it did not fall within the ambit of Section 271AAB. Furthermore, the Tribunal observed that there was no satisfaction recorded by the AO, either in the assessment order or the penalty order, regarding the undisclosed income. Consequently, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the penalty. The Tribunal expressly left undecided any issue beyond the validity of the penalty under Section 271AAB.

What were the facts?

The assessee, M/s River Valley Flour Mills Pvt. Ltd., is in appeal against the order of the CIT(A), Patna-3, dated 31.12.2024, for Assessment Year 2015-16. The appeal challenges the upholding of penalty under Section 271AAB of the Income Tax Act, 1961, levied by the Assessing Officer (AO). The assessee was subjected to a search under Section 132(1) on 17.08.2014. During the assessment proceedings, the AO noted that the assessee offered an amount of ₹86,51,551/- as undisclosed income found during the search and initiated penalty proceedings. The AO imposed a penalty of 10% on this amount. The CIT(A) confirmed the penalty, holding that the amount fell within the definition of undisclosed income and that the AO had passed a speaking order.

What were the issues?

1. Whether the penalty levied under Section 271AAB of the Income Tax Act, 1961, is valid when the Assessing Officer (AO) has not recorded any satisfaction regarding undisclosed income or undisclosed books of accounts, documents, etc., during the assessment or penalty proceedings. Assessee's Contention: The assessee argued that the AO failed to record any satisfaction regarding undisclosed income or undisclosed assets, which is a prerequisite for levying penalty under Section 271AAB. The assessee also contended that the disclosure of ₹86,51,551/- was a voluntary disclosure in the return of income for AY 2015-16 and was not linked to any disclosure made under Section 132(4) of the Act during the search, thus not falling within the ambit of Section 271AAB. Revenue's Contention: The revenue, through the CIT(A)'s order, contended that the term 'undisclosed income' as defined in the explanation to Section 271AAB(1) is broad enough to include entries in books of accounts or transactions found during search that were not previously disclosed. The revenue argued that the AO had passed a speaking order and correctly applied the provisions of Section 271AAB(1A)(b) and the ratio of the Supreme Court decision in MAK Data Pvt. Ltd.

Which sections of the Income-tax Act were involved?

Section 271AAB,Section 132(1),Section 142(1),Section 143(2),Section 132(4),Section 153A,Section 271AAB(1),Section 271AAB(1A)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “PATNA” BENCH, PATNA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Shri S.K. Tulsiyan, AR
For Respondent: Shri Ashwani Kr. Singal, DR
Hearing: 04.03.2025Pronounced: 11.03.2025

(Assessment Year:2015-16) M/s River Valley Flour Mills ACIT, Central Circle-1 Pvt. ltd. 219, Ashiana Towers, Exhibition Patna, Bihar Vs. Road, Patna-844101, Bihar (Respondent) (Appellant) PAN No. AAACD8209P Assessee by : Shri S.K. Tulsiyan, AR Revenue by : Shri Ashwani Kr. Singal, DR Date of hearing: 04.03.2025 Date of pronouncement : 11.03.2025 O R D E R Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the Commissioner of Income Tax, Patna-3 (hereinafter referred to as the “Ld. CIT(A)”] dated 31.12.2024 for the AY 2015-16.

2.

The only issue raised in various grounds of appeal is against the order of ld. CIT (A), Patna-3, upholding the levy of penalty u/s 271AAB of the Act by the ld. AO, where the ld. AO has not recorded any satisfaction about the undisclosed income or undisclosed books of accounts, documents, money, bullion, jewellery or valuable article or thing even during the course of assessment or levy of penalty.

3.

The facts in brief are that the assessee was subjected to search action u/s 132(1) of the Act on 17.08.2014, covering the residential and business premises of Gupta Nutrition Group of cases. The group is engaged in manufacturing and sale of atta, maida, sujji, bran etc. and has been pioneer in establishing flour mills in Bihar. The assessee

4.

In the appellate proceedings, the ld. CIT (A) confirmed the penalty by observing and holding as under:-

6.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 11.03.2025.

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