The Income Tax Appellate Tribunal, Delhi Bench has held that no penalty u/s 271 AAA(1) if assessee offered undisclosed income in statement recorded u/s 132(4) and ready to pay tax with interest.
The assessee, Late Mr. Krishan Kumar Modi was a resident individual. During the course of search and seizure under section 132 of the Act cash of Rs.11,82,500/-. The statement recorded under section 132(4) of the Act in course of search operation, the assessee offered the cash found amounting to Rs.11,82,500/- as its income. The assessee, subsequent to the filing of the original return of income, filed a revised return of income offering the interest income of Rs.29,28,474/- earned on the deposits in the foreign bank accounts.
The AO completed the assessment proceedings and initiated proceeding for imposition of penalty of Rs.12,84,631/- under section 271AAA of the Act alleging that the assessee would not have surrendered the cash found of Rs.11,82,500/- had search and seizure operation not taken place. Against the penalty order passed, assessee preferred an appeal before CIT (A), which confirmed the penalty imposed with the observation that the manner in which cash was derived was not specified by the assessee.
The counsel for the assessee submitted that the assessee is willing to offer the additional income found as a result of search and pay tax on the same. Further submitted by the counsel that while recording the statement under section 132(4) of the Act, since, the authority concerned did not put any specific query regarding the mode and manner in which undisclosed income was derived, the assessee did not give any specific answer.
The Tribunal has observed that at the time of search and seizure operation itself the assessee had offered the cash found of Rs.11,82,500/- as his additional income. The Tribunal further observed that the penalty under section 271AAA(1) cannot be imposed in a case where the assessee has offered the undisclosed income in the statement recorded under section 132(4) of the Act, specifying the manner in which such income has been derived and if the assessee pays the tax along with interest of such income. Hence, the assessee should be given the benefit of the exceptions provided under sub-section (2) of section 271AAA.
The division bench presided by Mr. Saktijit Dey, Judicial Member and Mr. Pradip Kumar Kedia, Accountant Member has held that “a liberal and compassionate view has to be taken qua the imposition of penalty under section 271AAA of the Act. Accordingly, we delete the penalty imposed under section 271AAA of the Act. Grounds are allowed”.
Advocate Mr. Rohit Jain and Ms. Shivangi Jain, CA appeared for the assessee and Smt. Sunita Singh appeared for the respondent.
Comments