TaxTMI 
TaxTMI 
TaxTMI 
2014 (3) TMI 1045
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....in Bank accounts with M/s. Vijaya Bank in the name of the following five individuals:- (1) Vijay Sankar Pandey, (2) Pradip Roy Chowdhury, (3) Biswamoy Mukherjee, (4) Sohanlal Jain, (5) Gopal Kumar Agarwal, 3. It seems summons under section 131 of the Act were issued on the above persons for explaining the source of the deposits. In response to such summons, Pradip Roy Chowdhury and Biswamoy Mukherjee among the above five persons appeared before DDIT(Investigation), Unit-III, Kolkata and stated in their statements given on 30.12.2009 that existence of such accounts, came to their knowledge only when they received letters from the Bank in March 2009. Their version was that assessee was their youth time friend, and they had accommodated him by signing Bank accounts opening form and cheques. In other words, according to them, except for signing the forms, they had no knowledge as to the transactions in the Bank accounts in their names. 4. On 28.01.2010, assessee wrote a letter to DDIT (Investigation), owning up the bank accounts in the name of above mentioned persons, as his, along with an affidavit. Assessee also offered to pay tax on the deposits therein, and requested ....
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..../1 to AKS/Off/18 and AKS/Off/PD/1. Also cash of Rs. 86,370/- was found out of which Rs. 50,000/- was seized as per Annexure-1 to the Panchanama, details of bank accounts found were inventorized as per Annexure-2 to the Panchanama and passport of Ashoke Surana and others inventorised as per Annexure-3 to the Panchanama. Here during search Shri Ashoke Surana, assessee's brother, was present and his statement was also recorded u/s 132(4). During search at 126A, Sarat Bose Road, Kolkata-26 on 19.04.2010, some further documents were inventorized as per AKS/Off/19 to AKS/Off/21 and seized and also the statement of Sri Ajit Kumar Surana was again recorded". 5. Notices under section 153A of the Act were issued to the assessee for various assessment years starting from assessment years 2004-05 to 2009-10, on 15.09.2010. At this juncture, it has to be mentioned that, assessee had prior to the search, filed regular returns for all the assessment years involved, except for assessment year 2010-11. However, in such returns, no income whatsoever was admitted vis-a-vis the deposits in the bank accounts mentioned at para 2 above. However, in the returns filed in pursuance to the notice under s....
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....account, by including the bank account of Rina Sinha, with M/s. DCB Bank, Kolkata, owned up by the assessee, as his own for assessment year 2009-10. 9. Reasons given by Assessing Officer for making further additions, apart from what was offered by assessee, for assessment year 2009-10 are summarized hereunder:- (i) Inclusion of alleged earnings from sale of shares of M/s. Bangla International Pvt. Ltd. done by one M/s. Kingshuk Niwas Pvt. Ltd. based on a statement given by the assessee on 24.02.2010, under section 131 of the Act. (ii) Inclusion of share application money of Rs. 15 lakhs found from share applications seized at the time of search. (iii) Clubbing of income of minor son Rs. 1,93,500/-. 10. Reasons given by the assessee for revising the income for assessment year 2010-11 is not clearly mentioned by the Assessing Officer. It seems such revisions were effected pursuant to changes in income for assessment year 2009-10 on account of calculation of deposits in bank account of Smt. Rina Sinha, with M/s. DIB Bank, Brabourne Road Branch, Kolkata. Said lady in her deposition before the Assessing Officer, had put the ball in assessee's court, saying that mone....
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....- 2007-08 19,74,365/- ---- 2009-10 4,91,49,432/- ---- 2010-11 57,88,836 1,83,346/- 14. Assessee moved in appeal before the CIT(Appeals) for all the above years and was unsuccessful in any. Vis-a-vis the levy of penalty under section 271(1)(c), observation of the ld. CIT(Appeals) is reproduced hereunder:- "6.5. In the case of appellant, from the facts as discussed above, it is apparent that he had not made the disclosure of income or admission of ownership of five benami bank accounts voluntary. The admission was made under constraint when he came to know that the bank and the income tax department were conducting the inquiry about these bank accounts. May be, by the time when he filed a letter dated 29.01.2010 before the DDIT (Inv.) admitting the ownership and income from these bank accounts; no notice was issued to the appellant. But, definitely, from one or other source, he came to know about the enquiries being conducted by the Department in respect of these bank accounts and this fact is proved from the appellant's letter dated 28.01.2010 itself. Thus, it cannot be said that the appellant voluntary disclosed the bank accounts before the date of search. Further even v....
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.... in the return filed in response to notice u/s 153A issued subsequent to the search operation. The provisions of Explanation 5A of section 271(1)(c) 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 valuation article or thing (hereafter 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 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 su....
