SANDIP JHUNJHUNWALA,,KOLKATA vs. DCIT, CENTRAL CIRCLE 4(3),, KOLKATA

ITA 2483/KOL/2025Status: DisposedITAT Kolkata20 January 2026AY 2012-201311 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty imposed under Section 271AAA of the Income Tax Act, 1961, was not imposable. The Tribunal noted that Section 271AAA(2) provides that no penalty shall be imposed if the assessee, in the course of search, admits the undisclosed income and specifies the manner in which it was derived, substantiates the manner, and pays the tax together with interest. The Tribunal found that the assessee had satisfied all three conditions: admitting the undisclosed income of ₹14,40,51,253/-, specifying the manner of derivation (commodity and share profits), substantiating the manner with documents and explanations, and paying the taxes thereon along with interest while filing the return of income. The Tribunal observed that the AO and CIT(A) had acknowledged the disclosure and payment of taxes. The Tribunal relied on its co-ordinate bench decision in SPS Steel & Power Ltd. vs. ACIT and other High Court judgments, which held that penalty cannot be levied merely on admission without conclusive evidence of concealment. Therefore, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the penalty. No issue was expressly left undecided.

What were the facts?

The assessee, Sandip Jhunjhunwala, is an appellant before the Income Tax Appellate Tribunal (ITAT) challenging an order of the Commissioner of Income-tax (Appeals) dated 03.09.2025 for Assessment Year 2012-13. The appeal concerns a penalty of ₹1,44,05,125/- levied by the Assessing Officer (AO) under Section 271AAA of the Income Tax Act, 1961. This penalty was confirmed by the CIT(A). The penalty was imposed on undisclosed income of ₹14,40,51,253/-, derived from commodity profits and share profits. A search and seizure operation under Section 132 was conducted on 15.06.2011, during which the assessee voluntarily disclosed this amount as net undisclosed income, specifying it was from commodity and share profits. The assessee filed a return of income including this amount, and taxes were paid. The AO initiated penalty proceedings, rejecting the assessee's contention that the disclosure was voluntary and without basis, noting that a seized document (PSRD/3) contained details of these transactions.

What were the issues?

1. Whether the penalty imposed under Section 271AAA of the Income Tax Act, 1961, is valid when the assessee, during the course of a search, admitted the undisclosed income, specified the manner in which it was derived, substantiated the manner, and paid the tax together with interest thereon, as stipulated in Section 271AAA(2)? Assessee's Contention: The assessee argued that the penalty levied under Section 271AAA is invalid because all three conditions stipulated in Section 271AAA(2) of the Act were satisfied. The assessee voluntarily disclosed the income, specified its source (commodity and share profits), substantiated the manner of derivation, and paid the taxes along with interest in the return of income. The assessee relied on various High Court decisions, including CIT v. Sarda Rice and Oil Mills, CIT vs. M. Pachamuthu, CIT vs. M. George & Brothers, Commissioner of Income-tax v. Rajiv Garg, and CIT vs. Haji Gaffar Haji Dada Chini, to argue that penalty cannot be levied merely on admission without conclusive evidence of concealment. Revenue's Contention: The revenue, through the AO and subsequently upheld by the CIT(A), contended that the disclosure was not entirely voluntary and was backed by material found during the search (document PSRD/3). The AO rejected the assessee's claim that the disclosure was without basis and imposed the penalty.

Which sections of the Income-tax Act were involved?

Section 271AAA,Section 132(4),Section 133A,Section 139(1),Section 143(3),Section 69C,Section 271(1)(c),Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

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

For Appellant: Shri S.K. Tulsian &, Ms. Sonam Bajoria, ARs
For Respondent: Shri S.B. Chakraborthy, DR
Hearing: 06.01.2026Pronounced: 20.01.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-27 (hereinafter referred to as the “Ld. CIT(A)”] dated 03.09.2025 for the AY 2012-13. 2. The only issue raised by the assessee in the various grounds of appeal is against the confirmation of penalty of %1,44,05,125/- by the Id. CIT (A) as made by the Id. AO u/s 271AAA of the Act, whereas during the course of assessment proceedings as well as during penalty proceedings, the modus operandi of earning the undisclosed income from commodity profits of %4,40,05,942/- and profit in shares of %10,00,45,313/- aggreg

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 271AAA

All 606 judgments and leading authorities on Section 271AAA →

Recent GST High Court judgments

Search GST case law →