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Showing contexts for: 271aab in Dcit, Cc-2(2), Kolkata, Kolkata vs Manoj Beswal, Kolkata on 10 November, 2017Matching Fragments
2. The only issue to be decided in these appeals is as to whether the Ld. CIT(A) was justified in deleting the penalty levied u/s 271AAB of the Act, in the facts and circumstances of the case.
3. The facts pertaining to Shri Amit Agarwal (I.T.A. No. 1471/Kol/2015) are considered herein for adjudication and the decision rendered thereon would apply with equal force to remaining two assessees also in view of identical facts except with variance in figures.
4. The brief facts of this issue is that the search & seizure operation was conducted u/s 132 of the Act in respect of "Nezone Group" on 01.08.2012. The assessee is one of the key persons of the said group. During the course of search, the assessee disclosed an income of Rs. 3crores towards his undisclosed income for the assessment year 2013-14 vide disclosure petition and the same was also duly declared in the return of income filed for the assessment year 2013-14 on 30.09.2013 among other income. The assessment thereon was completed u/s 143(3) of the Act on 29.08.2014 accepting the said additional income of Rs. 3 crores. The assessee also paid due taxes with interest on this additional income of Rs. 3 crores by way of advance tax before the end of the previous year ended on 31.03.2013 relevant to assessment year 2013-14. The Ld. AO initiated penalty proceedings u/s 271AAB of the Act on completion of the assessment.
(i) the assessee made a disclosure statement u/s 132(4) of the Act offering the undisclosed income of Rs. 3 crores ;
(ii) The assessee substantiated the manner in which such income was derived ; and
(iii) The assessee declared the said income in the return of income filed within the time limit prescribed u/s 139(1) of the Act and paid the due taxes thereon.
The Ld. AO observed that since all the aforesaid cumulative conditions were duly satisfied by the assessee, the assessee would be invited with penalty calculated at 10% undisclosed income amounting to Rs. 30lakhs ( 10% of 3 crores) as per provisions of Section 271AAB(1)(a) of the Act. The assessee submitted that it has engaged in commodities trading during the year under appeal and was not required to maintain books of accounts as per Section 44AA of the Act as commodity profit derived was sort of windfall gain and more of a speculative nature. Hence the same would not be covered under the ambit of business income. Since there is no business income, the assessee is not required to maintain books of accounts u/s 44AA of the Act. The assessee sought to explain this as the reason for not entering the profits derived from commodities trading transactions in the books of accounts maintained by the assessee. The assessee also pleaded that it is the mistake of Accountant for not entering the commodity transaction in the books of accounts maintained by him. It specifically stated as an alternative argument that the assessee is not required to maintain books of accounts in terms of Section 44AA of the Act for the reason stated hereinabove. Hence the present case, according to the assessee does not fall under the ambit of undisclosed income as defined in Explanation C to Section 271AAB of the Act. The Ld. AO did not ITA Nos.1471,1475&1476/Kol/2015 Amit Agarwal,Madan Lal Beswal& Manoj Beswal A.Yr.2013-14 heed to the aforesaid contentions of the assessee and observed that the Explanation C of Section 271AAB of the Act defines undisclosed income as follows:
7. Aggrieved, the Revenue is in appeal before us on the following grounds:
1. That on the facts and circumstances of the case, the Ld. CIT(A) has not at all understood the new provision of Section 271AAB and has erroneously deleted the penalty imposed u/s 271AAB of the IT Act, 1961.
2. That as per the provisions of Section 271AAB of the Income Tax Act, 1961 newly introduced by Finance Act, 2012 w.e.f. 01.07.2012 and applicable from A.Y. 2013-14 onwards, penalty u/s 271AAB of the Income Tax Act, 1961 is mandatory.
9. We have heard the ld. DR and perused the materials available on record. It is not in dispute that the assessee's case falls within the ambit of 271AAB(1)(a) of the Act as admittedly the assessee had satisfied the cumulative conditions prescribed thereon. We are not inclined to accept arguments of the assessee that he is not required to maintain books of accounts u/s 44AA of the Act for his commodities transactions, in view of the fact that the assessee himself had considered his case to be eligible for tax audit and had accordingly, filed the return of income u/s 139(1) of the Act on 30.09.2013 for the assessment year 2013-14. It is not in dispute that the due date for filing return of income for non-tax audit assessees is 31.07.2013 for the assessment year 2013-14. In the instant case, the assessee himself had accepted the fact that he is engaged in commodities trading business and accordingly, he is mandated to maintain books of accounts u/s 44AA of the Act. It is not in dispute that as on date of search i.e. 01.08.2012, the assessee had not entered the commodities transaction in its books of accounts. Hence, as per the definition of undisclosed income given in Explanation C to Section 271AAB of the Act, the additional income disclosed by the assessee indeed takes the character of undisclosed income. We also find that the legislature in its wisdom had consciously omitted to include Section 271AAB of the Act in the provisions of section 273B of the Act. Hence there is no requirement to look into any reasonable cause adduced by the assessee warranting grant of any immunity from levying of penalty u/s 271AAB of the Act. Hence, even assuming that the mistake lies on the part of the Accountant by not entering the entries in the books of accounts regarding the commodities transaction, which might tantamount to reasonable cause, the assessee would still be exigible for levy of penalty as no immunity could be claimed in terms of Section 273B of the Act. We find that the Ld. CIT(A) had looked into irrelevant circumstances for deleting the levy of penalty in the instant case forgetting the fact that the levy of penalty u/s ITA Nos.1471,1475&1476/Kol/2015 Amit Agarwal,Madan Lal Beswal& Manoj Beswal A.Yr.2013-14 271AAB of the Act is automatic in nature as per the plain reading of the provisions of the Act. Hence, we hold that the Ld. AO had rightly levied penalty at 10% of undisclosed income amounting to Rs. 30lakhs in the instant case. Accordingly, the grounds raised by the Revenue are allowed.