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1 - 9 of 9 (1.82 seconds)The Income Tax Act, 1961
Section 132 in The Income Tax Act, 1961 [Entire Act]
Section 4 in The Income Tax Act, 1961 [Entire Act]
Section 274 in The Income Tax Act, 1961 [Entire Act]
Section 44AA in The Income Tax Act, 1961 [Entire Act]
Tuticorin Alkali Chemicals And ... vs Commissioner Of Income Tax, Madras on 8 July, 1997
It is possible for an assessee/individual/company to have five different sources of income, each
one of it will be chargeable to Income Tax Act. Profits and gains of business or profession is only one
of the heads under which an assessee's income is liable to be assessed to tax. If an assessee has not
commenced business there cannot be any question of assessment of its profits and gains of business.
That does not mean that until and unless the assessee commences its business, its income from any other
source will not be taxed as held by the Hon'ble Supreme Court in the case of Tuticorin Alkali &
Chemicals Ltd. Vs. CIT (1997) 227 ITR 172 (SC). It has been further held that when the question is
whether a receipt of money is taxable or not or whether certain deduction from that receipt is principles
of law and not in accordance with accountancy practice. Further, the Hon'ble Apex Court held that the
question as to whether a principal receipt is of the nature of income and falls within the charge of sec. 4
of the Act is a question of law which has to be decided by the Court on the basis of the provisions of the
Act and interpretation of the term 'income' given in a large number of decisions of the Hon'ble
Supreme Court, High Court and Privy Council. After taking note of the Apex Court order as above, we
note that the AO in the assessment order after having accepted the statement of total income (supra)
and the return wherein the assessee has shown the income from commodities under the head "Income
from Other Sources" cannot now after perusal of "Income & Expenditure Account" determine the
character of transaction in the penalty proceedings as "Income from Business or Profession" which
approach/action is erroneous. We note that the assessee in his statement of total income along with
return has classified his income under two heads (i) Salary and (ii) from other sources and the income
of Rs. 3 cr. as income from other sources, which we find the AO has not contested in the assessment
order, has thus crystallized and the necessary inference drawn is that assessee an individual who was
admittedly a salaried person engaged in the previous year relevant to the assessment year under
consideration (that too for the first time) in an activity from which he derived "Income from Other
Sources" are not required to maintain books of account which are applicable only if the assessee was
engaged in Business or Profession. However, we further note that the transactions which yielded
income, the assessee had in fact maintained records from which the AO was able to deduce the true
income and expenditure of the assessee. We note the AO in the assessment order has accepted the
returned income comprising of income from salary and income from other sources by observing as
under :
Section 14 in The Income Tax Act, 1961 [Entire Act]
Sandeep Chandak vs Principal Commissioner Of Income Tax ... on 23 April, 2018
4. The Ld. DR brought to our notice that in the very same group case of Manoj Beswal
& Ors. the Tribunal had confirmed the levy of penalty and contended before us that penalty
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ITA Nos.1474 & 1478/Kol/2015
Sybhas Chandra Agarwala & Pradip Kr. Agarwala, AY- 2013-14
u/s. 271AAB of the Act is mandatory and therefore, according to Ld. DR, the Ld. CIT(A) erred
in deleting the penalty by stating that the assessee did not had any 'mens rea' not to disclose
the amount in question. According to him, penalty has to be mandatorily levied u/s. 271AAB
of the Act on the undisclosed income found during search. On the other hand, Ld. AR Shri
Miraz D. Shah, supporting the decision of Ld. CIT(A) made contentions though taken up
before the Ld. CIT(A) but has not been adjudicated on those averments, which the Ld. AR
urges before us to consider while adjudicating the appeal of the Revenue. The Ld. AR also
pointed out that the contentions which he is going to raise has been taken up before the AO
also, however, according to Ld. Counsel, those legal arguments were not considered by the
AO in the right perspective. The first contention of the Ld. AR is that since Sec. 271AAB of the
Act is a penalty section it should be construed strictly, which we agree being it is a trite law
that penalty provisions have to be strictly interpreted. Next contention of Ld. AR is that sec.
271AAB of the Act is not mandatory because Parliament in its wisdom has used the word
'may' and not 'shall'. So, according to him, it is the discretion bestowed upon the AO whether
to initiate and impose penalty u/s. 271AAB of the Act. We agree with the said contention of
Ld. AR because when a similar issue was adjudicated by ITAT Lucknow (the author of this
order was a member of the Bench) in Sandeep Chandak & Ors. Vs. CIT (2017) 55 ITR (Trib)
209 and 2017 (5) TMI 675-ITAT-Lucknow in ITA No. 416, 417 and 418/LKW/2016 dated
30.01.2017 while adjudicating a case where penalty was levied under section 271AAB of the
Act it was held that the provisions of Sec. 271AAB of the Act are not mandatory, which means
that penalty need not be levied in each and every case wherever the assessee has made default
as stated in clauses (a), (b) and (c) of the Act. Sub-section (1) of Sec. 271AAB of the Act uses
the word "may" not "shall". "May" cannot be equated with "shall" especially in penalty
proceeding. Using the word "may" in our opinion, gives a discretion to the AO to levy the
penalty or not to levy, even if the assessee has made the default under the said provision."
Therefore, the 2nd ground of Revenue fails and we hold that penalty u/s. 271AAB of the Act is
not mandatory and is discretionary.
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