ACIT Central Circle 2, Coimbatore V. S.Martin, Coimbatore

ITA 3147/CHNY/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3972 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 22-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAILENDRA MAMIDI
• Keywords: Business expenditure; TDS; Rule 8D
• Section: 271(1)(c); 153A; 14A; 158B(b); 13; 153C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2382/CHNY/2016 ' (' / ASSESSMENT YEAR : 2009-10 & ./ ITA NOS.3146 & 3147/CHNY/2017 ' (' / ASSESSMENT YEARS : 2015-16 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -2, INCOME TAX BUILDING, RACE COURSE ROAD, COIMBATORE 641 018. V. SHRI S. MARTIN, NO.335-339, DAISY PLAZA, 6 TH STREET, GANDHIPURAM, COIMBATORE 641 011. PAN : AEWPM 3703 Q (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI SAILENDRA MAMIDI, PCIT ,-*+ . / / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE 0 . 1$ / DATE OF HEARING : 17.09.2018 2!( . 1$ / DATE OF PRONOUNCEMENT : 05.10.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: ALL THE APPEALS OF THE REVENUE ARE DIRECTED AGAI NST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-18, CHENNAI, FOR THE ASSESSMENT YEARS 2009-10 AND 2015- 16. 2 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 THEREFORE, WE HEARD ALL THESE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. THERE WAS A DELAY OF 3 DAYS IN FILING THE APPEAL IN I.T.A. NO.2382/CHNY/2016 BY THE REVENUE. THE REVENUE HAS FILED A PETITION FOR CONDONATION OF DELAY. WE HAVE HEARD T HE LD. D.R. AND THE LD.COUNSEL FOR THE ASSESSEE. WE FIND THAT THER E WAS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL BEFORE THE STIPULAT ED TIME. THEREFORE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. LETS FIRST TAKE ASSESSMENT YEAR 2009-10 IN I.T. A. NO.2382/CHNY/2016. 4. SHRI SAILENDRA MAMIDI, THE LD. DEPARTMENTAL REPR ESENTATIVE, SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDING, THE ASSESSING OFFICER DISALLOWED 1,66,96,393/- TOWARDS INSURANCE RECEIPTS AND 90,86,349/- TOWARDS BUSINESS EXPENDITURE. ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER AL SO MADE DISALLOWANCE UNDER SECTION 14A OF THE INCOME-TAX AC T, 1961 (IN SHORT 'THE ACT') TO THE EXTENT OF 5,34,393/- AND PREPAID EXPENDITURE OF 1,98,990/-. THE ASSESSING OFFICER ALSO DISALLOWED INTEREST ON 3 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 THE DELAYED PAYMENT OF TDS TO THE EXTENT OF 11,687/- AND CAPITAL GAIN TO THE EXTENT OF 47,07,30,598/-. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE SURRENDERED HIS LIFE INSURANCE PO LICY ON 31.01.2009 AND RECEIVED A SUM OF 3,26,73,685/-. ACCORDING TO THE LD. D.R., THE ASSESSEE IN FACT, TOOK THE POLICY ON 20.04.2005 FOR 2 CRORES AND PAID A PREMIUM OF 1,26,73,685/- ON THE SAME DAY. THEREFORE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER FOUND THAT THE EXCESS AMOUNT RECEIVED OVER AND ABOVE THE PREMIUM OF 1,26,73,685/- HAS TO BE TREATED AS INCOME. ACCORDI NG TO THE LD. D.R., THE ASSESSEE HAS ALSO AVAILED PENSION PLUS RE GULAR POLICY DURING THE ASSESSMENT YEAR 2009-10. ON SURRENDER O F THE SAID POLICY, THE ASSESSEE RECEIVED AN AMOUNT OF 40,22,708/- ON 11.08.2008. SINCE THE PREMIUM PAID BY THE ASSESSEE WAS CLAIMED AS