TaxTMI 
TaxTMI 
TaxTMI 
2012 (10) TMI 1040
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....red income in response to notice U/S 153A of the Act. The learned commissioner of Income Tax (Central) appeal has also failed to appreciate the fact that assessing officer has not discussed the merit & reason for levying penalty & he has passed order mechanically without application of mind on the nature& circumstances of disclosure made during the coursed of search & in the return filed after search. 3. That the learned CIT(A) has erred in confirming the penalty U/S 271(1)(c) without appreciating the fact that the surrender / returned | Income has been disclosed during the course of search which was accepted subject to no penal action 271(1) (c ) & also failed to appreciate the fact that the appellant has not concealed any income or furnished inaccurate particulars of Income. 4. The Learned Commissioner of Income Tax (Appeals) has erred in confirming the penalty without appreciating the fact that the assessing officer has not recorded satisfaction for initiation of penalty in the assessment order & also failed to appreciate the fact that the assessing officer has not discussed the reason for levying penalty & merit of additional income on which penalty has levied. 5. That the l....
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.... argued by the ld. 'AR' that without prejudice to the above contentions, the AO has failed to record satisfaction in the assessment order and to support his contention, he placed reliance on the decision of the Hon'ble Delhi High Court, in the case of Madhushree Gupta & British Airways 317 ITR 107 (Del), wherein the Hon'ble Delhi High Court has explained the scope of amendment by way of insertion of sub-section (1B) to Section 271 of the Act, by the Finance Act, 2008 w.e.f. 1.4.1989, in the context of recording of satisfaction u/s 271(1)(c) of the Act. It was, further, argued that such satisfaction should be based on some material available on record. He argued that AO wrongly levied the penalty, on the wrong notion that the penalty u/s 271(1)(c) read with Explanation 5A is mandatory in nature, whereas the penalty u/s 271(1)(c) is discretionary in nature depending on the facts of each case. 2(iii) Ld. 'AR', further, argued that AO had invoked the Explanation 5A to Section 271(1)(c) of the Act, without proving the fact that the assessee failed to file the return, on or before due date of filing the return of income. The AO, levied penalty, on the basis of Ex....
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....alty u/s 271(1)(c) of the Act and to support his contentions, reliance was placed on the decision of the jurisdictional High Court in CIT V Jaswant Rai 142 CTR 49 (P&H). He argued that no addition has been made, to the returned income filed by the assessee, in response to notice u/s 153A of the Act, consequently, levy of penalty u/s 271(1)(c) does not arise. Ld. 'AR' was of the opinion that there is an Agreement between the assessee and the Department, at the time of making the impugned surrender and, hence, penalty cannot be levied. He placed reliance on the decision of the jurisdictional High Court, in the case of CIT V Smt. Sudershan Gupta (L/H), 10 DTR 184 (P&H). Ld. 'AR' also placed reliance on the decision in the case of CIT V Suresh Chander Mittal (2001) 251 ITR 9 (S.C) and the decision of the Hon'ble Supreme Court in Ram Nath Jagan Nath V State of Maharashtra (1984) 57 STC 51 (Bom) wherein penalty was cancelled in view of the conditional surrender made by the assessee. Ld. 'AR' placed reliance on certain other decisions and stated that same have been considered by the CIT(A). 2(v) It was, further, contended by the ld. 'AR' that the addit....
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....,60,000/-). The assessee declared income under the head 'Income from salary, business or profession' and income declared in the statement recorded u/s 132(4) of the Act. on 31.10.2007, in the course of search operation at Rs. 2,00,60,000/-. In the course of search operation, the assessee made a declaration in the statement recorded u/s 132(4) of the Act, as per the following details : (a) Difference between registered value and agreement to sell for land purchased in Village Sundran, Tehsil Dera Bassi Rs. 1,03,60,000/- (b) Payment in cash for land at Manali Rs. 20,00,000/- (c) Undisclosed income of 21st Century Builders & Engineers for F.Y, 2006-07 Rs. 77,00,000/- Total Rs. 2,00,60,000/- 4(i) Assessment order was passed by the ACIT, CC-1, Chandigarh, with the prior approval of the Addl.CIT, Range, Central Chandigarh, vide his order dated 30.12.2009, as contemplated u/s 153D of the Act. In the impugned assessment order, the AO recorded, satisfaction for initiation of penalty proceedings within the meaning of Section 271(1)(c) r.w.s. 271(IB) of the Act, at the end of each addition made by him as also in the concluding para of the Asstt. Order. 5. The AO levied p....
