TaxTMI 
TaxTMI 
TaxTMI 
2013 (8) TMI 593
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....g the legal position as provided u/s 132B(1) according to which advance tax liability is not included in the existing liability. 3. That the Ld. CIT(A) failed to appreciate the fact that the section 132B(1) is very clear that the seized or relinquished assets may be dealt with against any "existing liability" under the Income Tax Act and not against the Advance Tax and in doing so lost sight of the very purpose of the legislation of section 132B(1) of the Income Tax Act. 4. That the Ld. CIT(A) erred both in law and on facts in deleting the penalty u/s 271AAA which was valid and levied as per law. 5. That the appellant craves leave to file further grounds of appeal, if required, at the time of hearing. 6. It is prayed that the order of CIT(Appeals) be set aside and that of the A.O. be restored." 2. The brief facts in the grounds of the revenue are that the assessee had disclosed an amount of Rs.10 crores during the course of search u/s 132(4) and the said amount had been disclosed in the return of income filed on 29.02.2009 u/s 139(1), however, the assessee had not paid the due tax on the undisclosed income. The assessee submi....
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....ce tax demand of Rs.3,45,69,000/- and after adjustment the balance payable be kindly initiated as the assessee was not left with any cash and he had to arrange some bank loan for payment of balance advance tax. Copies of this letters were also sent to the CIT-1, Amritsar and CIT(Central), Ludhiana. iv) the assessee did not receive any reply that his applications had been rejected. v) The assessee had paid Rs.10,00,000/- earlier by first two instalment of Rs.5,00,000/- each. He requested for adjustment of seized amount of Rs.89,30,000/- towards last installment before due date and also paid Rs.2,52,00,000/- before 31/3/2009. vi) As per intimation u/s 143(1), the seized amount of Rs.89,30,000 was not considered/adjusted as advance tax and interest of Rs.22,16,382/- was charged u/s 234B. An application u/s 154 was filed on 19/01/2011. vii) Assessee's paid application u/s 154 was rejected by order dated 28.02.2011, holding that credit of Rs.89,30,000/- was not given since the said amount was lying in the P.D. account of the CIT(Central), Ludhiana and this amount lying in P.D. Account can not be treated as a payment against either ....
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....ome. The only issue is that the assessee was levied interest u/s 234B for short payment of advance tax due on the income return which in turn was caused by inaction on the part of the A.O. to adjust the seized cash towards advance tax liability as requested by the assessee. The assessee's appeal against the order of the A.O. refusing to rectify the order imposing interest u/s 234B has been adjudicated by the undersigned. I have held that no interest u/s 234B was leviable in view of the judgment of Hon'ble Jurisdictional High Court in the case of CIT vs. Ashok Kumar 334 ITR 355. This meant that the alleged short payment of interest was only on account of incorrect imposition of interest by the A.O. which stands deleted. Therefore, the basis to impose penalty u/s 271AAA in the form of non-payment of taxes/interest does not survive and thus penalty imposed is directed to be deleted." 4. The Ld. DR, Mr. Tarsem Lal argued and invited our attention at the outset to the provisions of section 271AAA which reads as under: " [Penalty where search has been initiated. 271AAA.(1) The Assessing Officer may, notwithstanding anything contained in any other provisions o....
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....,000/- and also paid Rs.2,52,00,000/- before 31.03.2009. As per intimation u/s 143(1), the seized amount of Rs.89,30,000/- was not considered/adjusted and interest of Rs.22,16,382/- was charged u/s 234B. An application under section 154 was filed on 19.01.2011 which was rejected by order dated 28.02.2011 by holding that the amount lying in P.D. account cannot be treated as payment either on account of self-assessment tax or advance tax. 7. The Ld. counsel for the assessee further argued that while making assessment under section 143(3), the AO observed "Tax due on returned income" has not been considered as credited into Govt. Account though it was lying in the P.D. account. In this way tax has not been paid/credited on the returned income disclosed u/s 132(4) of the Act. Therefore, penalty proceedings u/s 271AAA of the Act are initiated. He invited our attention to the order of penalty u/s 271AAA of the Act where the A.O. in his order dated 23.06.2011 has observed that the stand of the assessee is not acceptable as the case of the assessee is weak on merits as section 234B is very clear about the fact that interest for default in payment of advance tax under the provision of sect....
