The assessee, an individual, filed his return of income declaring total income of Rs. 64.87 lakhs and claimed exemption of long-term capital gain on sale of shares amounting to Rs. 2.77 crores u/s. 10(38) of the Act. A search and seizure activity was carried out in the case of a company with which assessee was associated. As per the statement recorded u/s. 132(4) of the Act, assessee declared and surrendered the above-mentioned long-term capital gain of Rs. 2.77 crores on sale of shares as undisclosed income and offered the same for taxation. The assessment was completed u/s. 143(3) r.w.s. 153A of the Act on the total income of Rs. 3.44 crores which included the income of Rs. 2.77 crores admitted by the assessee and surrendered to tax as undisclosed income during the search and seizure action. AO initiated the penalty proceedings u/s. 271(1)(c) of the Act in respect of the income surrendered by the assessee and levied the penalty.  CIT(A) deleted the penalty on the ground that the additional income surrendered by the assessee was based on statements recorded during the search and not based on any seized material or any finding in the assessment and therefore cannot be treated as concealed income.  On appeal by the revenue the Tribunal relied on the decision of Rajasthan High Court in the case of Jai Steel (India) v. ACIT (2013) 259 ITR 281 (Raj.)(HC)  which held that the addition made in absence of incriminating material in the proceedings u/s. 153A of the Act where the assessment was not pending on the date of search is not sustainable. Thus, upholding the order of Ld. CIT(A), Tribunal held that once the assessee has raised all these contentions and explained during the penalty proceedings that the transactions of purchase and sale of shares and consequential long term capital gain are genuine based on the documentary evidence and further all these were part of the books of account and disclosed in the return of income filed u/s. 139 of the Act, it would certainly lead to the conclusion that the penalty was not leviable u/s 271(1)(c) of the Act. (AY. 2013-14)