TaxTMI 
TaxTMI 
2016 (4) TMI 462
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....Y. 2007-08 was filed on 01/5/2007 declaring total income of Rs. 5,88,850/-. There was a search seizure operation carried out by the department on 16/11/2007. A notice U/s 153A of the Act was issued to the assessee and assessee also filed return of income U/s 153A on 01/7/2008 declaring income of Rs. 31,25,448/-. The assessee's case was scrutinized U/s 153A read with Section 144 of the Act. The ld Assessing Officer made various additions besides the returned income of Rs. 31,25,450/- and assessment U/s 153A was made on total income of Rs. 7,87,12,881/-. The penalty proceeding U/s 271(1)(c) was initiated by the Assessing Officer for concealed particulars of income and furnished inaccurate particulars of income in the assessment order. The assessee challenged the quantum addition before the ld CIT(A) and Hon'ble ITAT. Finally the addition remained Rs. 3,96,300/- being disallowance of work in progress (WIP)/construction expenses and addition of Rs. 1,25,000/- as income from taxi hiring. Accordingly the assessment was completed on 30/12/2009. The Assessing Officer issued notice U/s 274 read with Section 271-272 of the Act on 30/12/2009 in prescribed proforma by the Assessing Officer whe....
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....ee has stated nothing in this respect and therefore it was presumed by the Assessing Officer that the assessee has no explanation for his failure to disclose correct income in original return. Had there been no search in case of assessee, he would have not disclosed this additional income and it would have remained untaxed. His conduct/mens rea/intention is clear, is not disclosing correct and true income in original return and accordingly he is held that he has deliberately concealed the correct and true income in original return. The assessee is liable for penalty U/s 271(1)(c) of the Act on concealed income. He further referred explanation 5A of Section 271(1)(c), which is applicable in the case of assessee. Thus, he imposed penalty at Rs. 13 lacs, which is more than 100% of tax sought to be evaded. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the penalty by observing that the assessee filed original return of income of Rs. 5,88,850/-. There was a search seizure operation on 17/11/2007 at the residence and business premises of the assessee. Notice U/s 153A was issued on 14/2/2008. The appella....
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.... Annexure-A/1 where she found appellant got a sale deed registered on 04/11/2006 where the seller Shri Mohan Singh and Shri Kesar Singh sold plot Nos. 30 and 31 Kalyanpuri Jhotwara to the appellant for Rs. 5 lakhs. The registry was done at the value of 5 lakh whereas as per the Ikrarnama it has clearly been stated that for the plot had been sold for Rs. 40 lacs. This Ikrarnama has been made part of this order of the ld CIT(A) as Annexure-A. She further referred the statement recorded U/s 132(4) of the assessee dated 16/11/2007, which has been reproduced on page No. 9 and 10 of the ld CIT(A)'s order for penalty. On that basis, she held that the assessee was indulging in property business, the investment and profit from which were not declared in the return of income. The assessee claimed voluntarily to the disclosure was factually found incorrect to the ld CIT(A). She further reproduced the finding of the ld CIT(A) for quantum addition and Hon'ble ITAT order on page No. 10 and 11. The income assessed was not on the basis of estimation but all incriminating documents found during the course of search. Even when the addition is based on estimate in the non-search scrutiny assessment c....
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....ditions as made during the course of assessment proceedings. This argument also made before the Assessing Officer during the penalty proceedings that all the additions were deleted whatever additions remained are estimated additions. The ld Assessing Officer in the body of the penalty order himself accepted the assessee's submission that "the submission of the AR has been carefully considered and the case laws relied upon have been gone through. The submissions or the collection made above may be correct." Even after giving such observation by the Assessing Officer, he proceeded to impose penalty of Rs. 13 lacs. I believe that Explanation 5A to Section 271(1)(c) is applicable in the case of assessee, but no valid penalty can be imposed without letting the appellant know about the default specifically and also without letting the mind of the revenue known to the appellant for invoking the provisions of Explanation 5A. Thus, penalty imposed by the Assessing Officer confirmed by the ld CIT(A) is against the principle of equity and natural justice. He further challenged the quantum of penalty calculated by the Assessing Officer. He argued that the assessee disclosed in original retrn o....
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....onal income disclosed U/s 153A is based on the incriminating documents founds during the course of search. He further challenged the finding made by the ld CIT(A) and ITAT in quantum addition. The ld AR has further argued that the notice U/s 271 is to be specific on imposing of penalty U/s 271(1)(c) i.e. concealed particulars of income or furnishing inaccurate particulars of income for which he relied on the decision in the case of H. Lakshminarayana Vs. ITO (ITAT Banglore Tribunal (a) ITA Nos. 992 to 996/Ban/2014 order dated 3rd July, 2015 wherein the decision of Hon'ble Karnataka High Court in the case of CIT & Anr. Vs Manjunatha Cotton and Ginning Factory has been considered wherein it has been held that penalty proceeding is a civil liability, in fact, it is penal in nature. In either event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as the Section 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case of the department and show that the conditions stipulated in Section 271(1)(c) do not exist as suc....
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....der. He further relied on the decision in the case of CIT Vs Prasanna Dugar (2015) 59 taxmann.com 99 (Kol) wherein penalty was imposed on voluntary disclosure made by the assessee at Rs. 6 crores even though no incriminating document suggesting any such undisclosed income was found during the course of search dated 03/2/2009 wherein clause (b) of Explanation 5A of Section 271(1)(c) has been considered. He further relied on the decision in the case of Tej Bhan Cotton Ginning & Pressing Factory Vs. CIT, Rohtak (2011) 10 taxmann.com 16 (P&H) in IT appeal No. 01 of 2007 order dated 07/12/2010, wherein excess stock was found during the course of search, which was declared after search in the return. The Assessing Officer initiated penalty proceedings for concealing/furnishing of inaccurate particulars of income by the assessee and after due consideration, the penalty was levied. The penalty was set aside by the ld CIT(A) on the ground that in the order of the assessment, requisite satisfaction was not recorded in absence of which levy of penalty was without jurisdiction by following decision of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Munish Iron Store (2003) 263 I....
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....7/1/2008, penalty was imposed on additional income disclosed for various years wherein the Hon'ble Tribunal held that the assessee has offered additional income of Rs. 20 lacs over and above the excess cash balance found during the course of search. It is also admitted fact that the revenue did not seize any other incriminating material, which compelled the assessee to make this disclosure. Hence the additional income of Rs. 20 lacs was not a voluntary offer. Accordingly, the ld DR prayed to confirm the order of the ld CIT(A). 6. We have heard the rival contentions of both the parties and perused the material available on the record. In this case, the ld Assessing Officer initiated penalty proceedings for concealing of particulars of income and for furnishing inaccurate particulars of income vide order dated 31/12/2009. Notice U/s 274 read with Section 271-272 of the Act was issued on 30/12/2009 by ticking of the notice as under:- "U/s 271(1)(c):- Concealed particulars of income or furnished inaccurate particulars of income". The ld Assessing Officer again gave notice during the course of penalty proceedings on 23/1/2012 wherein he gave show cause notice U/s 271(1)(c) for ....