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....d in imposing the penalty u/s 271(1)(c) of the Act because the disclosure made by the appellant, as claimed by him, before the date of search or in the course of assessment proceedings was neither voluntary nor in good faith. The additional income was not declared in the original return filed him. It is a clear cut case where the appellant had concealed his income and, therefore, the penalty imposed by the AO u/s 271(1)(c) of the Act amounting to Rs. 4,91,49,432/- is confirmed. The judicial decisions relied upon by the appellant are distinguishable on facts. The ground no. 3, 4, and 5 are dismissed". 15. Vis-a-vis the levy of penalty under section 271AAA, observation of ld. CIT(Appeals) is reproduced hereunder:- "6 I have considered the submission of the appellant and perused the assessment order as well as the penalty order. On careful consideration of facts, I am not inclined to agree with the submission of the appellant that no penalty u/s 271AAA of the Act is imposable because the income was declared by him voluntarily before the date of search and subsequently in the course of search. As per the law, in order to get the immunity from penalty u/s 271AAA, the appellant has to....
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....ccounts, which had to be broken up in to various years. There was no intention to conceal. As per the ld. A.R., assessee had not furnished any inaccurate particulars, in the returns filed. 17. Continuing his argument, ld. A.R. submitted that for assessment year 2010-11, penalty under section 271AAA alone could have been levied, if at all any. For this, reliance was placed on the following decisions:- (i) Dinesh Kumar Amablal -vs.- ACIT [ITA No. 1429/Hyd./2012 and 1430/Hyd/2012 dated 24.05.2013(Hyderabad Bench)] (ii) DCIT -vs.- M/s. Pioneer Marbles & Interiors pvt. Ltd. [(2012) 68 DTR 01, (2012) 14 ITR (Trib.) 608 of Coordinate Bench]. 18. In support of his contention that there was no concealment, Ld. Counsel for the assessee placed heavy reliance on the declaration dated 28.01.2010 filed by the assessee. As per ld. A.R., it was clearly mentioned therein that assessee was making a disclosure of Rs. 8,00,00,000/-as undisclosed income of which Rs. 5,00,00,000/- pertained to assessment year 2009-10 and Rs. 3,00,00,000/- pertained to assessment year 2010- 11. As per ld. AR, Department had seized Rs. 5,16,00,000/- standing in the various Bank accounts and these were good en....
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....ned initiation of penalty proceedings, only for the addition of Rs. 5,29,50,000/- being alleged share sale effected by M/s. Kingshuk Niwas Pvt. Ltd. and addition of Rs. 15,00,000/- being undisclosed share application money. Initiation of penalty proceedings was not at all discernable in respect of the addition for deposits in the Bank account of Smt. Rina Sinha and also for the minor's income of Rs. 1,93,500/- clubbed with that of the assessee. Even for the amounts on which penalty was initiated, Assessing Officer had not mentioned whether it was for concealment or for furnishing of inaccurate particulars. Placing reliance on paper book page 23 which is notice issued by the Assessing Officer for levy of penalty under section 271(1)(c) of the Act, Ld. A.R. submitted that a specific charge was not mentioned therein. In any case, as per ld. A.R. assessee could file revised return for assessment year 2009-10 under section 139(5) of the Act upto 31.03.2011, and hence income if any shown in revised returns could not be considered for levy of penalty. As per ld. A.R. the addition of Rs. 5,29,50,000/- was based on statements given by a third party. Assessee had never accepted it as his inc....
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....n the mind of the Assessing Officer. At the end of the each assessment order, Assessing Officer had clearly mentioned that penalty proceedings were being separately initiated. According to the ld. D.R., Section 271(1B) clearly mentioned that a direction for initiation of penalty proceedings, was sufficient to constitute the satisfaction mentioned under section 271(1)(c) of the Act. The offer of income from the assessee had come after the detection of the benami Bank accounts held by the assessee in the name of various persons. Such offer was not based on good conduct. Assessee had repeatedly revised his income even during the course of assessment proceedings. According to him, levy of penalty was justified by virtue of the decision of the Hon'ble Apex Court in the case of Mak Data Pvt. Ltd. - vs.- CIT (SC) [358 ITR 593]. 25. Again as per the ld. D.R. Explanation 5A of Section 271(1)(c) clearly applied for all the assessment years. Assessee could never claim any immunity except at the most for the years which would be covered under section 271AAA of the Act. Levy of penalty in each of the year under section 271(1)(c) of the Act and levy of penalty under section 271AAA for assessme....