DEDUCTION, ACCORDING TO THE LD. D.R., THE AMOUNT RECEIVED BY THE ASSESSEE ON 11.08.2008 IS LIABLE FOR TAXATION. ACC ORDINGLY, THE ASSESSING OFFICER MADE AN ADDITION OF 40,22,708/-. SIMILARLY, ACCORDING TO THE LD. D.R., THE ASSESSEE HAS CLAIMED 88,81,129/- TOWARDS BUSINESS EXPENDITURE. THE ASSESSEE HAS PAI D 2,05,220/- FOR SECURITY SERVICES OF HIS OWN RESIDENTIAL BUNGAL OW AND CLAIMED THE SAME AS BUSINESS EXPENDITURE. ACCORDING TO THE LD. D.R., THE 4 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 ASSESSING OFFICER FOUND THAT PERSONAL EXPENDITURE C ANNOT BE ALLOWED AS BUSINESS EXPENDITURE. 5. COMING TO ADDITION MADE UNDER SECTION 14A OF THE ACT, THE LD. D.R. SUBMITTED THAT THE ASSESSEE RECEIVED DIVID END INCOME OF 71,19,981/- AND CLAIMED THE SAME AS EXEMPT. THE AS SESSING OFFICER BY PLACING RELIANCE ON SECTION 14A OF THE A CT, COMPUTED THE DISALLOWANCE UNDER RULE 8D OF INCOME-TAX RULES, 196 2 TO THE EXTENT OF 5,24,393/-. MOREOVER, ACCORDING TO THE LD. D.R., T HE INTEREST PAID ON DELAYED PAYMENT OF TDS WAS CLAIMED AS EXPEN DITURE BY THE ASSESSEE WHICH WAS DISALLOWED. SINCE THE ASSESSE E HAS NOT FURNISHED THE ENTIRE PARTICULARS OF INCOME AND CLAI MED THE SAME AS DEDUCTION, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER FOUND THAT THE ASSESSEE WILLFULLY CONCEALED AND DELIBERAT ELY FURNISHED INACCURATE PARTICULARS OF INCOME, THEREFORE, HE RIG HTLY LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDING TO T HE LD. D.R., THE CIT(APPEALS) WITHOUT CONSIDERING THE FINDING OF THE ASSESSING OFFICER WITH REGARD TO CAPITAL GAIN, FOUND THAT THE RE WAS NO CONCEALMENT OF INCOME. THE CIT(APPEALS), ACCORDING TO THE LD. D.R., HAS FAILED TO CONSIDER THAT THE ASSESSEE PURC HASED THE 5 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 PROPERTY AND WITHIN A SHORT SPAN OF TIME SOLD THE S AME AT MUCH HIGHER RATE AND EARNED SHORT TERM CAPITAL GAIN. AC CORDING TO THE LD. D.R., THIS IS A CLEAR CASE OF EVASION OF TAX AS HEL D BY THE APEX COURT IN MCDOWELL AND CO. LTD. V. COMMERCIAL TAX OFFICER (1985) 154 ITR 148, THEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED I N ALLOWING THE CLAIM OF THE ASSESSEE. 6. ON THE CONTRARY, SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF LOTTERY. ACCORDING TO THE LD. COUNSEL, THE ASSE SSING OFFICER MADE ADDITIONS TO THE TOTAL INCOME BY DISALLOWING THE CL AIM OF THE ASSESSEE. THE ASSESSEE HAS FURNISHED THE ENTIRE DE TAILS WITH REGARD TO INSURANCE RECEIPT, EXPENDITURE CLAIM, DIV IDEND INCOME, PREPAID EXPENDITURE AND SHORT TERM CAPITAL GAIN. T HE ASSESSING OFFICER WITHOUT APPRECIATING THE FACTS, MADE ADDITI ONS IN THE ASSESSMENT PROCEEDING. ACCORDING TO THE LD. COUNSE L, PENALTY PROCEEDING IS DIFFERENT FROM ASSESSMENT PROCEEDING. ALL THE ADDITIONS / DISALLOWANCES CANNOT AUTOMATICALLY RESU LT IN LEVY OF PENALTY. ACCORDING TO THE LD. COUNSEL, THE ENTIRE TRANSACTIONS WERE PLACED BEFORE THE ASSESSING OFFICER AND THE ASSESSI NG OFFICER AFTER 6 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 CONSIDERING THE CLAIM OF THE ASSESSEE FOUND THAT CE RTAIN CLAIMS ARE NOT ALLOWABLE. IT DOES NOT MEAN THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME OR CONCEALED P ART OF HIS INCOME. PLACING RELIANCE ON THE