INCOME TAX ACT, 1961

Section 271AAB

Penalty under section 271AAB - Leviability - Notings relating to cash advances given to various persons found during search -

During the course of search, a note book (diary) has been found wherein there were certain notings relating to cash advances given to various persons totaling to Rs. 82 lakhs. In his statement recorded under section 132(4), assessee did specify complete particulars of persons to whom loans were given and also failed to substantiate the same. Accordingly, AO treated such entries/notings representing undisclosed income of assessee and levied penalty under section 271AAB. Held: In the definition of 'undisclosed income', where it talks about 'income by way of any entry in the books of account or other documents or transactions found in the course of a search under section 132', what perhaps has been envisaged by legislature is an inflow of funds in the hands of the assessee which has been found by way of any entry in books of account or other documents, and which has not been recorded before the date of search in the books of account or other documents maintained by the assessee in the normal course and not vice-versa. A cash advance per se represents as an outflow of funds from assessee's hands and an income per se represents an in flow of funds in the hands of assessee. Giving an advance and income thus connotes different meaning and thus cannot be used inter- changeably. Accordingly impugned cash advance could not be treated as undisclosed income merely based on surrender and generalized statement of assessee, in absence of anything specific to corroborate such entries. Also, deeming fiction as envisaged under section 69 and section 69B could not be extended and applied automatically in context of section 271AAB, therefore, penalty under section 271AAB was deleted.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

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