INCOME TAX ACT, 1961

Section 271AAB & Section 271(1)(c) & 271AAA

Penalty under section 271AAB - Leviability - Applicability of clauses (a) to (b) of Explanation to section 271AAA - Specified previous year--Only statement of assessee sufficient to levy penalty

Search had been conducted on 4-10-2012 at assessee's business and residential premises. The same led to undisclosed income disclosure including cash, jewellery/other valuables and other income derived from dairies business, real estate business and financial activities transactions. The AO thereafter framed the assessment in issue accepting assessing income as returned on 27-3-2015. There was further no quarrel that the said assessment attained finality at this stage itself. AO's penalty order dated 29-9-2015 held that the assessee's undisclosed income during the search in issue attracted the impugned penal provision being a clear-cut inistance of unbearing of undisclosed income. He therefore declined the taxpayer's written submissions dated 17-8-2015 pleading therein that there was no evidence pinpointing any undisclosed income or assets found or seized during the course of search. The AO thus levied the impugned penalty. CIT(A) had partly affirmed the impugned penalty to the extent of the undisclosed income corroborating evidence found/seized during the course of search. Held: Only the statment of the assessee without any corroborating evidence cannot be the basis for levying penalty. It was also clear that from the statement of the assessee one cannot point out which amount of undisclosed income pertains to which specified previous year. In this situation. Where nothing was clear from assessee's statement recorded at the time of search, the action of the AO to levy penalty under section 271AAB(1)(c) on the amount offered by the assessee suo moto to buy peace of mind, cannot be justified. The AO was therefore, directed to calculate and levy penalty under section 271AAB(1)(c) on cash found only. In AKA Logistics (P) Ltd. it was held that the 'specified previous year' in terms of sub-clause (i) of clause (b) of Explanation to section 271AAA becomes the year ending 31-3-2012, being, the previous year which ended before the date of search on 4-10-2012. Going by this interpretation of the provision, the assessment year 2013-14 could not be considered as the 'specified previous year'. The assessee in the present case contended that AO's penalty show-cause notice nowhere specified the limb in issue pertaining to undisclosed income component as to whether the same related to income or expenditure side. The Tribunal found no merit in assessee's instant technical plea going by co-ordinate bench's decisions.

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