Compliance with all conditions under Section 271AAA(2) of the Income Tax Act is mandatory to avoid penalty for undisclosed income.

JUDGMENT :

MANMOHAN, J.

1. Leave granted.

2. The present appeal has been filed challenging the impugned judgment and order dated 02nd August, 2022 passed by the High Court of Karnataka at Bengaluru in I.T.A. No. 125 of 2017 whereby the High Court dismissed the appeal preferred by the Appellant under Section 260A of the Income Tax Act, 1961 (for short ‘Act 1961’).

FACTS

3. The facts giving rise to the present appeal are that a Memorandum of Understanding (‘MOU’) dated 19th January, 2009 was entered into between Mr. Hashim Moosa on the one hand and the Appellant as well as Mr. Surendra Reddy on the other, for procuring lands at a certain price from the land procurers, i.e. the Appellant and Mr. Surendra Reddy. As per Clause 10 of this MOU, Rs. 10,00,000/- (Rupees Ten lakhs only) was paid to the procurers for arranging facilitation of transfer of land from the landowners to Mr. Hashim Moosa/his nominees. No other payment, except a reimbursement under Clause 11, was contemplated under this MOU.

4. A transaction was entered into between Mr. Hashim Moosa and the Space Employees’ Co-operative Society Ltd. (in short ‘Society’) on 26th September, 2009. It was in order to facilitate purchase of land for this transaction that the MOU dated 19th January, 2009 was entered into by the Appellant with Mr. Hashim Moosa.

5. A search and seizure operation was carried out at the Appellant’s premises on 25th November, 2010 under Section 132 of the Act 1961. As recorded in paragraph 4 of the assessment order dated 15th March, 2013, the Appellant disclosed an income of Rs. 2,27,65,580/- (Rupees Two Crores Twenty Seven Lakhs Sixty Five Thousand Five Hundred Eighty Only) as a consequence of the search and seizure.

6. A notice dated 21st August, 2012 under Section 142(1) of the Act 1961 was issued to the Appellant calling for return of income for Assessment Year (‘AY’) 2011-2012. The Appellant filed his return of income on 05th November, 2012. The Appellant returned a total income of Rs. 4,77,11,330/- (Rupees Four Crores Seventy Seven Lakhs Eleven Thousand Three Hundred Thirty Only) for Previous Year (‘PY’) 2010-2011, relevant to AY 2011-2012. It is pertinent to mention that the due date for filing return of income for AY 2010-2011 expired on 31st July, 2010 in terms of Section 139(1) of the Act 1961.

7. The Respondent issued the Assessment Order dated 15th March, 2013 for PY 2010-2011 relevant to AY 2011-2012, in respect of the Appellant. The total income assessed was Rs. 4,78,02,616/- (Rupees Four Crores Seventy Eight Lakhs Two Thousand Six Hundred Sixteen Only). The relevant portion of the Assessment Order, which has attained finality, is reproduced herein-below:

“4. Declaration before the DDIT (Inv) during search proceedings:

4.1 Space Employees's Co-operative Housing Society Limited entered into an MOU on 26-09-2009 with Mr. Hashim Moosa for acquiring 120 acres (which was further extended to 150 acres) of lands in Hoskote Taluk for a consideration of Rs. 74,26,980/- per acre. The Society will pay Mr. Moosa Rs. 73,26,980/- per acre of registered land to and the balance Rs. 1 lakh per acre shall be deposited in a Joint Escrow Account till the entire extent of 120 acres of land is registered in favour of the Society.

4.2. To procure lands for the Society, Mr. Hashim Moosa had entered into an MOU on 19-01-2009 with Mr. K. Krishna Murthy and P. Surendra Reddy for procuring lands @ Rs. 70,00,000/- per acre.

4.3. Consequent to search action in your case, the assesse had admitted income for