TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 1130
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....gainst the order of ld CITA. The appeals of the assessee are against the confirmation of levy of penalty @ 100% by the ld CITA. 3. The only issue to be decided in all these appeals is as to whether the penalty u/s 271(1)( c) of the Act could be levied in respect of income offered after the search but in the return filed u/s 153A of the Act. 4. The brief facts of this issue is that a search and seizure operation was conducted on 24.1.2008 u/s 132 of the Act in the Sribir Group (Sarawgi) of cases. The assessee is one of the individuals belonging to this group. Sribir Group is a Giridih based leading business group of Jharkhand , engaged in the manufacturing activities of sponge iron, TMT bars, wires, nail etc besides running petrol pumps and owning agencies of Bajaj Auto & Mahindra Auto , operating from Giridih and Kolkata. A search and seizure operation was carried out at the residence of the assessee at Sarawgi Sadan, Dumri Road, Giridih, Jharkhand on 24.1.2008 besides conducting search in various factory and residential premises of the group. Besides a search and seizure operation was conducted in the residence at Flat No. 2, 3rd floor, Lav Flat Owners Association, Howrah A.C. M....
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....169888 253220 38221 676289 N.A. 2 Additional income offered in proceedings u/s. 153A pursuant to statement u/s. 132(4) 129946 3894000 9191000 3855000 6671000 126261040 3 Income disclosed in computation u/s. 153A 255920 4063688 9444220 4243221 7347289 127486910 4 Income assessed u/s. 153A 255920 4063688 9444220 4243221 7347289 127486910 5 Any other addition made in order u/s. 153A beyond the income returned u/s. 153A NIL NIL NIL NIL NIL NIL Total sum Rs.15,00,01,986/- 4.2. This was followed by further letter dated 5.10.2009 wherein detailed explanation substantiating the manner in which undisclosed income was derived by the assessee for each asst year was given by the assessee and enclosing the fund flow analysis for each assessment year for the purpose of computation of undisclosed income. It was submitted that the authorized officer had informed both the assessee as well as his eldest brother Shri S.K Sarawgi at the time of search, that if disclosure is made for undisclosed income, manner of deriving the same is explained and taxes due thereon were paid, then the assessee would be eligible for immunity from levy of penalty. It w....
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.... the return filed u/s 153A of the Act, the ld AO did not detect any further undisclosed income in the search assessment. We find that the assessee had deposited the taxes due on the said income. We find that the ld AO had held that since the income was disclosed only at the time of search and not in the return filed u/s 139(1) of the Act, there was deliberateness in the action of the assessee warranting levy of penalty. 5.1. The ld AR argued that consequent on completion of search, there were proposals for centralization of case records of Sarawgi Group first at Ranchi and thereafter at Patna. On the other hand, the assessee was requesting for centralization of assessment records of the group at Kolkata where the registered office of Atibir Industries Ltd was situated. Since the issue of centralization of records had not reached finality, the assessee did not have any idea about the correct jurisdiction and it was alos not possible for him to obtain inspection of the seized records so as to compile full and proper return of income in response to notice u /s 153A of the Act. He argued that the CBDT vide its order dated 9.4.2009 transferred jurisdiction over Atibir Industries Group ....
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....ings and paid full and proper taxes along with interest in the income disclosed in the return filed u/s 153A of the Act. It is not a case where the assessee had made false disclosures in the return of income or failed to cooperate during the assessment proceedings. Further, it is also not a case where no explanations were furnished or the explanation furnished were found to be false. It would be pertinent to note that the ld AO was unable to identify any further undisclosed income other than the income offered by the assessee. He stated that ultimately the penalty has been levied on the ground that but for the search, the assessee would not have come forward for disclosure of his undisclosed income and pay taxes thereon. With regard to arguments of Learned DR that but for the search this undisclosed income could not have been unearthed, the Learned AR argued that this issue is squarely covered in favour of the assessee by the decision of the Hon'ble Calcutta High Court in CIT vs Amardeep Singh Dhanjal in ITA No. 39 of 2010 dated 11.1.2013. 5.3. At this juncture, it would be relevant to address the amendment brought in Explanation 5A to Section 271(1)(c ) of the Act by Finance (No.....