JUDGMENT OF APEX COURT IN C IT VS. RELIANCE PETROPRODUCTS (P) LTD. (2010) 322 ITR 158, THE LD.C OUNSEL SUBMITTED THAT MERE CLAIM CANNOT BE CONSTRUED AS CO NCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. HAVING FURNISHED ALL THE PARTICULARS, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE MADE CLAIM BONAFIDELY AS PER THE PROVISION S OF INCOME- TAX ACT, THEREFORE, THERE IS NO QUESTION OF CONCEAL MENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE MADE SINGLE INSURAN CE POLICY FOR AVAILING LIFE INSURANCE FROM ICICI PRUDENTIAL LIFE INSURANCE COMPANY ON 20.04.2005. THE SUM ASSURED WAS 2 CRORES AND THE ASSESSEE PAID FULL PREMIUM OF 1,26,73,685/-. THE ASSESSEE RECEIVED 3,26,73,685/-. THE ASSESSING OFFICER FOUND THAT TH E EXCESS AMOUNT RECEIVED BY THE ASSESSEE OVER AND ABO VE THE 7 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 PREMIUM OF 1,26,73,685/- WAS TO BE TREATED AS INCOME OF THE ASSESSEE. THE FACT REMAINS THAT THE ASSESSEE HAS D ISCLOSED THE PAYMENT OF INSURANCE PREMIUM OF 1,26,73,685/- FOR SUM ASSURED OF 2 CRORES AND ALSO THE RECEIPT OF 3,26,73,685/-. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE QUESTION WHETHER THE EXCESS AMOUNT RECEIVED OVER AN D ABOVE 1,26,73,685/- WAS INCOME OF THE ASSESSEE IS A MATTE R TO BE DECIDED BY THE ASSESSING OFFICER. THEREFORE, THIS CANNOT BE CONSIDERED TO BE A CONCEALMENT OF INCOME. THE ASSE SSEE APPARENTLY DISCLOSED PENSION PLUS REGULAR POLICY AV AILED FROM AVIVA LIFE INSURANCE COMPANY AND ALSO THE AMOUNT RECEIVED ON SURRENDER OF POLICY. THEREFORE, EVEN IN THIS CASE, THERE IS NO CONCEALMENT OF INCOME. THE ENTIRE PARTICULARS WERE AVAILABLE BEFO RE THE ASSESSING OFFICER. 8. NOW COMING TO THE BUSINESS EXPENDITURE OF 88,81,129/-, THE ASSESSING OFFICER FOUND THAT A SUM OF 2,05,220/- WAS PAID FOR SECURITY SERVICES OF RESIDENCE OF THE ASSESSEE. TH E FACT REMAINS THAT THE ENTIRE FACTS WERE PLACED BEFORE THE ASSESS ING OFFICER AND 8 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 THE ASSESSEE CLAIMED THE SAME AS DEDUCTION. MERE C LAIM, AS RIGHTLY POINTED OUT BY THE LD.COUNSEL, CANNOT BE CO NSTRUED AS CONCEALMENT OF INCOME OR INACCURATE PARTICULARS OF INCOME. SIMILARLY, THE DIVIDEND INCOME OF 71,19,981/- WAS ALSO DISCLOSED BY THE ASSESSEE AND THE ASSESSEE CLAIMED DEDUCTION AS PROVIDED UNDER SECTION 14A OF THE ACT. THE ASSESSING OFFICE R BY APPLYING RULE 8D OF INCOME-TAX RULES, 1962 DISALLOWED 5,24,393/- OUT OF 71,19,981/-. WHEN THE ENTIRE FACTS WERE AVAILABLE BEFORE THE ASSESSING OFFICER, IT CANNOT BE SAID THAT THERE IS A CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. MOREOVER, THE INTEREST ON DELAYED PAYMENT OF TDS WA S PLACED BEFORE THE ASSESSING OFFICER AND THE ASSESSEE CLAIM ED DEDUCTION. IT DOES NOT MEAN THAT THE ASSESSEE HAS CONCEALED PA RTICULARS OF INCOME. SIMILARLY, DETAILS OF PREPAID EXPENSES OF 1,98,990/- WERE ALSO AVAILABLE BEFORE THE ASSESSING OFFICER. 