INCOME TAX ACT, 1961

Section 271AAA

Penalty under section 271AAA - Imposition of - Assessee did not disclose the source of undisclosed income unearthed at the time of search -

AO levied penalty under section 271AAA in assessment completed under section 153B(1)(b) read with section 143(3) in pursuance to search and seizure operation under section 132(1) conducted on the ground that assessee did not disclose the source of undisclosed income unearthed at the time of search. AO was of the opinion that for making an exception under section 271AAA, sub-section (2) of section 271AAA provides that assessee must have admitted undisclosed income in the course of search. According to AO as assessee did not disclose/specify manner in which the undisclosed income was derived, and therefore, penalty under section 271AAA was levied. Held: CIT(A) deleted the penalty levied under section 271AAA which was confirmed by Tribunal and revenue failed to question the assessee while recording his statement under section 132 (4) as regards the manner of deriving such income, the Revenue cannot jump to consequential or later requirement of substantiating the manner of deriving the income. It was only when officer of raiding party recording the statement of assessee under section 132(4) elicits a response from assessee's this requirement, assessee's responsibility to substantiate the manner of deriving such income would commence. When the base requirement itself fails, question of denying the benefit of no penalty would not arise. No substantial question of law.

REFERRED : Pr. CIT-2 v. Mukeshbhai Ramanlal Prajapati (2017) 398 ITR 170 (Guj) : 2017 TaxPub(DT) 1985 (Guj-HC) and CIT v. Mahendra C. Shah (2008) 299 ITR 3052008 TaxPub(DT) 1599 (Guj-HC).

FAVOUR : In assessee's favour.

A.Y. :

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