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....ingly with a bona fide belief that no penalty would be levied. Just because the law is changed retrospectively, the assessee cannot be invited with a penal liability when his case was falling under the erstwhile provisions of Explanation 5A to Section 271(1)( c) of the Act on the date of search. In this regard, we draw reference to the decision of Full Bench of Hon'ble Supreme Court in the case of CIT vs Vatika Township (P) Ltd reported in (2014) 367 ITR 466 (SC) wherein it was held :- 31. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset.....
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....case the Assessee had filed return of income on 7.7.2008. He filed revised return pursuant to notice u/s 153A on 12.11.2008. Thus both the original return as well as the revised return was filed before the amendment to Explanation5A became a part of the Statute." In the instant case, the notice u/s 153A of the Act was issued on the assessee only on 3.8.2009 and the return in response to such notice was filed on 31.8.2009 and by that time the amended provisions of Explanation 5A to Section 271(1)(c ) of the Act would become applicable , but still the circumstances leading to delayed issuance of notice u/s 153A of the Act and filing of return thereon could not be ignored in the facts and circumstances of the case. As stated earlier, there was lot of correspondences between the assessee and the revenue with regard to centralization of cases to Ranchi and Patna and ultimately that dispute got settled vide order of CBDT dated 9.4.2009 wherein it was decided to centralize the cases at Kolkata. Only after the said CBDT order was served on the officials of Kolkata jurisdiction , thereafter ld DGIT (Inv) Kolkata vide his order dated 15.5.2009 assigned the jurisdiction of the case to DCIT, ....
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.... in the show cause notice as to whether the assessee had concealed his income or furnished inaccurate particulars of income. Reliance was placed on the decision of the Hon'ble Karnataka High Court in the case of CIT vs Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565 (Kar) . We find that the ld AO had merely made a tick mark in the show cause notice for the Asst Year 2003-04 without striking off the specific charge on which the assessee has to meet while replying to the penalty notice. In respect tof Asst Years 2004-05 to 2007-08, we find that the ld AO had not even given any tick or struck off the irrelevant portion and had merely given a blank show cause notice by just mentioning the name of the assessee, Asst Year, date and time of penalty hearing. The ld AR pointed out that the Hon'ble Karnataka High Court in the aforesaid decision has considered the effect of Sec.271(1B) of the Act, in the light of the decision of the Hon'ble Delhi High Court in the case of Ms.Madhushree Gupta Vs. Union of India 317 ITR 107(Del) wherein it was held :- "In the result, conclusions are as follows : (i) sec. 271(1B) is not violative of Art. 14 of the Constitution; (ii) th....
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....cealing particulars of such income". On this aspect we find that in the show cause notice u/s.274 of the Act the AO has not struck out the irrelevant part. It is therefore not spelt out as to whether the penalty proceedings are sought to be levied for "furnishing inaccurate particulars of income" or "concealing particulars of such income". 9.1. The Hon'ble Karnataka High Court in the case of CIT & Anr. v. M.anjunatha Cotton and Ginning Factory, 359 ITR 565 (Karn), has held that notice u/s. 274 of the Act should specifically state as to whether penalty is being proposed to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income. The Hon'ble High court has further laid down that certain printed form where all the grounds given in section 271 are given would not satisfy the requirement of law. The Court has also held that initiating penalty proceedings on one limb and find the assessee guilty in another limb is bad in law. It was submitted that in the present case, the aforesaid decision will squarely apply and all the orders imposing penalty have to be held as bad in law and liable to be quashed. 9.2. The Hon'ble Karnataka High Court....
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....the offences. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(1)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confined only to those grounds and the said grounds have to be specifically stated so that the assessee would have the opportunity to meet those grounds. After, he places his version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on which he is called upon to answer. It is not open to the authority, at the time of imposing penalty to impose penalty on the grounds other than what assessee was called upon to meet. Otherwise though the initiation of penalty proceedings may be valid and legal, the final order imposing penalty would offend principles of natural justice and cannot be sustained. Thus once the proceedings are initiated on one ground, the penalty should also be imposed on the same ground. Where the basis of the initiation....
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....Assessment Order or order of the Appellate Authority or Revisional Authority. f) Even if there is no specific finding regarding the existence of the conditions mentioned in Section 271(1)(c), at least the facts set out in Explanation 1(A) & (B) it should be discernible from the said order which would by a legal fiction constitute concealment because of deeming provision. g) Even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings under Section 271(l)(c) is a sine qua non for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1(B). h) The said deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the Commissioner. i) The imposition of penalty is not automatic. j) Imposition of penalty even if the tax liability is admitted is not automatic. k) Even if the assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment or....