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Income Tax Appellate Tribunal, MUMBAI BENCH “J” MUMBAI
Before: SHRI JOGINDER SINGH & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the assessee. The relevant assessment year is 2014-15. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-52 [in short ‘CIT(A)’], Mumbai and arises out of the penalty levied u/s 271AAB of the Income Tax Act 1961, (the ‘Act’). Though the case was fixed for hearing on 03.07.2018, neither the assessee nor his authorized representative appeared on the above date. Hence, we decide the appeal after hearing the Ld. DR and examining the relevant materials on record.
The grounds of appeal
read as under:
1. The Ld. CIT(A) has erred in confirming the penalty levied @ 10% U/s 271AAB of the Income Tax Act, 1961 of Rs.2,70,000/- on the ground that appellant has undisclosed investment in jewellery to the tune of Rs.27,00,000/-. It is submitted that Ld. CIT(A) and Assessing Officer failed to consider the submission made during the appellate and assessment proceedings respectively. It is prayed to your honour to delete the penalty and necessary direction should he given in this regard.
2. The Ld. CIT(A) further erred in enhancing the penalty by Rs.5,40,000/- being difference between penalty levied @ 30% of Rs.27,00,000/- by invoking clause (c) to subsection (1) of section 271 AAB of income Tax Act, 1961. It is submitted that such action of enhancement was considered by drawing inference that the appellant did not disclose the amount of addition of Rs.27,00,000/- while filing return of income. It is prayed to your honour to cancel such enhancement of penalty and necessary direction should be given in this regard.
3. A search and seizure action u/s 132 of the Act was carried out in the case of Balalji group on 30.04.2013 by the Deputy Director of Income Tax (Investigation)-IX(1), Mumbai. The assessee-group was engaged in the business of production of TV serials and films. In the instant case, the assessee filed his return of income on 31.07.2014, subsequent to the search, declaring total income at Rs.14,75,550/-. During the course of search at the residential premises and bank lockers the following jewellery was found S. No. Particulars Weight Amount(Rs.)
1. Diamond Jewellery 51.70 gms 2,70,705 2. Gold Jewellery 755.50 gms 18,88,820 3. Gold Bar 700.00 gms 19,25,000
4. Silver items 14.98 kg 5.04,990 Total 45,89,515/- The Assessing Officer (AO) referred to the CBDT Instruction No. 1916 dated 11.05.1994 and observed that gold jewellery of 500 gms for married woman, 250 gms for unmarried daughters and 100 gms for male are treated as explained. Accordingly, in the case of the present assessee gold jewellery of 775 gms was treated as explained. However, the AO treated the gold bars, diamond jewellery and silver items as unexplained, since the assessee was not having any evidence to prove the source of investment. Thus, Rs.27,00,000/- was held by the AO as unexplained. During the course of statement recorded u/s 132(4) on 18.06.2013, the assessee accepted the discrepancy and requested the AO not to seize the said jewellery, for which he submitted pay orders of Rs.27,00,000/-. In the assessment order dated 18.05.2015, the AO made an addition of Rs.27,00,000/- as unexplained investment to the total income of Rs.14,75,550/- shown by the assessee. Thus the total assessed income comes to Rs.41,75,550/-. In the penalty proceedings, the AO observed that the assessee in his statement recorded on 21.05.2013 had admitted jewellery worth Rs.27,00,000/- as undisclosed investment. However, the assessee failed to furnish the relevant bank statement as most of these payments were Shri Jagdishchandra B. Mundra made in cash. Thus the AO came to a conclusion that the investment made by the assessee in jewellery remained unexplained. On the basis of the above facts, the AO levied a penalty of Rs.2,70,000/- (10% of Rs.27,00,000/-) u/s 271AAB of the Act.
Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) referred to Explanation 5A to section 271(1) and held that as the assessee failed to include the income of Rs.27,00,000/- in the return filed subsequent to search and also failed to pay taxes on the above amount of Rs.27,00,000/-, therefore, he is liable for penalty @ 30% as against @ 10% levied by the AO. Accordingly, the Ld. CIT(A) enhanced the penalty to Rs.8,10,000/- from Rs.2,70,000/-.
Before us, the Ld. DR supports the order passed by the Ld. CIT(A). It is submitted that as the assessee did not disclose the amount of Rs.27,00,000/- while filing the return of income subsequent to search nor paid due taxes on the above amount, the order passed by the Ld. CIT(A) be upheld.
We have heard the Ld. DR and perused the relevant materials on record. In the instant case a search and seizure action was conducted by the revenue in the case of the assessee-group on 30.04.2013. We find that section 271AAB is applicable if- (a) a search is initiated u/s 132 on or after July 1, 2012 ; (b) there is some “undisclosed income” ; and (c) undisclosed income pertains to a “specified previous year”.