9. COMING TO THE SHORT TERM CAPITAL GAIN, THE ASSES SEE RETIRED FROM PARTNERSHIP FIRM WITH EFFECT FROM 19.08.2008 A ND RECEIVED A LUMP SUM COMPENSATION FROM PARTNERSHIP FIRM OVER AN D ABOVE THE CAPITAL CONTRIBUTION BY WAY OF IMMOVABLE PROPERTY. THIS WAS 9 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 CONSIDERED TO BE A SHORT TERM CAPITAL GAIN. THE FA CT REMAINS THAT THE ASSESSEE RETIRED FROM PARTNERSHIP FIRM AND RECE IVED A LUMP SUM COMPENSATION FROM THE FIRM. THIS WAS DISCLOSED BEF ORE THE ASSESSING OFFICER. THEREFORE, THERE IS NO QUESTION OF ANY CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE JUDGMENT OF APEX COURT IN RELIANCE PETROPRODUCTS (P) LTD. (SUPRA) IS SQUARELY APPLICABLE TO THE FACT S OF THE CASE. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. HENCE, THIS TRIBUNA L DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUT HORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 10. NOW COMING TO ASSESSMENT YEAR 2015-16 IN I.T.A. NO.3147/CHNY/2017. 11. THE ONLY ISSUE ARISES FOR CONSIDERATION IS PENA LTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF TH E ACT. 12. SHRI SAILENDRA MAMIDI, THE LD. DEPARTMENTAL REP RESENTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMED 2,88,22,870/- AS EXPENDITURE 10 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 IN THE PROFIT & LOSS ACCOUNT. ACCORDING TO THE LD. D.R., THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THA T M/S GAMING & HOTEL SERVICES (P) LTD. IS A SEPARATE ENTITY ASSESS ED TO TAX AND HE HAS NOT GIVEN ANY INSTRUCTION TO SHRI NAGARAJAN, WH O IS AN EMPLOYEE OF M/S GAMING & HOTEL SERVICES (P) LTD. TO MAKE ANY PAYMENT. ACCORDING TO THE LD. D.R., THIS CLAIM OF THE ASSESS EE WAS NOT SUBSTANTIATED BY PRODUCING NECESSARY EVIDENCE, THER EFORE, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE. MOREOVER, IN RESPECT OF THE EXPENDITURE, THE ASSESS EE HAS NOT RAISED ANY OBJECTION FOR MAKING ADDITION TO THE TOT AL INCOME. THEREFORE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER FOUND THAT THE ASSESSEE CONCEALED THE PARTICULARS OF INCO ME. HENCE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER LE VIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 13. ON THE CONTRARY, SHRI S. SRIDHAR, THE LD.COUNSE L FOR THE ASSESSEE, SUBMITTED THAT NO DOUBT, THE ASSESSEE CLA IMED IN THE PROFIT & LOSS ACCOUNT EXPENDITURE TO THE EXTENT OF 2,88,22,870/-. ACCORDING TO THE LD. COUNSEL, MERE MAKING CLAIM OF EXPENDITURE IN THE PROFIT & LOSS ACCOUNT OR BEFORE THE ASSESSING O FFICER DOES NOT 11 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCO ME OR CONCEALING ANY PART OF INCOME. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS FURNISHED ENTIRE DETAILS OF INCOME EARNED BY HIM. THE ASSESSEE HAS ALSO FURNISHED DETAILS OF EXPENDITURE AND CLAIM ED THE EXPENDITURE AS DEDUCTION WHILE COMPUTING THE TOTAL INCOME. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ENTIRE PARTICULARS OF INCOME AND EXPENDITURE WERE AVAILABLE BEFORE THE AS SESSING OFFICER. THE ASSESSING OFFICER DURING THE COURSE O F ASSESSMENT PROCEEDING, FOUND THAT CERTAIN CLAIMS OF THE ASSESS EE AS EXPENDITURE WERE NOT ALLOWABLE, THEREFORE, ACCORDIN G TO THE LD. COUNSEL, HE MADE THE ADDITION. MERELY BECAUSE THE ASSESSEE HAS NOT CONTESTED THE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER WITH REGARD TO THE CLAIM OF EXPENDITURE, ACCORDING TO TH E LD. COUNSEL, THAT WILL NOT AMOUNT TO ADMISSION FOR DISALLOWANCE, THER EFORE, THE CIT(APPEALS) HAS RIGHTLY DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS