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4. Let us take up ITA No. 2305/Kol/2016 with regard to cancellation of penalty levied u/s 271AAB of the Act.

5. The revenue had raised the following grounds of appeal before us :-

i) That Ld. CIT(A) erred in facts and circumstances of the case in deleting the penalty imposed on the assessee of Rs. 27,33,800/- u/s 271AAB(1)(a) of the I.T. Act, 1961 on account of disclosure made u/s 132(4) at the time of search on undisclosed stock.
ii) That Ld. CIT(A) failed to appreciate the provision of section 271AAB, as the penalty was imposed @10% of Rs. 2,73,38,000/- which is disclosed at the time of search.

A.Yr.2013-14 explanations offered by the assessee mechanically levied penalty @ 10% amounting Rs. 27,33,800/- u/s 271AAB(1)(a) of the Act.

It is submitted that the penalty proceedings are quasi criminal in nature and the same are distinct and separate from assessment proceedings. Before levying penalty for concealment of income, it is necessary for the authority to prove that sum of Rs. 2,73,38,000/- in fact constituted assessee's 'undisclosed income' and further such income was unearthed or detected as a result of the search u/s 132 conducted against the assessee. In the present case admittedly no such incriminating material was unearthed by the Investigation Wing in the course of search nor was any excess physical stock was found by the IT authorities. The difference in stock had been duly incorporated in the regular stock records prior to the date on which the stock audit report was found and declaration u/s 132(4) was recorded from the Director. The assessee thus submits that the income of Rs. 2,73,38,000/- which it incorporated in its books for the financial year 2012-13 did not in any manner represent 'undisclosed income' of the assessee as contemplated by sec 271AAB of the Act. In the present case the sum of Rs. 2,73,38,000/- was incorporated by the assessee in the regular books of accounts. The assessee had already decided to incorporate the difference in stock found on the physical inspection prior to the date on which stock audit report was seized by the Authorized Officer u/s 132 on 29.10.2012. In the statement u/s 132(4) dated 29.10.2012, the assessee had merely admitted that the income with reference to excess quantities reported in the stock audit report would be included in taxable income for the assessment year 2013-14 and the same was to be part of income declared in the statement recorded u/s 132(4) on 31.08.2012 cannot be construed to be 'undisclosed income' of the company for the purposes of levy of penalty u/s 271AAB of the Act. The assessee pleaded that the sum of Rs 2,73,38,000/- assessed as assessee's income for the relevant year did not represent any 'unexplained money, bullion, jewellery, valuable article or any other asest', for the simple reason that no such asset had been identified by the ld AO and no undisclosed asset came to light as a result of the search conducted ITA Nos.2304&2305/Kol/2016 M/s Amrit Hatcheries Pvt. Ltd.

A.Yr.2013-14 by the investigation authorities. Accordingly, the sum of Rs 2,73,38,000/- does not come within the first limb of the definition of 'undisclosed income' as mentioned in section 271AAB of the Act. Similarly the assessee pleaded that its case does not fall under any of the limb of definition of 'undisclosed income' defined in section 271AAB of the Act.

5.5. The ld CITA duly appreciated the contentions of the assessee and deleted the levy of penalty u/s 271AAB of the Act . Aggrieved, the revenue is in appeal before us.

6. We have heard the rival submissions and perused the materials available on record. We find that the ld AO had levied penalty u/s 271AAB of the Act for the Asst Year 2013-14 being the year of search. What is relevant for section 271AAB of the Act is that there should be undisclosed income which should have been detected by the search party at the time of search. The expression 'undisclosed income' has been defined in section 271AAB of the Act as under:-

"(c) undisclosed income means -