JUDGMENT

Akil Kureshi, J. - This appeal is filed by the revenue to challenge the judgment of Income Tax Appellate Tribunal. Following question is presented for our consideration:"

Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in upholding the order of CIT(A) deleting the penalty under Section 271AAA without appreciating the fact that the assessee has failed to explain the source and the manner in which the undisclosed income was earned and therefore, the assessee was not covered by the exception provided in the subsection 2 of the section 271AAA of the Income Tax Act, 1961 and consequently liable for penalty under Section 271AAA of the Act?"

2. The issue pertains to imposition of penalty under section 271AAA of the Income Tax Act ("the Act" for short). During search the assessee in the statement recorded under Section 132(4) of the Act had admitted certain undisclosed income. The Assessing Officer however was of the opinion that since the assessee had not disclosed the manner of earning such income, the assessee cannot claim immunity from penalty. In this context, the reference was made to subsection (2) of Section 271AAA which requires