INCOME TAX ACT, 1961

Section 271AAB

Penalty under section 271AAB - Leviability - Surrender of undisclosed stock, investment in purchase of land and cash during search -

Assessee-firm was engaged in manufacturing and trading of Gem Stones and Jewellery. During the course of search proceedings, assessee surrendered undisclosed income as regards stock of Kundan Meena, diamond and other gemstones studded jewellery, cash advances for land puurchases and cash found from residence of the partners such undisclosed income had been offered and brought to tax. AO treated amount surrendered as qualifying as undisclosed income for the purposes of levy of penalty under section 271AAB.Held: Difference in stock of jewellery and silver items as per books and as found at the time of search was on account of valuation of such stock at market value, instead of cost and such valuation difference and on account of non-deduction of Chapadi, wax, etc. while weighing the Kundan Meena Jewellery same could not be a basis to hold that it represented undisclosed income so defined in Explanation to section 271AAB. Further, undisclosed investment in purchase of land could not be stated to be income represented by any money, bullion, jewellery or other valuable article or thing. Income by way of any entry in the books of account or other documents or transactions found in the course of a search. Therefore, same could not be said to qualify as an undisclosed income in the contex of section 271AAB read with the Explanation thereto. Therefore, penalty under section 271AAB was sustained to the extent of cash found during search and was deleted on rest of items of surrender made during search in absence of the same qualifying as undisclosed income as defined under section 271AAB.

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 271AAB

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