TaxTMI 
TaxTMI 
2012 (6) TMI 627
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....otice was given to the assessee to give year-wise break up of such suppression of sales and accordingly AO worked out further additional income during the assessment proceedings u/s.153A which has been worked out at pages 4 to 7 of the assessment order. The working for the current year is as under: A.Y 2002-03 1. Unrecorded sales as per seized materials 7,22,774 2. Corresponding unrecorded purchases with undisclosed sources of funds (after reducing 10% for G.P and 10% towards recorded sales) 5,78,219 3. Add: Investment made during the year by application of funds 3,48,434 Total (2+3) 9,26,653 9,26,653 4. Less: a. Available fund b/f from A.Y. 01-02 1,87,128 b. Additional income declared Total (a+b) 2,49,493 (-) 4,36,621 5. Shortfall of undisclosed income proposed to be included in the total income Rs. 4,90,032 Similar workings have been given for other years also. After working out the above short fall, AO confronted the assessee that why this addition could not be made. In response to this, it was stated that there were various mistakes in the seized material on account of duplication of some loose papers, totalling mistakes....
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....f proposal made in your show cause notice, we also propose this because it is very difficult to ascertain the date wise suppressed sales because papers seized are mixed up and it is not properly sorted out year wise. If we try to properly adjust year wise it will very troublesome and tedious job, which will consume more time and labour on our part as well as it will consume your time too. And hence just to cooperate with the department and to come out peacefully from this litigation, we have make the above proposal and request again we do hereby submit that all investments in immovable property are duly recorded in books of accounts and not a single investment in immovable is out of books. So far as certain suppressed investment of movable property i.e., small cash in savings account or the payment to LIC, ppf shares are concerned, we have already disclose in while filing either the firm return of parties return." The AO after examining the above noticed that assessee's purchases are not authenticated and suppression of sales is already detected. Accordingly, he estimated the profit @ 10% in respect of the short fall and added a sum of Rs. 49,003/- as undisclosed income on thi....
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.... name of minor children, which are unexplained. In fact, in the submission dated 15/11/07, the appellant has agreed for an addition of Rs. 66,435/- on account of net peak amount arising out of unrecorded sales. In other words, the appellant has on his own admitted the element of concealment in this regard. It is, therefore, established that there is a clear case of concealment of particulars on part of the appellant leading to concealment of income, accordingly, I hold that the action of the AC in imposing penalty on the addition of Rs. 49,003/-made to the returned income u/s 153A is within law and the same is confirmed." In other years also, penalty on account of undisclosed income which was assessed as additional income has been confirmed on the above basis. 5. Before us, Ld. Counsel of the assessee submitted that similar search was conducted in another group concern known as Gopal Shyam & Brothers wherein similar additional income was assessed and penalty which was levied was deleted by the Tribunal and in this regard he filed a full set of papers containing the assessment order, penalty order and the order of the Tribunal in I.T.A.Nos.707 & 708, 278 to 280/M/10. He also relie....
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.... the assessee must have furnished inaccurate particulars of his income. The meaning of the word "particulars" used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee the penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return, must not be accurate, not exact or correct, not according to truth or erroneous. Where there is no finding that any details supplied by the assessee in its return, found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of ....
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....e course of search proceedings the assessee had already declared additional income in the statement recorded u/s.132(4) and such income has been duly returned in the returns filed u/s.153A which have been accepted by the department and, therefore, AO was not justified in levying the penalty. It was further contended that in such situation immunity provided by clause (2) of Explanation 5 of sec.271(1)(c) would be applicable and penalty could not be levied and reliance was also placed on the decision of the Hon'ble Rajasthan High Court in the case of CIT v. Kanhaiyalal Sarupaia [2008] 299 ITR 19. The ld. CIT(A) after examining the submissions agreed with the contentions raised by the assessee and deleted the penalty on the additional income disclosed in the returns filed u/s.153A on the basis of the decision of the Hon'ble Rajasthan High Court in the case of Kanhaiyalal Sarupaia (supra). 12. Before us Ld. DR submitted that the CIT(A) has wrongly relied on the decision of the Hon'ble Rajasthan High Court in the case of Kanhaiyalal Sarupaia (supra). He carried us through Explanation 5 of sec.271(1)(c) and pointed out that immunity granted under this Explanation by clause (....