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...., Kolkata and in my residential premises at Flat No. 1B, 29, Shakespeare Sarani, Kolkata on 23.02.2010 and on subsequent dated. In the course of said operations, documents, books of accounts, dairies, computers, cash, jewellery, bank accounts, etc. were found. Some of the documents were seized. I am engaged in the business of production of TV serials as well as marketing agent of entertainment software. I am proprietor of M/s. Speel Binders in which I carry such business. Sir, I am peace loving citizen and deem fit to come out clean by offering my entire undisclosed income for taxation. I had some undisclosed income from sale of entertainment rights, commission on sale of assets and shares, interest income and financial dealings, which do not form part of my regular returns or accounts. These undisclosed incomes have been deployed in five undisclosed bank accounts as per details below. I am the sole beneficiary of these five bank accounts. I enclose herewith copy of declaration dated 29.01.2010, wherein I have affirmed these facts. It may be noted that some of the documents found in my possession on the day of search reaffirms these facts. Reference may be made to....
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....y proceeding initiated in the course of normal assessment proceedings under section 143(3) or 147 of the Act and not for a penalty initiated in the course of an assessment under section 153A of the Act. This has been clearly brought out by the Mumbai Bench of this Tribunal in the case of Shri Kiran Shah (supra). In that case, returned income filed under section 153A was accepted by the Assessing Officer but still penalty levied for a reason that there was a concealment of income, vis-a vis returns filed prior to the date of search. After referring to the decision of the Hon'ble Delhi Bench of this Tribunal in the case of Prem Arora -vs.- DCIT (2012) 78 DTR (Trib.) 91, it was held as under in Kiran Shah's case :- "On bare reading of Section 153A it is seen that this section starts with a non obstante clause relating to normal assessment procedure covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after 31.5.2003. The sections, so excluded, relate to filing of return, assessment and reassessment proceedings. Further, section 153A intends to assess or reassess total income of six assessment years immediately preceding the assessment year relevant to the ....
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.... its order has held as under: "We have carefully considered the rival submissions in the light of the material placed before us. Penalty in these cases has been imposed on the income disclosed in the return of income filed in response to notice u/s. 153A. The reason for imposition of such penalty is that the act of concealment related to return filed u/s. 139(1) and not to return filed u/s. 153A. Therefore, the question in the present appeals is limited only to the extent that whether concealment penalty can be levied in such a case with reference to original return. The case of the AO is that assessee has committed this default while filing the original return of income, therefore concealment has to be viewed with reference to return originally filed and AO also has referred to the provisions of Explanation-5. Ld. CIT(A) has upheld the order of the AO. We found that this issue has been considered at length in the aforementioned order of Delhi ITAT in the case of Shri Prem Arora Vs DCIT (supra)." 15. In another case before Nagpur Bench In ITA Nos 150 to 155/Nag/10, the Tribunal has held that where returned income filed u/s. 153A is accepted by the AO and there is no variation i....
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....ounts, which was offered by the assessee himself. For assessment year 2009-10, the difference was due to the addition of deposits in the account of Mrs. Rina Sinha, for undisclosed share application money, for alleged sale of shares of M/s. Bangla Entertainment Pvt. Ltd., and clubbing of minor's income. Of these. credits in the bank account of Mrs. Rina Sinha, was voluntarily offered by the assessee during the course of assessment proceedings. 31. Ld. CIT(Appeals) had upheld the levy of penalty under Explanation 5A to Section 271(1)(c) of the Act. The said Explanation filed is reproduced hereunder :- "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 valuation article or thing (hereafter 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 documen....
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....s 271 or 271A or 271B, or interest u/s 234A/234B/234C was leviable in respect of undisclosed income determined in block assessment in view of specific provisions of section 158BF of the Act. Section 158BFA was inserted by the Income -tax (Amendment), Act , 1997 w.e.f. 1.1.1997 prescribing both interest and penalty for concealment of income in respect of undisclosed income determined u/s 158BC(c). Thus theprovisions of Explanation 5 to section 271(1) remained inoperative during the period from 1.7.1995 to 31.05.2003. 25. Section 153A was inserted into statute w.e.f 1.6.2003. Clause (i) of Explanation to section 153A clarify that subject to sections 153A, 153B and 153C, all other provisions of this Act shall apply to the assessment made under this section meaning thereby that provisions relating to penalty and prosecution will also apply. It means that the Explanation 5 of section 271(1) will also apply in search assessment made u/s 153A of the Act provided that the conditions relating thereto are satisfied. 26. In the case before us the assessee has disclosed undisclosed income in the return of income filed in response to notice u/s 153A of the Act which has been accepted by the ass....
