INCOME TAX ACT, 1961

Section 271AAB Section 132 Section 132/132(4)/158BBE

Penalty under section 271AAB - Undisclosed income - Surrender of income by assessee without any seized material -

During the course of search and seizure action, certain loose papers were found and seized in respect of furniture and fixture in residential house situated in the name of assessee's wife. During the course of statement recorded under section 132(4), the assessee surrendered an income of Rs. 10.00 lacs on this account. Assessee filed the return of income for the year under consideration declaring total income at Rs. 13,68,700 including the surrendered income of Rs. 10.00 lacs. The assessment was completed under section 143(3) read with section 153B(1)(b) at the returned income. However, the AO held that income of Rs. 10.00 lacs was assessable under section 69 and therefore, the same was taxable @ 30% as per the provisions of section 115BBE. AO also initiated the penalty proceedings under section 271AAB and levied the penalty of Rs. 3.00 lakhs being 30% of undisclosed income of Rs. 10.00 lakhs due to the reason that return of income filed by the assessee was belated beyond the time prescribed provided under section 139(1). CIT(A) confirmed the penalty levied by the AO under section 271AAB while passing the impugned order. Held: Penalty under section 271AAB is not ipso facto as a result of surrender or disclosure of income by the assessee during the course of search and seizure action. If the definition of undisclosed income provided under Explanation to section 271AAB is applied to the facts of the present case seized documents which was Plan and Map of a residential house in the name of assessee's wife containing only the design of the house as well as electric plan. Therefore, the said seized documents itself did not reveal any undisclosed income or any other unaccounted expenditure. There was nothing either in the proceedings under section 132 or in the statement recorded under section 132(4) regarding unaccounted expenditure incurred by the assessee on construction of house. When the said income was not represented by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions then even if the assessee had surrendered a sum of Rs. 10.00 lacs as unaccounted expenditure, the same would not fall in the ambit of undisclosed income as defined in explanation to section 271AAB. In the absence of any undisclosed income revealed by said sized materials, the income surrendered by the assessee, therefore, cannot be said to be undisclosed income for the purpose of section 271AAB, the same would therefore, not attract the levy of penalty under section 271AAB.

Followed:Ravi Mathur v. Dy. CIT [ITA No. 969/JP/2017, dated 13-6-2018] : 2019 TaxPub(DT) 3754 (Jp-Trib).

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