TaxTMI 
TaxTMI 
2014 (1) TMI 1027
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....lty on the sum offered for taxation even though it is on estimated basis. 4. Brief facts of the case are that a search and seizure operation u/s. 132(1) of the Act were carried out in the Vijay group of cases on 22.9.2005. The search operations were also carried out at the business premises of the Chartered Accountant of the Vijay group of cases and certain documents were found and seized which showed that the assessee carried out business of hotel and also earned interest income and other income in different years. The assessee offered to tax Rs. 2.47 crores in his statement made before Investigation Wing on 5.12.2005. For the assessment year 1999-2000, the assessee filed return of income declaring total income at Rs. 5,52,227/- and agricultural income at Rs. 51,545/-. After the search and seizure operation in response to notice u/s. 148 of the Act, the assessee declared total income at Rs. 19,45,227/- which included additional income of Rs. 13,93,000/- which the assessee has stated to have declared suo motu before the investigation authorities. 4.1. During the course of the assessment proceedings, the AO observed that as per page No. 7 & 8 of Annexure A-4 to Panchanama dt. 22.9....
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....fered purely on estimated basis and has no connection/reference to any of the seized material. The AO has accepted the additional income without recording any satisfaction about the concealment of income. The Ld. Counsel further argued that this income is an estimated income and penalty cannot be levied on estimated income. 7. The Ld. Departmental Representative strongly contended that the income was not found recorded in the books of account of the assessee and therefore on account of failure on the part of the assessee to maintain account the assessee has to estimate his income. It is the say of the Ld. DR that the assessee himself has admitted that he has capitalized the amount of income so estimated which means that the income so estimated has been used to explain investment/loans etc. The Ld. DR says that if it had been a case of estimation of income without any relation to the reality, then the assessee could not have capitalized the same. This fact shows that income estimated by the assessee is close to income earned by it and is not an imaginary figure. The Ld. DR further submitted that there is no universal rule that penalty u/s. 271(1)(c) is not leviable on income estima....
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....ed hereinabove do not suggest any levy of penalty u/s. 271(1)(c) of the Act. The decisions relied upon by the Ld. DR are misplaced. We accordingly direct the AO to cancel the levy of penalty. Appeal of the assessee is accordingly allowed. ITA No. 5920 to 5925/M/11 -A.Yrs 2000-01 to 2005-06 10. The grievance of the assessee in all these assessment years relate to the levy of penalty u/s. 271(1)(c) of the Act though quantum may defer. The return of income for all these years were filed u/s. 153C of the Act which contain income which was not declared in the original return filed u/s. 139 of the Act. The issue involved is whether penalty can be levied on income which is not declared in the original return of income but declared in the return of income filed in response to notice issued u/s. 153A of the Act. It is the claim of the assessee that when the income declared in the return of income filed in response to notice u/s. 153A has been accepted, no penalty u/s. 271(1)(c) is leviable. For this proposition, strong reliance has been placed on the decisions of the Tribunal in the case of :- 1) Prem Arora Vs DCIT - 24 Taxmann.come 260 (Delhi Tribunal) 2)Purti Sakhar Karkhana Vs DCIT 3....
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....arties and perused the orders of the lower authorities. It is not in dispute that additional income was declared in response to notice u/s. 153A of the Act. The position of originally returned income and the assessed income would be clear from the following chart: 13. A perusal of the above chart clearly brings the case of the assessee covered by the decisions in favour of the assessee mentioned at page-7 of this order. It would be pertinent to refer to the decision of the Delhi Bench in the case of Prem Arora Vs DCIT (supra) wherein it has been held as under: "On bare reading of Section 153A it is seen that this section starts with a non obstante clause relating to normal assessment procedure covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after 31.5.2003. The sections, so excluded, relate to filing of return, assessment and reassessment proceedings. Further, section 153A intends to assess or reassess 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. Thus, the legislative intention is not to assessee escaped income as in sec....
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....as been imposed on the income disclosed in the return of income filed in response to notice u/s. 153A. The reason for imposition of such penalty is that the act of concealment related to return filed u/s. 139(1) and not to return filed u/s. 153A. Therefore, the question in the present appeals is limited only to the extent that whether concealment penalty can be levied in such a case with reference to original return. The case of the AO is that assessee has committed this default while filing the original return of income, therefore concealment has to be viewed with reference to return originally filed and AO also has referred to the provisions of Explanation-5. Ld. CIT(A) has upheld the order of the AO. We found that this issue has been considered at length in the aforementioned order of Delhi ITAT in the case of Shri Prem Arora Vs DCIT (supra)." 15. In another case before Nagpur Bench In ITA Nos 150 to 155/Nag/10, the Tribunal has held that where returned income filed u/s. 153A is accepted by the AO and there is no variation in assessed income and returned income, penalty u/s. 271(1)(c) cannot be imposed. In another case before the Tribunal Mumbai Bench in the case of Vrajlal T. ....