Div Bench of Karnataka High Court dismissed an appeal against penalty imposed under Section 271AAA of Income Tax Act 1961, holding that compliance with all three conditions in Sub-section (2) is mandatory and irrelevant that returned income exceeded admitted income.
Penalty order confirmed; appeal dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF AUGUST, 2022
PRESENT
THE HON’BLE MR. JUSTICE P.S.DINESH KUMAR
AND
THE HON’BLE MRS. JUSTICE M.G.UMA
I.T.A. NO.125 OF 2017
BETWEEN:
SHRI. K. KRISHNAMURTHY 'CHOWDESWARI PRASANNA' NO.94, 1ST MAIN, 2ND CROSS PRASHANTH EXTENSION HOPE FARM, WHITEFIELD BANGALORE - 560 066. .…APPELLANT
[BY SHRI. ASHOK A. KULKARNI, ADVOCATE]
AND:
THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-7(1) 4TH FLOOR, C WING KENDRIYA SADAN KORAMANGALA BANGALORE - 560 034. ....RESPONDENT
[BY SHRI. K.V. ARVIND, ADVOCATE]
THIS ITA IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:17/10/2016 PASSED IN ITA NO.667/BANG/2015, FOR THE ASSESSMENT YEAR 2010-2011, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATE THEREIN AND ETC.
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THIS ITA COMING ON FOR HEARING, THIS DAY, P.S.DINESH KUMAR J, DELIVERED THE FOLLOWING:
JUDGMENT
This appeal by the assessee has been admitted to
consider following questions of law:
1. Whether the compliance with all the three conditions mentioned in Sub-section (2) of Section 271AAA mandatory or not?
2. Whether penalty prescribed @ 10% of undisclosed income under Section 271AAA of the Act can be reduced if the tax together with interest on the undisclosed income as declared by the Assessee in the course of search in a statement under Section 132(4) is partly complied with, with a delay, in the absence of specific period for such compliance specified in the Sub-clause (iii) of Section 271AAA of the Act?
advocate for the appellant and Shri K.V.Aravind, learned Senior Standing Counsel for the respondent.
1 Deputy Commissioner of Income Tax
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2 Deputy Director of Income Tax
3 Commissioner of Income Tax (Appeals)
4 Income Tax Appellate Tribunal
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admitted only Rs.2.27 Crores before the DDIT during the course of search. Therefore, the amount returned can be bifurcated into two parts namely, the amount which the assessee has admitted and the excess amount which the assessee has returned as income.
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to second condition, assessee has substantiated the manner in which the undisclosed income was derived. Hence, this condition is also complied. So far as third condition is concerned, Shri Aravind submitted that search was conducted on November 25, 2010 and as late as October 17, 2016, the Tribunal has recorded a finding of fact that assessee had not paid tax and interest. Since the third condition is not complied with, it cannot be held that Sub-section (1) would not apply to the assessee's case.
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has thus failed and therefore, penalty cannot be imposed.
reads as follows:
" The assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007 [but before the 1st day of July, 2012], the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. "
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conditions in Sub-clause (2) of Section 271AAA of the Act are mandatory.
it is accordingly dismissed.
No costs.
JUDGE
Yn.
Sd/JUDGE
2 issues framed by the court
Whether compliance with all three conditions mentioned in Sub-section (2) of Section 271AAA mandatory?
Whether penalty prescribed under Section 271AAA can be reduced if tax and interest are partly complied with in absence of specific period?
3 provisions across 1 enactments
SHRI. K. KRISHNAMURTHY
THE DEPUTY COMMISSIONER OF INCOME TAX
P.S.DINESH KUMAR
M.G.UMA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
