TaxTMI 
TaxTMI 
2015 (3) TMI 361
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....ch was over and excess to the original return. In respect of assessment year 2009-10, i.e. in the second set of appeals, the penalty under section 271AAA was imposed in each case of the respective assessees and the same has been deleted by Ld. CIT(A), against which Revenue has filed the appeals. These appeals were argued together by both the parties, therefore, for the sake of convenience all of them are disposed of by this consolidated order. 2. Dr. K.Shivram, Ld. Sr. Counsel is representing the assessees and has submitted a chart, which read as follows: "Note : As per the order passed by Hon'ble ITAT in the case of Prakash Steelage Ltd. ITA No 5257/Mum/2012 dtd. 26/11/2014 the said issue is covered in respect of penalty levied u/s. 271(1)(c) Explanation 5A and the issue was decided against the assessee (Pg.No.6-13, Para 8-15, relevant para 13) S.No. Sr.No. as per Board Name of the Assessee A.Y Appeal ITA No. Section Amount of Penalty CIT(A) order 1. 12 Hemant Kanugo 08-09 Assessee 5046/Mum- 2012 271(1)(c) 1,10,437 Pg.No.9,para 6 2. 26 Vimal P. Kanugo -do- -do- 5249/Mum-2012 -do- 1,10,437 Pg.No.....
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.... may be mentioned here that there may be variation in the facts of each of the case as it relates to particulars of additions and quantum and consequential penalty but as per the submission of Ld. Sr. Counsel and his admission , these appeals were heard together and disposed of by taking these appeals as covered by the aforementioned orders. As in the matters relating to penalty under section 271(1)(c) the Tribunal has decided the issue against the assessee and in relation to matters relating to levy of penalty under section 271AAA of the Act, the matter has been restored back. 6. It is in these circumstances these appeals were taken for hearing accepting the submissions of Ld. Sr. Counsel for the assessee that these appeals are covered by the aforementioned orders of the Tribunal. 7. For the sake of completeness the relevant observations of the Tribunal on the issue relating to levy of penalty under section 271(1)(c) of the act in the aforementioned order dated 26/11/2014 are reproduced below. 8. Now we will take up appeal for A.Y. 2008-09, being ITA No. 5257/Mum/2012, vide which following ground has been raised: "The Hon'ble Commissioner of Income Tax (Appeals) (herei....
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....cordingly the assessee's return income filed u/s 153A was accepted by the AO in the order passed u/s 143(3) r.w.s. 153A. 10. During the course of the penalty proceedings, in response to the show cause notice, the assessee submitted that vide letter dated 22.12.2010, the assessee has given detail reply with regard to amount declared towards incentive against the interest expending outside the books of account. Since the income has already been included in the return of income, no penalty should be levied. However, the assessing officer rejected the assessee's submission and held that in view of Explanation-5A to section 271(1)(c), the assessee is deemed to have concealed the particulars of income on the amount of Rs. 49,21,666/-, as the assessee had not shown this amount in the original return of income filed on 30.09.2008. Accordingly he levied penalty of Rs. 15,20,795/-. Such a penalty has also been confirmed by the Ld.CIT(A), relying on certain decisions which has been dealt by the Ld.CIT(A) at pages 31 to 33 of the appellate order. The sum and substance of his reasoning is that, in view of Explanation 5A to section 271(1)(c), immunity is not available to the assessee for undi....
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....n of income had already expired for the A.Y. 2008-09. Here in this case original return of income u/s 139(1) was filed on 30.09.2008 declaring total income of Rs. 5,71,84,099/-. In the wake of search and seizure action, the assessee had made declaration for offering additional income, which was based on documents found at the time of search. The documents seized, revealed that the group concerns including assessee were indulged in receiving and paying of excess interest in cash over and above the receipt and payment of interest accounted in the regular books of account. The assessee has also incurred certain expenses which were towards process of loans paid by the assessee in cash or cheques under the head brokerage/commission. Statement of Shri Ashok M. Seth, Executive Director of the company was also recorded u/s 131 during the course of survey u/s 133A, which was carried out simultaneously and explained the contents of impounded material and its implication in the books of account. Base on the seized documents, an income of Rs. 49,21,666/- was offered as undisclosed income. This amount was included in the return of income filed on 17.08.2009, in response to notice u/s 153A dated....
