TaxTMI 
TaxTMI 
2016 (1) TMI 801
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....eting penalty levied under section 271 (1) (c) amounting to Rs. 4,24,570/- without appreciating the settled legal position that the difference between the income disclosed under section 139 and 153A of the Act particularly when such difference is based on in incriminating seized material. 2. On the facts and in the circumstance of the case and in law, the learned CIT (A) erred in not appreciating that the additional income of Rs. 6,61,3441- & Rs. 50,0001- (agriculture income) was offered only n the return filed under section 153A of the Income Tax Act on specific issue of suppressed professional receipts on the basis of incriminating materials found and seized during the search action. 3. On the facts and in the circumstance of the case and in law, the learned CIT (A) erred in ignoring the decision of jurisdictional Tribunal in the group cases of Thakkar and Kalantri group in appeal Nos.911 to 930/PN/2009 and 1006 to 1008/PN/ 2009 dated 10-02-2010 which was a direct decision. 4. On the facts and in the circumstance of the case and in law, the learned CIT (A) erred in not appreciating the fact that but for the search operations the assessee would not have ....
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....surplus of income over expenditure to tax. During the year under consideration, on the basis of seized material, additional professional fees of Rs. 22,96,542/- was noted and the assessee declared gross receipts in the return filed pursuant to notice under section 153A of the Act at Rs. 79,39,778/- as against Rs. 56,43,236/- shown in the original return of income filed under section 139(1) of the Act. The assessee also amended other mistakes in the original return filed under section 139(1) of the Act and the total income from house property, profession and other sources after deduction under section VI-A worked out to Rs. 15,70,040/- i.e. declaring additional income of Rs. 6,61,344/-. The Assessing Officer noted that though the assessee had declared additional income of Rs. 6,61,344/- in the return of income filed in response to notice under section 153A of the Act, but no such income was declared in the original return of income filed. The said additional income was detected during the course of search and seizure operation conducted at the residence of the assessee. The Assessing Officer was of the view that the said declaration of income was not voluntary and since the assessee....
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....ncome offered in the return of income submitted under section 153A of the Act included the income declared except the addition of Rs. 6,00,000/- and since the assessment was completed without making any further addition to the returned income, there was no justification for levy of penalty under section 271(1)(c) of the Act. The Assessing Officer levying penalty under section 271(1)(c) of the Act observed that the assessee's claim could not be accepted as the law does not provide any immunity from levy of penalty to the assessee, who offered income, which was not disclosed in the regular return of income filed and which was unearthed during the course of search and was declared in the return subsequent to search. The Assessing Officer further held that the declaration made under section 132(4) of the Act does not entitle the assessee from immunity from penalty proceedings. With regard to the addition of Rs. 6,00,000/-, where the addition was confirmed by the Tribunal in assessee's hands, the Assessing Officer held there was no justification in the explanation of the assessee. The Assessing Officer in view thereof, held that the amount added in the hands of the assessee represent co....
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....ell established position of law as laid down by the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. Vs. State of Orissa 83 ITR 26 (SC). On the given facts in this case it is seen that the ld. AO has not applied his mind on the facts of the case and imposed the impugned penalty in a mechanical manner. It is settled position of law that penalty u/s 271(1)(c) cannot be levied merely because it is lawfull to do so. Use of discretion to levy penalty is independent of the decision as to whether concealment is there or not. Deeming provisions of Explanation 5A helps the AO in deciding the concealment part of the penalty provision. However, the discretion part is not explained by deeming provision. Since the AO has not brought on record any material to support his decision regarding discretion, the penalty is not leviable on the facts of the case." 8. With regard to second limb of penalty levied under section 271(1)(c) of the Act on Rs. 6,00,000/-, the CIT(A) held that where the Assessing Officer had included sum of Rs. 6,00,000/- on the ground that the addition was made originally and was upheld by the Tribunal, but was not declared in the return of income filed pursuant to n....
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....t penalty provisions could not be amended retrospectively. Reliance in this regard was placed on the ratio laid down by the Hyderabad Bench of Tribunal in Dilip Kedia Vs. ACIT in ITA No.1986/HYD/2011, relating to assessment year 2007 -08, order dated 26.07.2013. It was further pointed out by the learned Authorized Representative for the assessee that though the contrary view has been taken by Chandigarh Tribunal in Shri Rajnish Vohra Vs. DCIT in ITA No.516/CHD/2012, relating to assessment year 2007-08, order dated 31.10.2012, the present facts of the case are at variance. He further pointed out that where the assessee had declared additional income on estimate basis, there was no basis for invoking Explanation 5A to section 271(1)(c) of the Act. With regard to the second addition of Rs. 6,00,000/- the learned Authorized Representative for the assessee pointed out that since the appeal against the order of CIT(A) was pending, so there was no question of adding Rs. 6,00,000/- as income of the assessee. Our attention was drawn to Circular No.7 of 2003, wherein no appeal proceedings were to abate. In the absence of incriminating documents found, there was no merit in levy of penalty un....
