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Income Tax Appellate Tribunal, BENCH ‘B’ KOLKATA
Before: Hon’ble Shri S.S.Godara, JM & Shri M.Balaganesh, AM ]
ORDER PER S.S.GODARA, JM:
This Revenue’s appeal for A.Y.2013-14 falls into question the CIT(A)-20, Kolkata’s order dated 02.01.2017 in Appeal No.1343/CIT(A)-20/CC-2(3)/15-16 reversing the Assessing Officer’s imposing penalty of Rs.10,00,000/- in his order dated 23.02.2016, involving proceedings u/s 271AAB of the Income Tax Act, 1961 (in short the ‘Act ‘ ). Case filed perused. None appeared at assessee’s behest. We therefore proceed exparte against him.
Learned CIT (DR) vehemently contends during the course of hearing that the Assessing Officer had rightly penalised the assessee u/s 271AAB of the Act. There is no dispute that the department had carried out the search in question dated 13.02.2013 and on subsequent dates in M/s Agarwal group of cases. The assesse is one of the connected party to the said searched group. He made section 132(4) disclosure of Rs.1,00,00,000/- under the head “ other business income”. He filed his return dated 31.03.2014 declaring total income of Rs.105,26,260/- as accepted in regular assessment framed on 30.09.2015.
Sri Kanwar Sain Gupta A.Y.2013-14 2
We now come to the impugned penalty proceedings. The Assessing Officer levied penalty in question in his order dated 23.02.2016 by quoting section 271AAB of the Act on the ground that all the relevant conditions stipulated therein stood duly satisfied qua the above stated undisclosed income.
The CIT(A) reverses the Assessing Officer’s action as follows :
“I find that during the search and seizure operation u/s 132 in this case no evidences regarding concealment/undisclosed income in the form of cash seizure/papers/documents/stock etc were found and seized. Nothing incriminating/no evidences were found regarding Rs.1 crore which was offered for taxation by the assessee suo moto in order to buy peace of mind. I also find that neither the officers in the investigation wing in the post search investigation nor the Assessing Officer during assessment process found any discriminating evidence of undisclosed income other than the statement of the assessee for making the addition of Rs.1 crore. Further I find that the AO has levied penalty u/s 271AAB (1)(a).. This section reads like sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. Thus, it is clear that in order to levy penalty two things are essential (1) undisclosed income and (2) specified previous year. Here in this case Rs.1 crore was offered for taxation by the assessee suo moto in the statement recorded at the time of search. From the ratio decided by the Hon’ble Supreme Court in the case of Sudarshan Siik & Saries (supra), it is clear that only the statement of the assessee without any corroborating evidence cannot be the only basis for levying penalty. Here it is also clear that from the statement of the assessee one cannot point out which amount of undisclosed income pertains to which specified previous year. In this situation, where nothing is clear from assessee's statement recorded at the time of search, the action of the AO to levy penalty u/s 271AAB(1)(a) on the amount offered by the assessee suo moto to buy peace of mind, cannot be justified. The Hon'ble Supreme Court has also categorically decided the ratio that penalty cannot be levied on the amount offered by the assessee in order to buy peace of mind [in the case of Sudarshan Silk & Saries (supra)]. Thus, respectfully following the ratio decided by the Hon'ble Supreme Court, the AO is directed to delete the penalty u/s 271AAB(1)(a). Accordingly, assessee's appeal on grounds no l, 2 and 3 are allowed.”
Sri Kanwar Sain Gupta A.Y.2013-14 3
Learned Departmental Representative argued that the Assessing Officer had rightly imposed the impugned penalty in assessee’s case @10% of his undisclosed income of Rs.1 crore coming Rs.10,00,000 in question. We find no substance in Revenue’s instant arguments. We first of all make it clear that section 271AAB of the Act applies in relation to the impugned penalty @10% of the undisclosed income as stood defined in Explanation (c) thereto. There is no material in the case file to indicate that the assessee’s undisclosed income represents any money, bullion, jewellery or valuable article or any entry in the books or other documents therein. We make it clear that we are dealing with a penalty provision in tax statute which is to be strictly interpreted. We therefore are of the opinion that the CIT(A) has rightly deleted the impugned penalty as the assesee’s search statement nowhere indicated the corresponding undisclosed income as per specific requirement in the Act. The CIT(A)’s findings under challenge deleting penalty in question are accordingly confirmed.
This Revenue’s appeal is dismissed.
Order pronounced in the Court on 29.06.2018.