Whether every income surrendered during search is undisclosed income for penalty u/s 271AAB?
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Short note of today's case law for quick reference:
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[2024] 119 ITR (Trib) 555 (ITAT[Jai])
[BEFORE THE INCOME-TAX APPELLATE TRIBUNAL — JAIPUR "A" BENCH]
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AESHWARYA JAIN
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DEPUTY COMMISSIONER OF INCOME-TAX
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VIJAY PAL RAO (Judicial Member) and VIKRAM SINGH YADAV (Accountant Member)
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January 7, 2020.
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1. Penalty u/s 271AAB is not ipso facto as a result of surrender or disclosure of income by the assessee during the course of search and seizure action until and unless such income surrendered by the assessee falls within the definition of “undisclosed income” as provided in the Explanation to section 271AAB.
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2. “Undisclosed Income” means:
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(i) Any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of search u/s 132, which has-
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(A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or
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(B) otherwise not been disclosed to PCCIT, CCIT or PCIT or CIT before the date of search; or
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(ii) Any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted.
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3. In the search on assessee, loose papers were found in the form of plan and map of residential house which contained only the design of the house and the electrician plan which did not reveal any undisclosed income or any other unaccounted expenditure.
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4. The assessee in the statement u/s 132(4) surrendered an amount of income which the A.O. held assessable u/s 69.
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5. A.O. levied penalty u/s 271AAB which was confirmed by CIT(A).
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6. ITAT deleted the penalty on the ground that income is not represented by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions even if the assessee has surrendered a sum of money as unaccounted expenditure, it would not fall in the ambit of undisclosed income as defined in Explanation to section 271AAB.
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7. In the absence of any undisclosed income revealed by the seized materials, the income surrendered by the assessee could not be said to be undisclosed income for the purposes of section 271AAB.