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....h element i.e. Rs. 1.70 crores in her hand and computed the income from capital gains and declared total income of Rs. 2,04,91,850/- on 13.09.2010. Against the income from capital gains computed at Rs. 2,41,17,168/-, the assessee also claimed exemption under section 54 of the Act at Rs. 38,40,098/-, on account of investment in Mega Polis property. The Assessing Officer while completing assessment, noted that the assessee had not declared the sale consideration of Rs. 2.55 crores in the original return of income filed and subsequently after the search, the declaration was made on account of total amount of capital gains. The Assessing Officer recorded satisfaction in the body of the assessment order to the extent that the assessee had concealed the particulars of income and penalty proceedings under section 271(1)(c) of the Act were initiated. Beside the above said, there was another aspect of sale of property, wherein the assessee had claimed that it had sold fittings and fixtures of the said bungalow for Rs. 10 lakhs. However, in the absence of list of furniture or personal effects sold, the Assessing Officer was of the view that the fittings and fixtures attached to the property ....
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....ting penalty proceedings under section 271(1)(c) of the Act and in view thereof, we find no merit in the plea of the assessee in this regard. 15. Now, coming to the issue that where the assessee had offered the income in the return of income filed after surrendering the additional income, can the assessee be held to have concealed its income vis-à-vis original return of income filed by the assessee. Section 271(1) of the Act makes provision for levying penalties on assessee in different eventualities, one such eventuality is for concealment of income or furnishing of inaccurate particulars of income. Only on fulfillment of the conditions stipulated in section 271(1)(c) of the Act, there arises a question of exercising power under the said provision to impose penalty. The said section lays down that where the Assessing Officer or the CIT(A) in the course of any proceedings under the Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, then he may direct that such person shall pay by way of penalty stipulated in the aforesaid provision. The Explanation/s under section 271(1)(c) of the Act set ....
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....ons and he claims that the same represents his income for any previous year, then where the period has ended before the date of search and the due date for filing the return of income for such year has expired and the assessee has not filed the return of income, then notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall for the purpose of imposition of penalty under section 271(1)(c) of the Act, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of income. The said Explanation 5A was substituted by the Finance (No.2) Act, 2009 with retrospective effect from 01.06.2007 with the amendment that where the return of income for such previous year had been furnished before the date of search, but such income had not been declared therein or where the due date of filing the return of income for other previous year has expired, but the assessee had not filed the return of income, then notwithstanding the fact that the said income is declared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed the particulars of his inco....
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....he question is quantum of income on which penalty is to be levied. The said issue was before the Pune Bench of Tribunal in ACIT Vs. Mulay Construction P. Ltd. & Ors. in ITA Nos.116 to 119/PN/2012 & Ors. and it was held as under: - "16. The next limb of argument of the Ld. counsel is that Explanation 5A(ii) contemplates "income" and not the "expenditure". In this case, it is undisputed fact that the assessee came forward and declared "income" which was pertaining to the amount covered by the unrecorded expenditure but the fact remains that the assessee did not declare any 'expenditure' but it is only the income. The Ld. Counsel referred to the definition of the income given in sec. 2(24) of the Act. The scope of the said definition has been explained by the Hon'ble Supreme Court in the case of EMIL Webber (supra) which has been relied upon by the Ld. Counsel The relevant portion is in para no 7 which reads as under: "7. The definition of 'income' in clause (24) of Section 2 of the Act is an inclusive definition. It adds several artificial categories to the concept of income but on that account the expression 'income' does not lose its natural connot....
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....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 search and (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein or (b) the due date for filing the return of income for such previous year has expired but 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 search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, he deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income." 19. So far as the present assessee is concerned, clause (ii) to Explanation 5A is applicable. Admittedly, the expenditure which was not recorded has been found by way of entries in the seized documents. While explaining the scope of Explanation 5A in the case of Chandan K. Shewani (supra....
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....id income detected during the course of search and seizure operation, the assessee case is squarely covered by Explanation- 5(ii) as the assessee himself has admitted the said undisclosed income." 19. Applying the said proposition to the facts of the present case, we hold that the income offered by the assessee pertaining to the cash seized from the assessee and the declaration of the assessee that the said cash relates to the unaccounted cash received vide the sale transaction entered into by the assessee, which in turn, was declared by the assessee in the return of income filed pursuant to issue of notice under section 153A of the Act, is the income detected during the course of search and seizure operation. The case of the assessee is squarely covered by the provisions of Explanation 5A to section 271(1)(c) of the Act and the assessee is exigible to levy of penalty on such income which was detected during the course of search and seizure operation, which in turn has been offered by the assessee in return of income filed pursuant to notice issued under section 153A of the Act. The learned Authorized Representative for the assessee on the other hand has placed reliance on....