INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Unexplained cash deposits treated as undisclosed income in the relevant assessment year, being the year of search -

Assessee's assessment was framed under section 153A read with section 143(3) and a sum was added towards unexplained cash deposits for which penalty proceedings were initiated under section 271(1)(c) for concealment of particulars of income. Held: It was not in dispute that unexplained cash deposits had been treated as undisclosed income by AO for the relevant assessment year, being a year of search. Hence, the said addition shall not be eligible for levy of penalty under section 271(1)(c) in view of specific provisions contained in section 271AAA(3). Moreover, it was also found that penalty in the instant case under section 271(1)(c) has been levied by AO @200% of the tax sought to be evaded on the undisclosed income. The rate of penalty @ 200% is contemplated only under section 271(1)(c) and not under section 271AAA. It is elementary that the provisions of section 271AAA and Explanation 5A to section 271(1)(c) are distinct and separate and totally operate on two independent fields for different assessment years containing different provisions altogether. Hence, it was erred in levying and confirming the penalty under section 271(1)(c) in the facts and circumstances of the case for the relevant assessment year, being the year of search.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09

SUBSCRIBE FOR FULL CONTENT