TaxTMI 
TaxTMI 
2014 (3) TMI 1045
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....y were deposited and withdrawn from certain Bank accounts with M/s. Vijaya Bank in the name of the following five individuals:- (1) Vijay Sankar Pandey, (2) Pradip Roy Chowdhury, (3)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 off....
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....nexure A to Panchanama having identification marks AKS/Off/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. Howe....
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....figure of deposits in the five bank accounts for assessment year 2007-08, (ii) Reworking the correct figure of deposits in Bank 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, Brabo....
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....the penalties levied is summarized hereunder: Assessment Year Penalty under section 271(1)(c) Penalty under section 271AAA 2006-07 2,42,212/- ---- 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 ....
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.... appeal the original return of income was filed by the appellant, but no income as per the benami bank accounts was declared therein. The additional income3 was declared by the appellant 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 h....
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....sable under section 271(1)(c) because said admission was not voluntary but the result of enquiries conducted against the appellant. In view of above, I am of the opinion that the AO was justified 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 ....
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....n to conceal. Revision of the income during the course of assessment proceedings for various years were only for correction of arithmetical mistakes in the calculation of credits in the respective bank accounts, 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/- p....
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....or assessment year 2009-10 in so far as the addition of Rs. 4,00,56,380/- made for Bank deposits in the name of Smt. Rina Sinha. Assessing Officer had not considered it as concealed income. Assessing Officer had mentioned 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 incom....
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.... that satisfaction was not recorded with regard to some of the items on which additions were made, Ld. D.R. submitted that such satisfaction was clearly discernable on a reading of the assessment order and this was very much in 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 cl....
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....xe, P-13, Chowringhee Square, Kolkata-700 069 Sub. : Disclosure of income u/s 132(4) of the Income Tax Act, 1961, - Petition. Search and seizure operations were conducted in my office premises at 126A, Surat Bose Road, Ground Floor, 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 ....
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....ere filed, in respect of assessments completed under section 153A and 143(3) of the Act, after the search. 29. Nature of income whether it was based on a voluntary disclosure by the assessee or investigation done by the Department would be important only in a penalty 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 s....
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....ment of income and, consequently, penalty u/s. 271(1)(c) cannot be imposed." 14. This view has also been followed by the Mumbai Bench in the case of M/s. Unimark Remedies Ltd Vs ACIT in ITA Nos. 409 to 411/M/09 and ITA Nos. 290 to 292/M/09 wherein the Tribunal at para-7 of 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 ....
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....ed, except for assessment year 2006-07 was higher than the income returned in the return filed pursuant to notice under section 153A of the Act. For assessment year 2007-08, such difference was only due to correction of mistakes in calculation of deposits and credits in the Bank accounts, 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 assesse....
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....s invoked provisions of Explanation 5 to sec. 271(1)(c ) while imposing penalty in assessment year 2004-05. It is also important to note that Chapter XIVB was inserted in the statute by the Finance Act, 1995 w.e.f. 1.7.1995 which prescribed special procedure for search assessments. No penalty u/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 ....
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....unt of one Smt. Rina Sinha with Development Credit Bank, Brabourne Road Branch, Kolkata. There is nothing on record to show that such disclosure made by the assessee during the course of assessment proceedings was on account of any compulsion arising out of any information available with the Revenue. 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 ....
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....d by you there was one share holder of M/s. Bangla Entertainment Pvt. Ltd. by the name of M/s. Kingshuk Niwas Pvt. Ltd. of 40, Weston Street, Kolkata-12, who had sold 5000 shares to M/s. Highlight Commodeal Pvt. Ltd. and 22500 shares to M/s. Indra Barter Pvt. Ltd. in return it had received 4,045 crores from 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 r....
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....oncealment whatsoever can be made out from the answer given by the assessee on the above amount. On the other hand, assessee clearly states that he had no dealings with the respective parties. 36. Thus there is an absence of a discernable element of concealment in the additions made. Once a concealment or furnishing 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 ....
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....) to Section 271(1)(c) could not have been applied on the assessee since assessee had offered explanation and furnished all particulars of the income disclosed by him. As already mentioned by us, particulars of every item of income offered by the assessee and added by the Assessing Officer is clearly available in the assessment 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 c....
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....ion 271(1)(c), Section 271 AAA, without any reference to findings or presumptions of concealment of income or the findings or presumptions of furnishing of inaccurate particulars, provides that in respect of unaccounted income in the cases where search initiated after 1st June 2007, the assessee is to pay a penalty @ 10% of unaccounted 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 th....
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....r 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 (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 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 ....
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....he assessee,- (i) in the course of the search, in a statement under sub-section (4) of section 132, 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. (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 ....