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.... of Sudershan Silk & Sarees Vs CIT and 142 CTR 49 (PAH) in the case of CIT Vs Jaswant Rai. Reliance was also placed on other case laws contending that no penalty should be levied when the assessee agrees to addition subject to no penalty. Further, vide letter dated 10.6.10, the assessee requested that the penalty proceedings should be kept in abeyance as the assessee has filed an appeal before the worthy CIT(Appeals) -I, Ludhiana. From the perusal of the acknowledgement filed by the assessee, it is noticed that the assessee has filed appeal before worthy CIT(Appeals) -I, Ludhiana on 21.5.10 whereas the assessment order alongwith the demand notice was served on the assessee on 30-12-2009. Also, it was found ,that the search was conducted in the premises of the assessee on 31-10-2007 and the assessee had made disclosure of Rs. 2,00,60,000/- for the assessment year 2007-08, therefore provisions of Explanation 5A to section 271(l)(c) were applicable. Vide this office letter dated 21/06/10, the assessee was issued the following show cause notice: "To Shri Rajneesh Vohra, # 259, Sector 10, Panchkula Sir, Sub.: Penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 for the a....
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....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. On going through the facts of your case, it is seen that your case is squarely covered by provisions of explanation 5A to Section 271(1)(c) of the Income Tax. You are therefore requested to please explain as to why penalty u/s 271(1)(c) should not be imposed on you. Your reply should reach this office by 25.06.2010. In case no reply is received it will be presumed that you have nothing to say in the matter. Also please note that minimum penalty leviable u/s 271(1) (c) of the Income Tax Act, 1961 is 100% of the Income Tax Act, sought to be evaded and maximum penalty is 300% of the tax sought to be evaded." 4. In response to this office show cause notice dated 21/06/10, the assessee himself alongwith his counsel Sh Ajay Jain, attended the proceedings before the undersigned and vide letter dated 22.06.2010 filed written submission on 25.06.2010. It was again contended vide written submission dated 22.06.10 that the assessment order is subject ma....
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.... of Explanation 5A of the section 271(l)(c) of the Income Tax Act, 1961, with effect from 1st June, 2007 the case laws cited by the assessee can not be relied upon. 5. In the show cause notice dated 21/06/10, the specific attention of the assessee was drawn to the provisions of Explanation 5A to Section 271(l)(c) which have been inserted w.e.f 1st day June, 2007, reads as under: Explanation 5A.-Where in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of,- (i) 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 pre via us 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....
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....come-tax Act, 1961, the return of income was filed on 23/07/09 declaring total income of Rs. 3,27,01,440/-(inclusive of surrender of Rs. 2,00,60,000/- ). Therefore, from the above facts, it is clear that the undisclosed assets and income pertained to the previous year which ended before the date of search, the due date for filing the return of income had expired and the assessee did not file the return disclosing the above 'undisclosed income' . Even, in the return filed on 14/11/2007 the assessee did not disclose the above 'undisclosed income'. As per the provisions of Explanation 5A, the assessee will deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income if the case of the assessee falls with in the preview of Explanation 5A to Section 271(l)(c) of the Income Tax Act, 1961. 6. From the above facts, it is clear that the case of the assessee squarely falls within the preview of Explanation 5A to section 271(l)(c) and the assessee has willfully and intentionally concealed the particulars of the income. Therefore, penalty u/s 271(1)(c)of the Income-tax Act is hereby imposed at Rs. 67,62,200/- which is @ 100% on the ....
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....nished on or after the date of search, he shall, for the purpose 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. 5.2. In this case it is an undisputed fact that the search operation took place after 1st June, 2007. The search and seizure operation u/s 132 was conducted on 31.10.2007. In this case, the assessee has claimed that the original return for A.Y 2007-08 was filed 31.10.2007 through E-Filing facility and the signed acknowledgment was deposited on 14.11.2007 whereas the Id. AO had taken the date of filing of return as 14.11.2007. That in such a scenario the provisions of Explanation of section 5A were not applicable as the date of search and date of filing of the return were on the same date i.e. 31.10.2007, and consequently, the due date for filing of return had not expired. 5.3 Be that as it is, it is a undisputed fact that as the search and seizure operation u/s 132 was conducted after 1.6.2007, the provisions of Explanation 5A of Section 271(1) (c) are applicable in this case at hand. As for the dispute in the date of filing of ....
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....against assessee's claim of 31.10.2007) the assessee did not disclose the above undisclosed income thereby falling within the ambit of section 271{ll (c) r.w. Explanation 5A. 6.2. I have carefully gone through the assessee's submission and the impugned penalty order. It is a fact that the undisclosed income was not declared in the return filed u/s 139(1). It was only disclosed in the return filed in response to notice u/s 153A. The return u/s 153 (1) (A) has been accepted by the department. However needless to say, the levy of penalty u/s 271 (1) (c) would depend on the facts and circumstances of each case. If the concealment is apparent from the records there is no reason for not levying penalty. Therefore, the nature of evidence available becomes the deciding factor as to whether there is any concealment. Assessee's contention that the addition was on agreed basis on assurance that no penalty would be levied does not hold any water as the surrender was consequent to search and seizure operation wherein specific documents regarding property transaction were found and seized. The Hon'ble Judicial High Court in the case of Careers Education & Infotech Pvt. Ltd (336 ....
