| The Tax Publishers2019 TaxPub(DT) 8178 (Del-Trib) : (2019) 076 ITR (Trib) 0698 INCOME TAX ACT, 1961
Section 271AAA
As per law, it was incumbent upon the AO to first establish that there was undisclosed income within the meaning of section 271AAA before any penalty under the said section could be levied. Further, no penalty can be imposed when the income was determined on the basis of estimation.
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Penalty under section 271AAA - Leviability - Penalty order devoid of any specific findings in respect of any specific seized material or undisclosed income detected as a result of search - Income determined on the basis of estimation
AO made quantum additions that were deleted by CIT(A). Further, considering that the assessee was involved in providing accommodation entries, commission income was estimated and addition in respect of pay orders and cash were also made by CIT(A). Thereafter, the AO worked out undisclosed income and levied penalty under section 271AAA @ 10% of undisclosed income. Assessee contended that the provisions of section 271AAA did not apply as the commission income had been estimated by the CIT(A). Further, as no specific seized documents or statements of the assessee had been pointed out, which might suggest that the amount on which penalty was proposed to be levied was undisclosed income within the meaning of section 271AAA. CIT (A), however, deleted the penalty levied by AO. Held: As per law, it was incumbent upon the AO to first establish that there was undisclosed income within the meaning of section 271AAA before any penalty under the said section could be levied. However, bare perusal of the penalty order showed that the AO had levied the penalty mechanically as the entire penalty order was devoid of any specific findings in respect of any specific seized material or undisclosed income detected as a result of search. Moreover, as the quantum of income confirmed by the CIT(A) was purely on estimate basis and estimated income could not be said to be undisclosed income within the meaning of section 271AAA, thus, said penalty could not be imposed.
REFERRED : PCIT v. Ritu Singal (2018) 92 Taxmann.com 224 (Del) : 2018 TaxPub(DT) 1396 (Del-HC),Durga Kamal Rice Mills v. CIT (2004) 265 ITR 25 (Cal) : 2004 TaxPub(DT) 0570 (Cal-HC), and Anand Sancheti v. DCIT [I.T.A. No.305/Nag/2015, dt. 22-9-2015]
FAVOUR : In assessee's favour
A.Y. : 2012-13
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