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d) The return was selected for scrutiny assessment. Compliance to notices u/s 143(2) and 142(1) were duly made. Assessment Order for AY 2013-14 was passed u/s 143(3) on 06-06-2014 at a total income of Rs.3,96,04,140/-.

e) Penalty proceedings was initiated separately on the disclosure amount of Rs.2,79,15,065/- u/s 271AAB of the Income Tax Act, 1961

f) During the course of penalty proceeding, it had been stated that out of such offering of Rs.2,79, 15,065/-, an amount of Rs.2,60,00,0001 - was not backed by any evidence of undisclosed income or any undisclosed assets 1 items that had been found / inventorised by the Department. Hence, such suo moto offering of Rs.2,60,00,0001- does not come under the purview of "undisclosed income" as explained in Explanation (c) of Section 271AAB and hence the penalty provision cannot be invoked on such figure of Rs.

8. Thus, it is clear that in order to levy penalty two things are essential (1) undisclosed income and (2) specified previous year. Here in this case Rs.2,60,00,000/- was offered for taxation by the assessee suo motu in the statement recorded at the time of search. Form the ratio decided by the Hon'ble Supreme Court in the case of Sudarshan Silk & Saries (supra), it is clear that only the statement of the assessee without any corroborating evidence cannot be the only basis for levying penalty. Here it is 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 is clear from assessee's statement to levy penalty u/s. 271AAB(1) on the amount offered by the assessee suo moto to buy peace of mind, cannot be justified. The Hon'ble Supreme Court has also categorically decided the ratio that penalty cannot be levied on the amount offered by the assessee in order to buy peace of mind [in the case of Sudarshan Silk & Saries (supra)]. Thus, respectfully following the ratio decided by the Hon'ble Supreme ITA No.1605 & CO. 99/Kol/2017 A.Y. 2013-14 DCIT, CC-2(3), Kol. Vs. Sh Liadhar Agarwala Page 5 Court, the AO is directed to calculate and levy penalty u/s 271AAB(1)(a) on Rs.19,15,065/- only. Accordingly, assessee's appeal on grounds no 1, 2 and 3 are partly allowed."

4. Learned CIT.DR vehemently contends during the course of hearing that the Assessing Officer had rightly invoked the impugned penal provision as stipulated u/s 271AAB on account of search operation in issue conducted in assessee's case on 20.12.2012. He heavily relies upon assessee's admission stating his undisclosed income of ₹2,79,15,065/-. His case therefore is that the same formed sufficient reasons for the Assessing Officer to imposed the impugned penalty. We sought to know from learned CIT-DR as to whether the authorized officer had found any specified asset i.e. any money, bullion, jewellery or other valuable article or things as per explanation (c) forming of sec. 271AAB. There is no such material indicated during the course of hearing. We find that co-ordinate bench's order in ITA No.538/Kol/2017 in ACIT vs. Sri Kanwar Sain Gupta decided on 29.06.2018 declines Revenue's identical arguments para 3-4 follows as under:-

Further I find that the AO has levied penalty u/s 271AAB (1)(a). This section reads like sum computed at the rate of ten per cent of the undisclosed income of the specified previous year.

Thus, it is clear that in order to levy penalty two things are essential (1) undisclosed income and (2) specified previous year. Here in this case Rs.1 crore was offered for taxation by the assessee suo moto in the statement recorded at the time of search. From the ratio decided by the Hon'ble Supreme Court in the case of Sudarshan Siik & Saries (supra), it is clear that only the statement of the assessee without any corroborating evidence ITA No.1605 & CO. 99/Kol/2017 A.Y. 2013-14 DCIT, CC-2(3), Kol. Vs. Sh Liadhar Agarwala Page 6 cannot be the only basis for levying penalty. Here it is 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 is clear from assessee's statement recorded at the time of search, the action of the AO to levy penalty u/s 271AAB(1)(a) on the amount offered by the assessee suo moto to buy peace of mind, cannot be justified. The Hon'ble Supreme Court has also categorically decided the ratio that penalty cannot be levied on the amount offered by the assessee in order to buy peace of mind (in the case of Sudarshan Silk & Saries (supra)]. Thus, respectfully following the ratio decided by the Hon'ble Supreme Court, the AO is directed to delete the penalty u/s 271AAB(1)(a). Accordingly, assessee's appeal on grounds no 1, 2 and 3 are allowed. "