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....assessment order and penalty order. This plea is not acceptable as it is discernable from the impugned assessment order that the penalty under Section 271 (1)( c) r/w Explanation 5A, had been initiated for non- declaration of income in the original return of income. Additionally, the impugned penalty order is found to speak for itself. 6.5. Thus, in view of the aforesaid paras, the grounds of appeal no 2 and 4 are dismissed." 7. The appellant contended that recording of satisfaction u/s 271(1)(c) of the Act is mandatory in character, even after the amendment by the legislature by way of insertion of Section 271(IB) in Finance Act, 2008 w.e.f. 1.4.1999, in view of the decision of the Hon'ble Delhi High, Court in the case of Madhu Shree Gupta and British Airways, 317 ITR 107 (Del). The relevant provisions of Section 271(IB) are reproduced hereunder, for the purpose of proper appreciation of the legislative intent embodied therein. "271(1B)-Where any amount is added or disallowed in computing the total income or loss of an assessee in any order of assessment or reassessment and the said order contains a direction for initiation of penalty proceedings under clause (c) of sub-se....
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.... tenable as the same is found to have been recorded, in consonance with the amended provisions of Section 271(IB) of the Act. In view of this, such contention of the appellant is not found legally and factually tenable. 10. Ld. 'AR' placed reliance on the decision of Hon'ble Supreme Court, in the case of B.N.Sharma V CIT (1997) 226 ITR 442 (S.C), wherein it has been held that amount of interest for concealment of income should be worked out, on the basis of law in force at the time of filing the return, whether original and/or revised, which contain the alleged concealment or misstatement. Ld. 'AR', further, placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT V Omkar Saran & Sons (1992) 195 ITR 1, wherein Hon'ble Supreme Court has held that penalty is to be based, on law, as on the date when original return was filed. 11. We feel it pertinent to discuss the nature of addition made by the AO, on appreciation of incriminating documents, seized in the course of search operation. The AO, made an addition of Rs. 1.03 crores, on account of difference between the registered value and agreement to sell, for land purchased in village....
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....d satisfaction in the matter. Accordingly, the contentions raised by the assessee cannot be legally and factually sustained in the matter. 13. Ld. 'AR' stated that no addition has been made by the AO except in respect of the amount surrendered in the course of search operations. The assessee filed return of income in response to notice u/s 153A of the Act, declaring income at Rs. 3,27,01,440/- including the surrender made at Rs. 2,00,60,000/-. Ld. 'AR' contended that return filed in response to notice u/s 153A declaring additional income therein has been accepted by the AO. In view of this, provisions of Section 271(1)(c) of the Act are not applicable to the assessee's case and the decision of the Hon'ble Supreme Court, in the case of Sudershan Silk & Sarees V CIT (2008) 300 ITR 205 (S.C), has been cited to support his contentions. 14. We have perused the said decision and found that the same is not applicable to the present case. The Hon'ble Supreme Court has rendered the decision, in the case of Sudershan Silk & Sarees (supra), for assessment year 1984-85 to 1987-88, in the context of the facts obtaining in that case. The findings of the Tribunal wer....
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....'ble Bombay High Court, in the case of CIT V Dodsal Ltd. (supra) has adjudicated the issue involved in that appeal, in the context of Block Assessment provisions, as contained u/s 158BFA(2) of the Act. The provisions of Section 158BFA(2) applicable to the Block Assessments, within the contemplation of Chapter XIVB of the Act, are not the same, as the provisions of Section 153A read with the provisions of Section 271(1)(c) of the Act and Explanation 5A thereunder. Therefore, the reliance placed by the assessee, to support his contention is of no avail, as the statutory provisions and facts of the case, are different and distinguishable. Similarly, reliance placed by ld. 'AR', on the decision in the case of CIT V Harkaran Das Vedpal (supra) is misplaced, having regard to the fact-situation obtaining in the case-law relied upon vis-à-vis the fact-situation of the present case. The decision relied upon by the appellant has been rendered by the Hon'ble Delhi High Court in the context of Section 158BFA(2) of the Act. Consequently, ratio laid down in the said decision is patently inapplicable to the facts and statutory provisions applicable to the present case. In v....