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.... Salil Kapoor, Advocate on identical facts relied upon the decision of co-ordinate Bench in the case of DCIT vs. Pioneer Online Ltd in IT No.1324-5/Kol/2011 dated 17.02.2012 reported in (2012) 52 SOT 94 (Kolkata) (URO) and DCIT vs. Pioneer Marbles & Interiors (P) Ltd. in ITA No.1326/Kol/2011 dated 17.02.2012 (reported in (2012) 50 SOT 571 (Kolkata). He further invited our attention that the provisions of section 271AAA have been omitted w.e.f. 01.07.2012 and in place of 271AAA, the new section i.e. section 271AAB has been introduced where the time limit has been prescribed and accordingly levy of penalty in different circumstances has been prescribed in the newly inserted section. The Ld. counsel for the assessee, therefore, clarified and invited our attention that had the time limit for payment of tax alongwith interest could have been the intention of the legislature while incorporating section 271AAA then there would have been no omission of the section 271AAA and there would not have been introduction of new section as 271AAB prescribing the time limit and other conditions, which were not present in earlier section 271AAA, which in fact are matter of present dispute. Therefore,....
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....ntum of penalty in different circumstances has been introduced in the Act itself. Therefore, the legislators were clear that there is no intention of the law w.r.t. time limit embedded in section 271AAA with regard to payment of tax together with interest. Accordingly, section 271AAB was introduced w.e.f. 01.07.2012 by Finance Act, 2012 incorporating therein time limit, which for the sake of convenience is reproduced as under: 271AAB (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the Ist day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,- (a) a sum computed at the rate of ten percent of the undisclosed income of the specified previous year, if such assessee- (i) in the course of the search, in a statement under subsection (4) of section 132, admits the undisclosed income and specified the manner in which such income has been derived' ii) substantiates the manner in which the undisclosed i....
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....he income subsequently returned by the assessee, vide income tax returns filed on 13th November 2007 for the assessment year 2007-08 and 29th September 2008 for the assessment year 2008-09. The assessment under section 143(3) for the assessment year 2007-08 was completed on 31st December 2009, but, while finalizing the assessment, the Assessing Officer also initiated the penalty proceedings under section 271 AAA and observed that "Since the assessee has not paid the full taxes and interest on disclosure made u/s 132(4), penalty proceedings under section 271AAA of the Act are initiated." the same was the position with regard to the assessment year 2008-09. In the resultant penalty proceedings, it was submitted by the assessee that before filing the income tax return, the assessee had paid advance tax of Rs 18,72,162 on 25.10.2007 and the assessee had also requested that the cash of Rs.15,00,000 seized from assessee's premises during search operation be adjusted against the balance liability. The adjustment was finally carried out on 17.3.2010 and the cash seized was adjusted against the tax liability. There was also a demand for 234B and 234 C liabilities and there is no dispute tha....
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....o the penal provisions of Section 271 AAA(1). Considering the facts and circumstances of the case, I am of the opinion that it is a fit case for imposition of penalty under section 271 AAA. The quantum of penalty is computed @ 10% of the amount of disclosure at Rs50,00,000. 4. Aggrieved, assessee carried the matter in appeal before the CIT(A). Learned CIT(A) noted that "from a plain reading of the above section (i.e. 271AAA) it is apparent that if the conditions laid down under sub section 2 of Section 271 AAA are satisfied, no penalty will be imposed" and that "....in section 271AAA, there is no precondition that the tax alongwith interest must be paid before filing of return or any other specified date". It was in this backdrop, and in a situation in which it was an admitted position that due tax, along with interest, was paid before the penalty proceedings were concluded, the CIT(A) deleted the impugned penalty. The Assessing Officer is not satisfied with the stand so taken by the CIT(A) and is in appeal before us. 5. We have heard the rival contentions, perused the material on record and duly considered facts of the case i....
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.... in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted; (b) "specified previous year" means the previous year- (i) which has ended before the date of search, but the date of filing the return of income under sub -section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted. 7. We find that under the scheme of Section 271AAA, there is a complete paradigm shift so far as penalty in respect of unaccounted income unearthed as a result of search operation carried out on or after 1s t June 2007 is concerned. Unlike in the case of penalty under section 271(1)(c), Section 271 AAA, without any reference to findings or presumptions of concealment of income or the findings or presumptions of furnishing of inaccurate particulars, provides that in respect of unaccounted income in the cases where search initiated after 1st Ju....