2013 (7) TMI 934

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....A/PDK/Res/4 and was asked to go through the same and explain the contents thereon. In reply, Sri Ravinder Kedia disposed that pages 1 to 104 of Annexures A/PDK/Res/3 and Pages 1 to 30 of A/PDK/Res/4 are the petty cash books maintained by Sri Mahesh Sharma, Cashier of M/s. Binju Metals and Alloys Industries P Ltd. He deposed that the scribbling in the loose sheet pertains to receipts and payments which were not reflected in the regular books of account of the business concern and are stated to be done for temporary adjustments. 4. With regard to the acronyms, he deposed that "BM" stands for M/s. Binju Metals and alloys Industries Ltd and 'DK' stands for Dilip Kedia. After referring to the above mentioned incriminating evidences, Sri Ravinder Kedia further deposed that the Peak Credit in your name i.e. Sri Dilip Kedia as appearing in page No.101 of annexures A/PDK/Res/3 as on 16/12-02-07 was Rs. 48.34,810/- and offered the same as additional income for the financial year 2006-07 relevant for the assessment year 2007-08. 5. Subsequently, assessee offered an amount of Rs. 50,00,000/- in the ROI filed in response to the notice u/s.153A as against offered income of Rs. 48,3....

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.... to Section 271(1)(c) and the same is not applicable in this case. Accordingly, it is held that the provisions of Section 271(1)(c) with the relevant explanation i.e. explanation 5A of the I.T Act is applicable in this case. The said provisions of Explanation 5A are deeming in nature without any exceptions provided thereto. Further, it was held by the Hon'ble High Court of Karnataka in the case of K.L. Swamy v. CIT [1998] 239 ITR 386 wherein it was held that if the department has incriminating material with regard to disclosed income, disclosure is not voluntary, vice versa" 9. Aggrieved by the order of the CIT(A), the assessee is in appeal before us. 10. We have heard both the parties and perused the record. The Assessee filed return of income for the AY 2007-08 under appeal on 7.7.2008. Subsequently he filed a return on 12.11.2008 in response to the Notice u/s 153A. In the revised return he offered the additional income agreed to be offered in the statement given u/s 132(4) in the course of search proceedings. Penalty has been levied u/s 271(1)(c) on this agreed addition. The Assessee has come up on appeal against the levy of penalty on the ground that the addition was ....

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....posed upon the assessee in respect of the undisclosed income referred to in sub-section (1). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section." 14. In the CBDT circular 3/2008 dated 12.3.2008, provisions of this section has been explained as under (299 ITR 8 St at page 84): "68.1 A new section 271AAA has also been inserted so as to provide that, in a case where search has been initiated under section 132 on or after 1st June, 2007, the assessee shall be liable to pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent. of the undisclosed income of the specified previous year. However, the provisions of this section shall not be applicable if the assessee-(i) in a statement under sub-section (4) of section 132 in the course of the search, admits the undisclosed income and specifies the manner in which such income has been derived ; (ii) substantiates the manner in which the undisclosed income was derived ; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income. It is further provided that no p....

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....p;   any money, bullion, jewellery or other valuable article or thing (hereinafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilizing (wholly or in part) his income for any previous year ; or (ii)     any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of the search and the due date for filing the return of income for such year has expired and the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income." 20. While the new explanation does away with the exemption from penalty if the Assessee offers the payment in the course of sta....

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....e liable to pay penalty under section 271." 22. Thus as per the existing Explanation 5A prior to the amendment by Finance (No.2) Act, 2009, if an Assessee had filed the return of income for the years covered by the search, then the addition made shall not be considered as deemed concealment. It is only by the Amendment to explanation 5A by the Finance (no.2) Act, 2009, (which received the assent of the president on 13.8.2009), that addition made in the course of assessment u/s 153A, will be deemed to be concealed income, even if the Assessee had filed a return of income earlier for the relevant Assessment Year. Prior to the amendment, if an assessee had already filed a return of income, the addition made in the assessment made u/s 153A cannot be deemed to be concealed income. 23. No doubt the amendment to Explanation 5A has been made with retrospective effect from 1.6.2007 and is applicable to searches initiated after 1.6.2007, the issue is whether this amendment to Explanation will apply to returns filed before the amended explanation became part of the Statute in 2009. In the instant case the Assessee had filed return of income on 7.7.2008. He filed revised return pursuant ....