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....o the fact-situation of the present case. 16(i) Similarly, ld. 'AR' placed reliance in the case of CIT V Smt.Sudershan Gupta through L/H 10 DTR 184 (P&H) which is akin to the ratio of the decision of Hon'ble High Court, in the case discussed above. Therefore, we find that the decision is not applicable to the facts of the present case, being factually different and distinguishable. 16(ii) The appellant, further, relied upon the decision of Mumbai Bench, in the case of Bhagat & Co., V ACIT 101 TTJ 553. We have carefully perused the decision of the Mumbai Bench and found that same is not applicable to the facts of the present case, being factually different and distinguishable. 16(iii). Ld. 'AR' placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT V Suresh Chander Mittal, 251 ITR 9 to support his contention that penalty cannot be levied in case of higher income shown in the revised return of income. 17. We have perused the ratio laid down by the Hon'ble Supreme Court in the case relied upon by the ld. 'AR' and found that in that case, the assessee had originally filed returns showing meager income. However, after ac....
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....ar view has been taken in P.C. Joseph & Bros. vs. CIT (2000) 158 CTR (Ker) 104 : (2000) 240 ITR 818 (Ker) and CIT vs. Sudharshan Silks & Sarees (2001) 171 CTR (Kar) 256 : (2002) 253 ITR 145 (Kar). Accordingly, no substantial question of law arises. The appeals are dismissed." 18. Further, the Hon'ble Supreme Court, in the case of G.C.Aggarwal V CIT (1990) 186 ITR 571 (S.C) has held that penalty is exigible in case of revised returns filed by the assessee as the same does not fall under the provision of Section 139(5) of the Act. The relevant part of the decision is reproduced hereunder: "Penalty-Explanation to Section 271(1)(c)-Presumption-Burden of proof-Assessee filing revised returns showing much larger income-Not able to establish inadvertent mistake or omission in original returns-Decision of Tribunal on facts that penalty was justified-Quantum-Difference between tax assessed in first returns and the tax on the incomes assessed should be taken as the tax which would have been evaded-Income-tax Act,1961 ss. 139(5), 271(1)(c), Expl. From the decision of the Gauhati High Court in F.C.Agarwal v. CIT (1976) 102 ITR 408 to the effect that the Appellate Tribunal was correct i....
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....ove discussions, it is evident that even filing of revised return of income must be within the purview of Section 139(5) of the Act. It is pertinent to highlight that filing of revised return after discovery of omission or wrong statement is not by itself sufficient to bring the revised return within the ambit of Section 139(5) of the Act. A further requirement is that this omission or wrong statement in the original return must be due to bonafide inadvertence or mistake, on the part of the assessee. It is evident that bonafide omission or mistake must be discovered by the assessee. In the present case, a search operation led to discovery of undisclosed income which the assessee admitted in the deposition made u/s 132(4) of the Act, before authorized officer. Further, the surrendered undisclosed amount was returned, in the return of income filed, in response to notice u/s 153A of the Act. Therefore, the case law relied upon by the assessee is not applicable to the facts of the present case. 20. It is, further, submitted that Hon'ble Allahabad High Court defined 'detection' in Mool Chand Mahesh Chand V CIT (1978) 115 ITR 1 (All) and held that even in a case where ITO starts inv....
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....om 01.06.2007, which has been duly reproduced by him, in para 5.1 of his order. However, for the sake of ready reference, the same is reproduced hereunder : "Explanation 5A. - Where, in the course of a search initiated under section 132 on of after the lst day of June, 20Q7, the assessee is found to be the owner of- (i) Any money, bullion, jewellery or other valuable article or thing {hereafter in this Explanation referred to as assets} and the assesses claims that such assets have been acquired by Him by utilising {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 represents his income (wholly in part) for any previous year, which has ended before the dote 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 ....
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....context, it is pertinent to mention here that the appellant filed return of income, in response to notice u/s 153A, on 23.7.2009, at the time of filing the return of income, in response to Section 153A of the Act, the newly inserted Explanation 5A to Section 271(1)(c) of the Act, vide Finance (No.2) Act 2009, was available on the Statute and hence, the same is applicable to the facts of the present case. 28. The assessee placed reliance, on the decision of Hon'ble Supreme Court, in the case of CIT V Omkar Saran & Sons and in the case of B.N.Sharma V CIT (supra). On a careful perusal of the same, it was found that the ratio laid down in this case is not applicable to the facts of the present case. The Hon'ble Supreme Court, in the case of CIT V Omkar Saran & Sons (supra) held that even in a case where a return, filed in response to the notice u/s 148 involve an element of concealment, the law applicable would be the law, as it stood at the time when the original return was filed, for the assessment year in question and not the law as it stood on the date, on which the return was filed in response to the notice u/s 148 of the Act. The Hon'ble Supreme Court, by following ....