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....unal in the cases of Ajit B. Zota v. Asstt. CIT [2010] 40 SOT 543 (Mum), Mahendra Mittal v. Asstt. CIT [2011] 132 ITD 80/9 taxmann.com 212 (Mum) and Dy. CIT v. Shri Sunil V. Sangoi in I.T. Appeal Nos. 615 to 619-(Mum) of 2010. 13. He filed a chart showing the due dates of filing of the returns which is as under: ITA NO. A.Y Date of filing original return Returned income (Rs.) Date of filing return in response to notice u/s.153A Income returned u/s.153A (Rs.) Date of assessment u/s 153A Assessed Income (Rs)/ 709/M/10 2004-05 30.10.2004 39,513 12.04.2007 6,65,083 31.12.2007 7,76,932 710/M/10 2005-06 31.10.2005 25,637 12.04.2007 10,68,629 31.12.2007 12,52,515 711/M/10 2006-07 30.10.2006 64,766 05.07.2007 19,86,266 31.12.2007 24,19,721 He pointed out that for A.Yrs. 2004-05 and 2005-06 the date of filing of returns had already been expired. As far as A.Y 2006-07 is concerned, though on the date of search there was still time to furnish the return but actually the return was filed on 30-10-2006 in which income of only Rs. 64,766/- was declared, which means even after the search and after declaring the incomes during the search, assessee did not ....
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....rn filed u/s.139(1) income could not be declared. In this regard he filed a copy of the letter addressed to the department for supply of the documents. He also argued that in sec.153A it is clearly mentioned that earlier returns filed would abate, therefore, these returns are not in existence. The assessee has filed fresh returns in response to notice u/s.153A and assessed income and returned income being same, no penalty was leviable. 16. In the rejoinder, Ld. DR again referred to sec.153A and pointed out that as per 2nd proviso to sec.153A what would abate is only pending assessment. This means the return filed itself is not abated if the assessment has been completed, therefore, it cannot be contended that returned income and assessed income u/s.153A being same, penalty cannot be levied. He argued that as pointed out earlier all Benches of the Mumbai Tribunal have followed the decision of the Third Member in the case of Kirit Dahyabhai Patel (supra) and should have force of a decision of the Special Bench and, therefore, same should be followed. In any case this arose in the case of Dy. CIT v. Omkareshwar R. Kalantri [2010] 42 DTR 489 (Pune), wherein the issue regarding levy of....
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....disclosed so far in his return of income to be furnished before the expiry of time specified in [* * *] sub-section (1) of section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income.] The highlighted portion clearly shows that if income has not been declared before the expiry of time under sub-sec.(1) of sec.139, then immunity is not available. This aspect has been considered by the Learned Accountant Member in the case of Kirit Dahyabhai Patel (supra) vide para 7.1 which is as under: 7.1 In the case under consideration, the AO levied the penalty under s. 271(1)(c) of the Act for concealment of income. The CIT(A) cancelled the penalty on two premises i.e., (i) by making applicability of concession in Expln. 5(2) to s. 271(1)(c) of the Act and (ii) penalty on returned income under s. 153A of the Act by considering the return filed under s. 139 of the Act as abated and non est in the eyes of law. As regards contentions of the taxpayer regarding applicability of the aforesaid Expln. 5 to s. 271(1)(c) of the Act, it is noticed that prior to the insertion of Expln. 5 to....
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.... the Rajasthan High Court in the case of Kanhaiyalal Sarupaia (supra) as well as the decision of the Hon'ble Madras High Court in the case of S.D.V. Chandru (supra) observed vide paras 11 to 13 as under: "11. I have considered the arguments. Since the learned counsel for the assessee has not disputed the position that section 271(1)(c) is applicable to an assessment made under section 153A, it is not necessary for me to examine that position. The main question before me, which was debated at length, was whether the immunity granted under Explanation 5(2) to section 271(1)(c) is available to the assessees. No judgment of the Hon'ble Gujarat High Court on this question was brought to my notice by either side. The Madras High Court in S.D.V. Chandru's case (supra) has held that the words in Explanation 5(2)"....has been acquired out of his income which has not been disclosed in his return of income to be furnished before the expiry of time specified in sub-section (1) of section 139" are not to be read as referring to income so far not disclosed in respect of the previous year which is to end after the date of the search and that the words which refer to the time limit u....
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..... 469 (162 ITR St. 21) to which my attention was drawn do not advance the case of the assessees. The statement of objects and reasons says that the amendment was being made "to remove an anomaly in the existing provisions in respect of cases where penalty is imposable for concealment of income even if the taxpayer has no intention to fabricate evidence or to conceal his undisclosed income after search and seizure". The anomaly and the remedial amendment made are explained by the above circular in the following words: "As per the existing Explanation 5 to section 271(1) of the Income- tax Act, if at the time of search, assets which are not recorded in the books of account are found, a taxpayer is liable to penalty for concealment even if he declares the full value of those assets as his income in the return filed after the search. This provision has been found to operate, even in cases where the assessee has no intention to fabricate any evidence and he includes in his return the income out of which such assets have been acquired. Hence, by the Amending Act, it has been provided that if an assessee in such cases makes a statement during the course of the search admitting that the as....