CLAIMED AN EXPENDITUR E OF 12 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 2,88,22,870/-., WHICH INCLUDES A SUM OF 30,00,000/- SAID TO BE PAID BY ONE SHRI NAGARAJAN TO SHRI RAMESH KRISHAN O N SO-CALLED INSTRUCTION OF THE ASSESSEE. THE FACT REMAINS THAT THE ASSESSEE HAS FURNISHED ENTIRE DETAILS OF INCOME AND ALSO FURNISH ED ENTIRE DETAILS OF THE SO-CALLED EXPENDITURE. THE ASSESSING OFFICER F OUND THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE CLAIM OF EXPENDI TURE. THE QUESTION ARISES FOR CONSIDERATION IS WHEN THE ASSES SEE CLAIMED EXPENDITURE AND THE ASSESSING OFFICER DISALLOWED TH E CLAIM OF THE ASSESSEE ON THE GROUND THAT SUCH A CLAIM WAS NOT SU BSTANTIATED, WHETHER THERE WAS ANY CONCEALMENT OF INCOME OR FURN ISHING INACCURATE PARTICULARS OF INCOME? THIS ISSUE WAS C ONSIDERED BY THE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS (P ) LTD. (SUPRA). THE APEX COURT FOUND THAT MERE CLAIM OF EXPENDITURE WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF I NCOME OR CONCEALING ANY PART OF INCOME. IN VIEW OF THE ABOV E, THIS TRIBUNAL HAS NO HESITATION TO CONFIRM THE ORDER OF THE CIT(A PPEALS). ACCORDINGLY, THE ORDER OF THE CIT(APPEALS) IS CONFI RMED. 15. NOW COMING TO I.T.A. NO.3146/CHNY/2017 FOR ASSE SSMENT YEAR 2015-16. 13 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 16. THE ONLY ISSUE ARISES FOR CONSIDERATION IS PENA LTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271AAB OF THE A CT. 17. SHRI SAILENDRA MAMIDI, THE LD. DEPARTMENTAL REP RESENTATIVE, SUBMITTED THAT THERE WAS SEARCH CONDUCED IN THE PRE MISE OF THE ASSESSEE ON 13.01.2015. ACCORDING TO THE LD. D.R., THE ASSESSEE ADMITTED AN ADDITIONAL INCOME OF 50 CRORES UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE ALSO FIL ED RETURN OF INCOME ON 28.09.2015 DECLARING TOTAL INCOME OF 234,17,62,510/-. THIS INCLUDES THE ADMISSION OF 50 CRORES UNDER THE HEAD INCOME FROM OTHER SOURCES. HOWEVER, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER DETERMINED THE TOTAL INCOME AT 2,37,05,85,380/-. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDING UNDER SECTION 271AAB OF THE ACT. REFERRING TO SECTION 271AAB OF THE ACT, THE LD. D.R. SUBMITTED THAT THE ASSESSING OFFICER MAY LEVY PENALTY IF THE ASSESSEE ADMITS IN THE COURSE OF SEARCH PROCEEDING THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHIC H SUCH INCOME WAS DERIVED. IN THIS CASE, ACCORDING TO THE LD. D. R., THE ASSESSEE ADMITTED UNDISCLOSED INCOME DURING THE COURSE OF SE ARCH OPERATION, 14 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY LEVIED PENALTY UNDER SECTION 271AAB OF THE ACT. 18. ON THE CONTRARY, SHRI S. SRIDHAR, THE LD.COUNSE L FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE OFFERED AN AD DITIONAL INCOME OF 50 CRORES DURING THE COURSE OF SEARCH OPERATION, FO R ASSESSMENT. ACCORDING TO THE LD. COUNSEL, THE ASSE SSEE HAS NOT SPECIFIED THE MANNER IN WHICH SUCH UNDISCLOSED INCO ME WAS DERIVED. MOREOVER, REFERRING TO SECTIONS 153A AND 153C OF THE ACT, THE LD.COUNSEL SUBMITTED THAT UNDISCLOSED INCOME SH ALL BE WITH REFERENCE TO MATERIAL FOUND DURING THE COURSE OF SE ARCH OPERATION AND THE INFORMATION WHICH IS RELATABLE TO THE MATER IAL FOUND DURING THE COURSE OF SEARCH OPERATION. IN THIS CASE, ACCO RDING TO THE LD. COUNSEL, NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION. THEREFORE, WHAT WAS OFFERED BY THE ASSE SSEE AS ADDITIONAL INCOME CANNOT BE CONSTRUED AS UNDISCLOSE D INCOME. HENCE, THE PROVISIONS OF SECTION 271AAB OF THE ACT IS NOT APPLICABLE AT ALL. