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

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 ld. CIT (A) as made by the ld. 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/- aggregating to ₹14,40,51,253/- with details of

The facts in brief are that the assessee is a key personal of REI Group of companies. A search and seizure operation u/s 132 of the Act was conducted on 15.06.2011 and subsequent dates on concerns of REI group at various premises in Kolkata and New Delhi. A survey u/s 133A of the Income-tax Act, 1961 (the Act) was also carried out at various places. The assessee being a key person of the group also covered under the said search. During the course of search several books of accounts and other documents were found and impounded. During the course of search , the assessee voluntarily disclosed in the statement recorded u/s 132(4) of the Act an amount of ₹14,14,51,253/- as his net undisclosed income. The assessee submitted that the undisclosed income was derived from the commodity profit in shares. Pertinent to note that the assessee filed the return of income on 31.07.2012, showing total income of ₹16,79,80,980/-, which was inclusive of undisclosed amount of ₹14,40,51,253/-. The assessment was completed u/s 143(3) of the Act vide order dated 27.03.2014, after examining the seized documents and accordingly, the AO accepted the disclosure made by the assessee during the search. The assessee duly explained the nature and source of the income while making the statement u/s 132(4) of the Act. However, the ld. AO initiated the penalty proceedings u/s 271AAA of the Act. The penalty order u/s 271AAA of the Act was passed by the ld. AO on 29.09.2014, by rejecting the contention of the assessee that the undisclosed income of ₹14,40,51,253/- was not backed by any material found during the course of search and the ld. AO in fact recorded that the search

In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee.

After hearing the rival contentions and perusing the materials available on record, we note that the ld. CIT (A) noted that the assessee has disclosed an amount of ₹14,40,51,253/- during search. While filing the return u/s 139(1) of the Act, the said amount was included to the total income and taxes were paid accordingly. The contention of the assessee was that the disclosure was totally voluntarily and without any basis which was rejected by the AO as well as ld. CIT (A). The ld. CIT (A) further noted that PSRD/3, a seized material contained the details of transactions in the Future and Options in shares and commodity profits earned by the assessee. Therefore, there is no merit in the contention of the assessee that it was a voluntarily disclosure. Finally, the order of ld. AO was affirmed by the ld. CIT (A).

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