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....ime for filing the return u/s.139(1) is yet to expire. 18. The Ld. Counsel of the assessee has vehemently argued that this decision has already been distinguished by the Kolkatta Bench of the Tribunal in the case of Avinash Ch. Gupta (supra) and that the issue before the Hon'ble Bombay High Court in the case of Sheraton Apparels (supra) was not in respect of immunity under Explanation 5 to sec.271(1)(c). In the case of Sheraton Apparels (supra) a question of law raised before the Hon'ble High Court was as under: "Whether, on the facts and in circumstances of the case and law, the diaries, on the basis of which the additions were made could be regarded as books of account for the purposes of clause (1) of Explanation 5 to section 271(1)(c) of the Act, so as to provide immunity to the appellants ?" No doubt, the question was not exactly on clause (2) of Explanation 5, but the High Court has considered the whole Explanation under the heading Legislative Intentions at pages 28 & 29 which reads as under: "Prior to the insertion of Explanation 5 to section 271 by the Taxation Laws (Amendment) Act, 1984, with effect from October 1, 1984, an assessee, who is found to be the o....
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....e the decision of the Third Member in the case of Kirit Dahyabhai Patel (supra) has not been noted. When similar situation arose before the Pune Bench in the case of Omkareshwar R. Kalantri (supra) wherein assessee relied on the decision of the co-ordinate Bench in the case of Sarla M. Ahuja (supra) for deletion of the penalty but the revenue placed reliance on the decision of the Third Member in the case of Kirit Dahyabhai Patel (supra). The issue has been discussed at para-11 which reads as under: "Considering the above submissions, we find substance in the contention of the learned Departmental Representative that the decision of Third Member Bench in the case of Asstt. CIT v. Kirit Dahyabhai Patel (supra) dt. 25th June, 2009 on the issue was not brought to the notice of the Pune Bench during the course of hearing of appeals in the cases of Narayandas Muiji Thakar and Karsandas Mulji Thakkar (supra) especially when the same was in existence at that time. The Third Member Bench decision in the case of Kirit Dahyabhai Patel (supra) had an occasion to discuss the issue in detail in view of several dec1sions cited before it inducing those which have been relied upon before us by t....
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....a) has been followed, which is based upon the binding decision of (Hon'ble jurisdictional Bombay High Court in the case of Sheraton Apparels (supra). The Third Member Bench has also discussed the CBDT Circular No. 469, dt. 23rd Sept., 1986 [(1986) 162 ITR (St) 21] explaining the amendment showing benefit of immunity conferred by Expln. 5(2), as amended by Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, w.e.f. 10th Sept., 1986. Hence the same cannot be ignored. Certainly there would have been substance in the contention of the learned Authorised Representative for sending a proposal by this Bench for constitution of a Special Bench to decide the issue if the present Bench would not have agreed with the latest elaborate decision of Third Member Bench of the Tribunal on the issue or the Co-ordinate Bench would have passed a detailed order after discussing that the learned CIT(A) had properly applied the decision of the Bench in the case of Smt. Sarla M. Ahuja (supra). But it is not the case of the assessee. The present situation has arisen only because the parties appearing in the cases of Narayandas Mulji Thakkar and Karsandas Mulji Thakkar (supra) of the group ....
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....ndisclosed income, whether further satisfaction is required to be recorded by the Assessing Officer? Our answer will be, No. So far as the undisclosed income unearthed in course of the search action, only protection the assessee gets to the extent provided in Explanation 5 to section 271(l)(c) and otherwise it is presumed that to that extent the assessee deemed to have concealed the particulars of his income or furnished inaccurate particulars of his income. So far as the decision of Rampur Engg. Co. Ltd's case (supra) is concerned, this is a case where the normal assessment is made. In the case where assessment is made in consequence of the search and if the assessee himself admits and offers an undisclosed income to tax then that is covered by Explanation 5 to section 271(1)(c) of the Act and in our opinion, no further satisfaction is required to be recorded by the Assessing Officer. We, therefore, hold the assessee has himself admitted the undisclosed income to the extent of Rs. 6,20,000 in respect of the cash deposits in his two bank a/cs and offered the same and also paid the tax on it, then Explanation 5 to section 271(l)(c) is applicable and to that extent the assessee h....
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....cordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. [(2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of su....