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....o state that assessee has declared an amount of Rs. 1,46,666/- towards Incentives against the interest expended In books of Account. Such Incentive of Rs. 1,46,666/- has been reed. In cash and has been declared as undisclosed Income. " 5. It is therefore clear from the above facts your honour has wrongly Initiated penalty proceedings in assessee's case even after voluntary disclosure by the assessee and therefore the penalty proceeding initiated by Your Honour should be dropped. 6. It is therefore submitted that your assessee has not deliberately concealed any fact or concealed any particulars of income at' the 'time of filing of the return, hence no penalty should be levied. 7. In view of the above facts and above. legal case laws, it Is prayed that penalty proceedings in the case of the assessee should be dropped. However, the assessing officer has levied the penalty after invoking Explanation 5A to section 271(1)(c). The main issue before us is, whether under the aforesaid facts, penalty can be said to be leviable under Explanation 5A to section 271(1)(c). For sake of ready reference Explanation 5A which has been brought in the statute w.e.f. 01.06.2007 r....
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....ded in clause (i) and (ii). If the cases fell within the said exceptions, then no penalty is leviable. Such exceptions have not been provided in Explanation 5A. All the case laws which have been referred by the assessee, pertain to exception clauses provided in Explanation-5. Here in this case admittedly the search has taken place after 01.06.2007 and the return of income for the A.Y. 2008-09 had fallen due much before the date of search. In the return of income filed prior to the date of search, the income of Rs. 49,21,666/- was not included by the assessee. The additional income which has been declared after the date of search was in the return of income filed u/s 153A and not earlier. Thus in our view Explanation-5A is clearly attracted and the penalty levied by the AO u/s 271(1)(c) has rightly been confirmed by the Ld.CIT(A). Accordingly, the grounds raised by the assessee is dismissed and the assessee's appeal for A.Y. 2008-09 is dismissed. 7.1 In this view of the situation, after hearing both the parties in respect of ITA No.5046 and others, (1st set of appeals), the issue is decided against the assessee and these appeals are dismissed. 7.2 In respect of levy of penalty....
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....him. 4.4 In this regard, we also consider it relevant to state our prima facie observations, so that the same are kept in view by the ld. CIT(A) while deciding the assessee's case before him. Firstly, any income to be subject to penalty u/s.271AAA should be an 'undisclosed income', as defined vide Explanation below sub-subsection (4) the said section. The penalty in the instant case, however, has been levied on the income of Rs. 3,46,632/-, which, as it would appear to us on a reading of the assessment and penalty order, is only on account of a difference in the valuation of stock. Thus a finding as to the impugned incomes being undisclosed incomes is a pre-requisite for the application of the provision. Further, each of the three ingredients as specified u/s. 271AAA(2) would need to be separately examined for their satisfaction by the assessee if the penalty there-under is not to be levied and, thus, sustained. While this may seem axiomatic and, therefore, superfluous for us to be stating so, liable to be construed as an expression of over anxiety, we do so as we observe a gross overlooking of this vital aspect of the matter. As we observe, the undisclosed income of Rs. 562.....
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....ection 271AAA. While the former provision is applicable in the case of concealment of or furnishing inaccurate, particulars of income, considering the deeming provisions in its respect under the section, s. 271AAA provides for a mandatory levy of penalty except where the assessee satisfies the conditions of section 271AAA(2). Even the saving upon proving a reasonable clause, as provided under section 273B, is not applicable for a penalty imposable u/s.271AAA, which is only in respect of undisclosed income, so that what alone is relevant is the applicability of the provision in the facts of the case. It is apparent from the reading of the said decision that the environmental conditions existing at the time of the search, including the manner in which the statement u/s.132(4) is generally recorded, prevailed with the hon'ble court in holding of a substantial compliance in the facts of the case, i.e., qua the condition of admission of undisclosed income and the statement of the manner in which it is derived, also provided u/Expl.5 to s. 271(1)(c), saving penalty. As explained by it, this is as the assessee had no occasion to state or make averments in the manner as required by or unde....