ITAT held that no penalty u/s.271AAA (of Income Tax Act, 1961) leviable in case after AO levied it.

Facts in Brief:

1. Search action u/s.132 (of Income Tax Act, 1961) was carried out in the case of the assessee.

2. AO completed the assessment, assessing the total income at Rs.2,01,52,850/- which was less than the income returned since an amount of Rs.3,97,09,216/- declared for this assessment year was assessed in the assessee's hands for earlier assessment years.

3. The AO did not make any addition on account of cash deposits since he found the cash in hand with the assessee to be more than the cash deposited on all occasions.

4. The AO worked out ITA No.115/PN/2014 unexplained investment in accounts at Rs.45,30,800/-. Since the assessee had agreed for addition of the amount of Rs.45,30,800/- vide letter, the AO levied penalty of Rs.4,53,080/- u/s.271AAA (of Income Tax Act, 1961).

5. On appeal, CIT(A) held, addition of Rs.45,30,800/- was clearly made on account of bank accounts discovered well after the search action and after the disclosure made by the assessee and even after the filing of return by the assessee. Since this addition was separately accepted by the assessee vide his letter dated 24-12-2009, therefore, there is no question of this amount being a part of the disclosure made u/s.132(4) (of Income Tax Act, 1961).

On appeal, ITAT held

6. On facts of the present case wherein entire tax and interest has been duly paid well within the time limit for payment of notice of demand under section 156 (of Income Tax Act, 1961) and well before the penalty proceedings were concluded, the assessee could not be denied the immunity under section 271AAA(2) (of Income Tax Act, 1961) only because entire tax, along with interest, was not paid before filing of income tax return or, for that purpose, before concluding the assessment proceedings.

7. For the reasons set out above, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter.

8. In the result, the appeal is dismissed.

9. Since in the instant case although the assessee has not paid an amount of Rs.40,99,998/- before filing of the return of income, however, the fact remains that the demand of Rs.49,64,700/- raised by the AO for A.Y. 2010-11 vide order dated 29-12-2011 passed u/s.143(3) (of Income Tax Act, 1961) has been paid on 22-03-2012 which is much before 28-06- 2012, i.e., the date of penalty order passed u/s.271AAA (of Income Tax Act, 1961) for the year under appeal. Therefore, respectfully following the decision of the Kolkata Bench of the Tribunal in the case of Pioneer Marbles and Interiors Pvt. Ltd. (Supra), we hold that no penalty u/s.271AAA (of Income Tax Act, 1961) is leviable in the instant case. Accordingly, the order of the CIT(A) is upheld and the grounds raised by the Revenue are dismissed.

10. Since in the instant case the assessee has paid the taxes before the passing of the penalty order, since huge amount is refundable to the assessee and since the addition of Rs.45,30,800/-

11. ITA No.115/PN/2014 made in A.Y. 2008-09 gets covered in the total declaration made by the assessee amounting to Rs.3,97,09,216/-, therefore, respectfully following the decision of the Coordinate Bench of the Tribunal cited (Supra) we are of the considered opinion that it is not a fit case for levy of penalty u/s.271AAA (of Income Tax Act, 1961). We hold and direct accordingly. The order of CIT(A) confirming the penalty is thus set aside. The ground raised by the assessee is accordingly allowed.

12. In the result, the appeal filed by the assessee is allowed.

Case Reference- Habibullah A. Chaudhary,, Pune vs Assessee 

IN THE INCOME TAX APPELLATE TRIBUNAL

PUNE BENCH "A",PUNE