ADITYA SATISH PARAKH,,NASHIK vs. ASSISTANT COMMISSIONER OF INCOME-TAX,,

The brief facts of the case as emanating from records are : A search and seizure action u/s. 132 of the Act was conducted in the case of Ashoka Group on 20-04-2010. The assessee was part of Ashoka Group, therefore, was covered under the search. The assessee had not filed any return of income u/s. 139 of the Act. In response to notice u/s. 153A the assessee filed return of income on 17-10-2011 declaring total income of Rs.28,30,517/-. The income returned by the assessee was accepted by Assessing Officer. However, the Assessing Officer initiated penalty proceedings u/s. 271AAA in respect of cash payments made by assessee on „Visar Pavti‟ qua two parcels of land i.e. : i. Land at Kukne, Taluka Igatpuri, Gut No. 1018 Rs.6,12,500/-. ii. Land at Gangavarhe, Taluka Nashik, Gut No. 46/1 Rs.1,00,000/-.

Shri Pramod Shingte appearing on behalf of the assessee submitted that the return filed by the assessee in response to notice u/s. 153A was accepted by the Assessing Officer without making any further addition. The assessee in computation of income had disclosed the manner of

On the other hand Shri M.K. Verma representing the Department vehemently defended the order of Commissioner of Income Tax (Appeals). The ld. DR submitted that the assessee has failed to substantiate the manner in which additional income declared during search was derived by the assessee. The ld. DR prayed for upholding the impugned order and dismissing the appeal of assessee.

Both sides heard. Orders of authorities below perused. It is an admitted fact that the income disclosed by the assessee in the return of income filed in response to notice u/s. 153A was accepted by the Assessing Officer without further addition. The Assessing Officer initiated penalty proceedings u/s. 271AAA in respect of alleged cash payments made by the assessee in respect of two parcels of land. Immunity from levy of penalty u/s. 271AAA is allowed to the assessee if three conditions are satisfied : i. The assessee should be able to specify the manner in which income disclosed in statement recorded u/s. 132(4) has been derived. ii. Substantiate/corroborate the manner in which the undisclosed income is derived. iii. Pays tax along with interest, if any in respect of undisclosed income.

In the present case, in so far as condition Nos. i and iii mentioned above are concerned, the Revenue has raised no dispute. It is only the condition No. ii that the Revenue is not satisfied with the explanation furnished by the assessee. We find that along with the return of income the assessee has furnished explanation and circumstances resulting in generation of additional income Rs.7,12,500/-. The relevant extract of the explanation furnished by assessee reads as under : “3) Additional income of Rs.7,12,500/- comprise of – i) Difference of Rs.5,62,500/- in the price of land at G. No. / S. N. 1018 of Mukane, Tal : Igatpuri, as per Visar Pavati dated 27/02/2010 and Purchase Deed dated 18/03/2010 is on account of negotiated reduction in price paid for land due to falling market. However, assessee apprehends that this explanation of assessee may not be acceptable to the I.T. Dept. Authorities. Hence, to avoid litigation and to buy peace of mind, assessee has declared the said sum of Rs.5,62,500/-, as his additional income for A.Y. 2010-11. ii) Similarly, source for the advance payment of Rs.1,00,000/- against purchase of land at S. No. 46/1 of Gangavarhe, Nashik to Mr. W.H. Gaikar and of Rs.50,000/- against purchase of land at G. No./S. No. 1018 of Mukane, Tal: Igatpuri, can be explained. However, assessee apprehends that his explanation may not be acceptable to the I.T. Authorities. Therefore, with a view to avoid litigation and to buy peace of mind, assessee has declared both the said sums aggregating to Rs.1,50,000/- as his additional income for A.Y. 2010-11.”

A perusal of reasoning given by the assessee sufficiently explains the reason for disclosing additional income and hence, the condition specified in Clause (ii) of Sub-section (2) of section 271AAA is complied with.

The Chandigarh Bench of the Tribunal in the case of ACIT Vs. Munish Kumar Goyal reported as 45 taxmann.com 563 deleted levy of penalty u/s. 271AAA where the assessee surrendered certain income in the course of search, filed the return disclosing the said amount and paid taxes thereon. The Tribunal held that there is sufficient compliance of provisions of section 271AAA(2) of the Act.

In the result, the appeal of assessee is allowed.