INCOME TAX ACT,1961

Section 271AAB

Penalty under section 271AAB - Leviability - -

Search and seizure operation was conducted by IT Authorities at assessee's premises. Jewellery found during search was treated by AO as undisclosed income and AO made addition on account of unexplained investment under section 69 and levied penalty under section 271AAB. Assessee pleaded that total jewellery found from the premises of assessee and finally assessed in term of quantity a well as in term of value was just below 10% and this 10% was due to variation of various factors and this was just purely estimation and on estimation, penalty under section 271AAB could not be levied. AO's case was that penalty under section 271AAB was not diseretionary and was to be levied mandatorily. Held: As evident from charts filed by assessee relating to addition of jewellery, the jewellery was inherited and acquired in this year or received any gift or pertaining to any specified year was not clear. Addition confirmed by CIT(A) remained only to the extent of 10%. The 10% addition sustained on estimate might be on various reasons like valuation of jewellery by estimate in quantity and determination of value i.e., rate. This all depend on the social circumstances, family status and other consideration for holding of jewellery. But, AO could not prove that jewellery pertained to any specified year. Further, the word of 'may' used in section 271AAB clearly indicates that levy of penalty under section 271AAB is not mandatory but AO has discretion to take a decision. Hence, in view of the facts and circumstances, penalty levied by AO under section 271AAB could not be upheld.

Followed:Ravi Mathur, v. Dy. CIT 2019 TaxPub(DT) 3754 (JP-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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