INCOME TAX ACT, 1961

Section271AAB

Penalty under section 271AAB - Surrender of undisclosed income under section 132(4) - Non-specification of clause under which undisclosed income falls -

It is a pre-condition for invoking the provisions of section 271AAB that the said income disclosed by the assessee in the statement under section 132(4) was an undisclosed income as per the definition provided under section 271AAB. Question arises was whether the levy of penalty under section 271AAB is mandatory and consequential to the disclosure of income by the assessee under section 132(4) or the AO had to take a decision whether the given case had satisfied the requirements for levy of penalty under section 271AAB.Held: The AO in the proceedings under setion 271AAB has to examine all the facts of the case as well as the basis of the surrender and then arrive to the conclusion that the income disclosed by the assessee falls in the definition of undisclosed income as stipulated in the explanation to the said section. The levy of penalty under section 271AAB is not mandatory but the AO has a discretion after considering all the relevant aspects of the case and then to satisfy himself that the case of the assessee falls in the definition of undisclosed income as provided in the Explanation to section 271AAB. The AO in the show cause notice had neither specified the grounds and default on the part of the assessee nor even specified the undisclosed income on which the penalty was proposed to be levied. The show cause notices issued by the AO for initiation of penalty proceedings under section 271AAB were very vague and silent about the default of the assessee and further the amount of undisclosed income on which the penalty was proposed to be levied. This issue was decided in favour of the assessee by holding that the initiation of penalty was not valid and consequently, the order passed under section 271AAB was not sustainable and liable to be quashed.

Relied:Shevata Construction Co. (P) Ltd. DBIT Appeal No. 534/2008 dt. 6-12-2016, CIT v. Manjunatha Cotton & Ginning Factory, (2013) 359 ITR 565 (Karn) : 2014 TaxPub(DT) 202 (Karn-HC), Rambhajo's v. ACIT ITA No. 991/JP/2017, dt. 11-1-2019 and Ravi Mathur v. DCIT ITA No. 969/JP/2017, dt. 13-6-2018. Distinguished:Pr. CIT v. Sandeep Chandak (2018) 405 ITR 648 (All) : 2017 TaxPub(DT) 5170 (All-HC).

REFERRED : Muninaga Reddy v. ACIT (2017) 396 ITR 398 (Karn) : 2016 TaxPub(DT) 4490 (Karn-HC).

FAVOUR : In assessee's favour.

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 271AAB

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