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1. The learned CIT (A) has erred in law and facts in confirming penalty levied under section 271 AAA on an amount of Rs.

1,58.68,413/-of penalty levied at Rs. 2,85,65,300/-.

2. The learned CIT(A) has erred in law and facts in holding that amount disclosed Rs. 1,58,68,413/- is undisclosed income as per provisions of section 271 AAA.

3. The learned CIT (A) has erred in law and facts in confirming penalty levied under section 271 AAA on an amount of Rs. 1,58,68,413/- whereas assessee filed appeal before CIT(A) with regard to fact that" assessee has failed to substantiate the manner in which income was derived, when the assessee has duly declared the same as business income and which is accepted and assessed by the AO.

2,85,65,300/-, which is equivalent of 10% of the additional income of Rs. 28,56,53,000/-.

6. The assessee filed a detailed submissions before the CIT(A), contending that the assessee had fulfilled all the conditions as per section 271 AAA. The CIT(A) held that during the year under consideration, the assessee had disclosed undisclosed income for the Asstt. Year under consideration which was accepted by the Assessing Officer and held that the assessee has failed to substantiate the manner of earning the undisclosed income as per explanation to section 271 AAA. The CIT(A) further held following the judgment of Jurisdictional 'Chandigarh Bench' in the case of 'Manohar Infrastructure and Construction Pvt. Ltd. in ITA No. 729/Chd/2016' that for claiming immunity from penalty u/s 271AAA, since the assessee had not been able to substantiate the manner of earning undisclosed income, penalty u/s 271AAA was held to be leviable to the extent of Rs.1,58,68,413/- as the assessee had not disclosed the manner of earning the income of Rs. 1,58,68,413/- only as offered on account of any other discrepancy.

7. Thereafter, the assessee made an application u/s 154 before the CIT(A) which has been reproduced in the order of CIT(A) in Appeal No. 60/CIT(A)-3/GGN/2017-18. In the said application, it was contended that the amount of Rs. 1,58.68,413/- was surrendered to cover any other discrepancy, during the course of search. The addition of Rs. 33,52,000/- made by the AO in the assessment order on account of 'unexplained receipts' was deleted by the ITAT, thus, the appellant could be said to have failed to specify and substantiate the manner of earning, the balance surrender of undisclosed income of Rs. 1,25,16,413/- (Rs. 1,58,68,413/- minus Rs. 33,52,000/-). This amount was, not covered under the provisions of section 271 AAA. Thus, it was held that as per said section 271 AAA, the penalty @ 10% on undisclosed income of Rs. 1,25,16,413/- should have been imposed. It was further submitted that only 10% of the undisclosed income of Rs. 1,25,16,413/-, amounting to Rs. 12,51,641/-could be imposed as penalty. The Ld. CIT (A) vide order, dated 21.09. 2020, accordingly, restricted the penalty to Rs. 12,51,641/- against which, the department has filed an appeal bearing ITA No. 344/Chd/2020.

9. The assessee relied upon the judgement of 'Chandigarh Bench' of the ITAT in the case of Sh. Jarnail Singh Bajwa, one of the group case wherein, under similar facts and circumstances, the penalty u/s 271 AAA has been deleted and in that case also, it was argued that the penalty u/s 271AAA was levied since the assessee had not stated the mode and manner of earning the undisclosed income. Further reliance has been placed on the following judgments:-

i). Chandigarh Bench of the ITAT in the case of Sh. Jarnail Singh., where under similar facts and circumstances, the penalty had been levied u/s 271 AAA, have been deleted.