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) HAS RIGHTLY DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 15 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THERE WAS SEARCH OPERATION IN THE PREMISES OF THE ASSESSE E ON 13.01.2015. IN THE COURSE OF SEARCH OPERATION, THE ASSESSEE OFFERED AN ADDITIONAL INCOME OF 50 CRORES UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271AAB OF THE ACT IN RESPECT OF THE ADDITIO NAL INCOME OFFERED BY THE ASSESSEE. IT IS NOT THE CASE OF THE REVENUE THAT ANY INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION WITH REGARD TO INCOME OFFERED BY THE ASSE SSEE. THE TERM UNDISCLOSED INCOME IS NOT DEFINED IN SECTION 271A AB OF THE ACT, BUT IT IS DEFINED IN SECTION 158B(B) OF THE ACT. S ECTION 158B(B) OF THE ACT READS AS FOLLOWS:- 158B(B) UNDISCLOSED INCOME INCLUDES ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT O R OTHER DOCUMENTS OR TRANSACTIONS, WHERE SUCH MONEY, BULLIO N, JEWELLERY, VALUABLE ARTICLE, THING, ENTRY IN THE BO OKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTION REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSES OF THIS AC T [ OR ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UNDER TH IS ACT WHICH IS FOUND TO BE FALSE]. 16 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 20. THIS IS THE ONLY DEFINITION AVAILABLE FOR UNDI SCLOSED INCOME IN THE INCOME-TAX ACT, 1961. THEREFORE, ON THE BAS IS OF MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION, IF THE ASSESSING OFFICER COMES TO A CONCLUSION THAT THE MATERIAL FOUND REPRE SENTS WHOLLY OR PARTLY OF THE ASSESSEES INCOME, WHICH WOULD NOT HA VE BEEN DISCLOSED BUT FOR THE PURPOSE OF SEARCH, MAY BE CON STRUED AS UNDISCLOSED INCOME. IN THIS CASE, IT IS NOT THE CA SE OF THE REVENUE THAT ANY INCRIMINATING OR OTHER MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION WHICH REPRESENTS WHOLLY OR PART LY THE UNDISCLOSED INCOME OF THE ASSESSEE. IT IS A DEFINI TE CASE OF THE REVENUE THAT THE ASSESSEE OFFERED AN ADDITIONAL INC OME OF 50 CRORES. THEREFORE, OFFER MADE BY THE ASSESSEE IS N OT ADMITTED ON THE BASIS OF ANY MATERIAL OR DOCUMENT, BULLION, ETC . THEREFORE, AS RIGHTLY FOUND BY THE CIT(APPEALS), THIS CANNOT BE C ONSTRUED AS UNDISCLOSED INCOME FOR THE PURPOSE OF LEVY OF PENAL TY UNDER SECTION 271AAB OF THE ACT. HENCE, THE CIT(APPEALS) HAS RIG HTLY DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER. THIS TRIB UNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 17 I.T.A. NO.2382/CHNY/16 I.T.A. NOS.3146 & 31 47/CHNY/17 21. IN THE RESULT, ALL THE THREE APPEALS FILED BY T HE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 5 TH OCTOBER, 2018 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 5 TH OCTOBER, 2018. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-18, CHENNAI-34 4. PRINCIPAL CIT, CENTRAL-2, CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.