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

Facts

A search action u/s 132(1) was conducted on the assessee. The assessee subsequently declared an undisclosed income of ₹86,51,551/- in its return for A.Y. 2015-16, leading to a penalty under section 271AAB, which was confirmed by the CIT(A). The assessee contended this was a voluntary disclosure, not linked to any incriminating material found during the search or a prior statement under section 132(4).

Held

The Tribunal found that the ₹86,51,551/- was a purely voluntary disclosure by the assessee, not connected to any disclosure made under section 132(4) or incriminating material. It also noted the absence of recorded satisfaction by the AO regarding undisclosed income. Consequently, the Tribunal held that the disclosure did not fall under Section 271AAB and directed the deletion of the penalty.

Key Issues

The key issue was whether penalty under Section 271AAB of the Income Tax Act is applicable to income voluntarily disclosed in the return, without being linked to incriminating material found during a search or a statement recorded under Section 132(4), and in the absence of recorded satisfaction by the Assessing Officer.