2012 (8) TMI 1055

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....53A dated 23/11/07 was issued and served upon the assessee. In response to notice, the assessee filed return of income on 17/03/08 for all the four assessment years under consideration and offered additional income as under: - NUTAN GUPTA Chart of Additional Income offered by the Assessee in the returns of income filed u/s 153A S.No. Nature of Additional Income Offered AY 2001-02 AY 2003-04 AY 2004-05 AY 2006-07 1. Investment made in KVPs 38,000 42,000 190,000 2. Investment made in NSCs 217,100 3. Life Insurance Premia Paid (LIPs) 283,500 4. Deposits made in SB A/cs with Post Office 130,766 23,987 5. Interest accrued on KVPs 4,000 35,513 6. Interest accrued on NSCs 22,958 7. Interest on SB A/c (SBI) held by daughter 33,291 Total Additional Income Offered (Rs.) 38,000 176,766 407,100 399,249 4. The Assessing Officer initiated penalty proceedings u/s 271(1)(c). The assessee advanced following pleas before the AO: - "i) "No penalty u/s 271(1)(c) can be levied on the income declared in any of the said six returns filed in response to the notices issued u/s 153A as the income declared therein has be treated as the income duly disclosed to the dep....

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....he first two situation {i.e., (a) and (b)}, if the assessee shows that the income in question has been recorded in his books before the date of search, he cannot be deemed to be guilty of concealment; (ii) In the third situation {i.e., (c)}, if the assessee shows that the income in question has been recorded in his books on or before the date of search, he cannot be deemed to be guilty of concealment; (iii) In all the three situation {i.e., (a), (b) and (c)}, the assessee cannot be deemed to be guilty of concealment if the income in question has been otherwise disclosed by him to the commissioner before the date of search. The explanation was amended by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986 which inserted the following clause: "unless,- (2) he, in the course of the search, makes a statement under sub-section (4) of section 132 that any money, bullion, jewellery or other valuation article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in clause (a) or clause (b) of sub-section (1) of secti....

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....lso to establish that he does not fall within the entire provisions of section 271(1)(c). In Pradip Chandulal Patel vs. P.G. Karode [(1992) 197 ITR 385, 398 (Guj.)], it has been held that, in passing an order u/s 132(5), the Officer was right in coming to the conclusion that, independently of the said Explanation 5, penalty was imposable under section 271(1)(c)." 8. Ld. Counsel for the assessee reiterated the submissions made before lower revenue authorities and submitted that following two issues arise for consideration: (i) there was no variation between income returned in pursuance to notice u/s 153A and assessed income, therefore, there was no concealment of income or furnishing of inaccurate particulars of income, (ii) whether Explanation 5 to sec. 271(1) is applicable for the period from 01.06.2003 to 31.03.2007 after insertion of the words "search initiated u/s 132 before first day of June, 2007" or is it limited only to the period from 01.04.2007 to 31.05.2007. Ld. Counsel submitted that since in this case search took place on 26.11.2006 therefore, Explanation 5 is not applicable. In support of his contention, ld. Counsel has vehemently relied on the decision of ITAT, Del....

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.... As far as assessee's contention regarding applicability of Explanation 5 to section 271(1)(c) for the period from 01/06/03 to 31/03/2007 after insertion of the words "search initiated u/s 132 before first day of June, 2007" or to be limited only to the period from 01/04/2007 to 31/05/07 on the basis of reliance placed in the case of Prem Arora (supra), is concerned, I do not find any substance in the same because the said amendments are with reference to amended provisions of Explanation 5 to sec. 271(1)(c) by which the words "search initiated u/s 132 before the first day of June, 2007" had been inserted by the Finance Act, 2007 w.e.f. 01/06/07. These amendments have no bearing to the issue in hand. The search took place in assessee's case on 22/11/06 and, therefore, the assessee's case is fully covered by Explanation 5 to sec. 271(1)(c). The third plea of assessee is that since the additional income offered was in the form of documents like KVP, NSC, LIP, deposits in saving bank account and interest accrued thereon the said items do not come within the ambit of Explanation 5 as they have been specifically included by insertion of Explanation 5A w.e.f. 01/06/07. The contention is ....