SH. PADAM SINGHEE,NEW DELHI vs. DCIT, NEW DELHI

The appeal has been preferred by the Assessee against the order dated 31.07.2014 of CIT(A)-XXXI, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) arising out of an appeal before it against the order dated 27.09.2013 passed u/s 271AAA of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the DCIT, Circle-11, New Delhi (hereinafter referred as the Ld. AO). 2. Assessee is in appeal raising following grounds : “

1. The order passed is illegal, invalid, and bad in law.

2. The Penalty levied at Rs. 42,65,000/- is unjustified and unwarranted.

3. That on the facts and the circumstances of the case and in law, the penalty shall not be levied ordinarily where the assessee is not at fault or guilty of misconduct. The Ld. AO and Commissioner of Income Tax (Appeals) erred by levying penalty on the appellant without any finding/proving anything on record in relation to the additional income. Hence the penalty levied is uncalled and without any basis.

4. That on the facts and the circumstances of the case, the Ld CIT (A) and the Ld Assessing Officer erred by considering that the appellant fails to fulfill the conditions of section 271 AAA of the Income Tax Act, 1961. Whereas the appellant has truly disclosed all the facts in the course of search whatever being asked by the oath administrator. Hence, penalty levied is against the provisions of the law and shall be deleted. 5. That on the facts and the circumstances of the case, the judgment of Hon'ble Supreme Court in the case of Hindustan Steel v. State of Orissa (1972) 83 ITR 26 still hold good and applicable to the appellant’s case. Hence the penalty levied is unjustified. 6. The above grounds of appeal

are without prejudice to one another.

7. The assesee craves leave to add, amend, alter or forgo any of the grounds at the time of or before the hearing.”

(2) Nothing contained in sub-section (1) shall apply if the assessee,— (i ) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii ) substantiates the manner in which the undisclosed income was derived; and (iii ) pays the tax, together with interest, if any, in respect of the undisclosed income. (3) No penalty under the provisions of clause (c) of sub- section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub- section (1). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation.—For the purposes of this section,— (a ) "undisclosed income" means—

(i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has— (A ) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B ) otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of the search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted; (b ) "specified previous year" means the previous year— (i) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted.’