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..... Relevant para in the assessment order with respect to deposits in the accounts of Smt. Rina Sinha considered suo motu shown by the assessee as his own, is reproduced hereunder:- "Smt. Rina Saha, submitted a letter on 09.12.2011 in response to the summon u/s. 131 of the I.T. Act issued to her on 07.12.2011 and she also denied any connection with this particular a/c no. 7955 standing in her name with DCB, Brabourne Road Branch. She also stated very clearly in this letter - "The DCB Bank account no. 08911100007955 is solely maintained by Mr. Ajeet Surana". At the assessment stage, the assessee has revised his quantum of disclosure twice, first vide letter submitted on 17.08.2011, whereby he offered further Rs. 29187380/- on account of owning up Rina Saha's bank account and then again he revised the disclosure amount vide letter dated 29.12.2011 to Rs. 41071380/- for assessment year 2009-10 on account of Rina Saha's a/c The assessee was asked that why he has excluded Rs. 2.5 crores in his 2nd disclosure letter from the sum total of all the non-cash deposits appearing in the accounts statement. He stated that the reason has been explained in the letter dated 29.12.2011 along with e....
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.... M/s. Indra Barter Pvt. Ltd. and 1.25 crores from M/s. High Light Commodeal Pvt. Ltd. The undersigned had made an enquiry with that company through its Assessing Officer. The AO forwarded me a photo copy of the reply by M/s. Kingshuk Niwas Pvt. Ltd. addressed to him. Please go through the reply. As you can see the director of the company has clearly stated that no purchase or sale of shares of M/s. Bangla Entertainment Pvt. Ltd. took place but the entire transaction were in the nature of accommodation entries. What do you want to comment upon this? Ans. : We do not know under what circumstances and under what duress the party had made such a statement, we do not recall having any direct transaction with the company. However, if you honour considers the sum involved i.e. Rs. 5.295 crores as income in my hand for the relevant period then to avoid litigation and buy peace. I am ready to accept such addition of Rs. 5,295 crores. However, I hope your honour will be kind enough not to initiate any penalty proceedings for such addition. In our opinion, there is nothing in the above reply which will show any concealment. Nor is there anything to show any inaccurate particulars be....
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....of inaccurate particulars is not coming out as such from the returns filed vis-a-vis the finally assessed income, it becomes necessary to see whether any of the deeming provisions set out in the explanations to Section 271(1)(c) will come into play. As already mentioned by us at para 31, Explanation 5A cannot be applied since the threshold condition for applying such explanation has not been satisfied. Leaving the question whether any other explanatory clauses can be invoked in a search case, once explanation 5A is found not applicable open, presuming it can be so done, only other explanation that can be considered in the circumstances of the case is explanation one. At this juncture, it will be worthwhile to have a careful understanding of the judgment of Hon'ble Apex Court in the case of Mac Data Pvt. Ltd. (supra). In this case before Hon'ble Apex Court, there was a survey in the sister concern of the assessee concerned on 16.12.2003, wherein certain documents with share application form, bank statements, Memorandum of Association of Companies, Affidavits, copies of income tax returns, assessment also and blank share documents were impounded. Assessee filed its return more than 1....
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....ent order for assessment year 2009-10, wherein Assessing Officer has elaborately analyzed the information and particulars given by the assessee, as to how the credits in various bank accounts had come in. None of such explanation given by the assessee were found to be untrue or incorrect. 37. As for the levy of penalty under section 271AAA for assessment year 2010-11 is concerned, the income finally computed by the Assessing Officer was less than the sum of Rs. 3,00,00,000/- declared by the assessee prior to the search in his letter dated 28.01.2010addressed to the DDIT(Investigation). In the notice issued under section 271AAA for levy of penalty, (paper book page no.22) Assessing Officer stated that assessee had not satisfied the conditions mentioned in sub-section 2 of Section 271AAA of the Act. However, in the penalty order he stated that assessee had concealed his income knowingly and intentionally in the return of income filed before the search. However, for assessment year 2010-11, the return was filed by the assessee on 02.10.2010, which was after the date of search. Levy of penalty under section 271AAA was for a different reason than the one mentioned in the notice. Ld. C....
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....ted income. Sub section 2 of Section 271 AAA, however, relaxes the rigour of this penalty provision in a situation in which (i) in the course of the search, in a statement under section 132(4), 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. While payment of taxes, along with interest, by the assessee is one of the conditions precedent for availing the immunity under section 271AAA(2), there is no time limit set out for such payments by the assessee. Once a time limit for payment of tax and interest has not been set out by the statute, it cannot indeed be open to the Assessing Officer to read such a time limit into the scheme of the Section or to infer one. There is thus no legally sustainable basis for the stand of the Assessing Officer that in a situation in which due tax and interest has not been paid in full before filing of the relevant income tax return, the assessee will not be eligible for immunity under section 271 AAA(2). 8. While dealing with Ex....
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....ous 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 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, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income." As can be seen from the above, where any search has been initiated under S.132 of the Act on or after 1.6.2007 but before 1.7.2012 and the impugned income pertained to any previous year which has ended beforethe date of search or where the assessee has not declared the ....
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....ncome. (3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed 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. Explanation.- For the purposes of this section,- (a) "undisclosed income" means- (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course....