Question And Answer
Subject: Section 271AAC of Income Tax Act
Querist: Prakash
Answered by:
Date: February 23, 2023
Query asked by Prakash

The proviso to section 271AAC provides that no penalty shall be levied in respect of incomes referred to in the specified sections to the extent such income has been included by the assessee in the return of income furnished u/s. 139 and tax in accordance with the provisions of 115BEE(1) (i) has been paid on or before the end of the relevant previous year.

(a) whether the benefit of the proviso will be available in a case where the income shown as turnover by the assessee is treated as unexplained by the assessing officer during the assessment and addition is made under the specified sections? (b) whether even in a case where the income is offered in the return of income under the specified sections, the penalty u/s. 271AAC can be levied on account of failure to make the payment of tax before the end of financial year?

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Where the cash receipts have been included in the turnover of the assessee and tax has been paid on it. No addition can be made as unexplained income and section 115 BBE of the Income-tax Act, 1961 (Act). Once there is no addition, no penalty can be levied.
The Hon’ble Income-tax Appellate Tribunal – Gauhati Bench in the case of ACIT v. Hirapanna Jewellers ITA No.253/Viz/2020 dated May 12, 2021, wherein it was held that since the assessee has already admitted the sales as revenue receipt, there is no case for making the addition under section 68 read with section 115BBE of the Act again.

The Hon’ble Income-tax Appellate Tribunal – Gauhati Bench in the case of Shri Abdul Hamid v. ITO ITA 46-47/Gau/2019 dated July 17, 2020, wherein it was held that section 115BBE of the Act cannot be attracted where the income is taxable under section 28 of the Act.

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