2016 (12) TMI 441

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....ies, income from business & profession which consisted of income from trading of medicines and income from C&F Agent of various pharmaceutical companies under the name and style of M/s. Mittal Enterprises. It is noted from the assessment order that originally return of income was filed by the assessee on 25-10-2004 declaring income of Rs. 1,51,100/- for the assessment year under consideration. A search was conducted on 27-8-2008 in the case of Mittal Group to which the assessee belonged. The group is engaged in wholesale trading / C&F Agent of medicines/ Pharmaceuticals. Various assets/ books of account and documents had been found and seized as per Annexures prepared during search. In compliance to the notice u/s 153A of the Act, the assessee filed the return declaring income of Rs. 5,85,090/- on 31-03-2009. The assessment was made u/s 153A/143(3) of the Act on income of Rs. 6,18,980/- vide assessment order dated 9-12-2010 which included surrender of income of Rs. 4,53,819/- on the basis of transactions recorded on various documents including documents seized from the premises at Mittal Chambers marked as annexure A-1 to A-3. As per explanation furnished during the course of asses....

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....of voluntary disclosure by the appellant but because of the compulsion on account of evidence in possession of the Income Tax Department. The appellant chose to accept this additional income after having been searched by the Department. 4.7 It is seen that provisions of Explanation 5A were inserted by the Finance Act 2007 with effect from 01- 06-2007. The provisions are:-......... 4.8 Thus, it is seen that the provisions of Explanation 5A are mandatory in nature and the penalty is leviable on the amount of additional income declared in the return of income filed u/s 153A of the I.T. Act. 4.9 The case laws cited by the appellant have been found to be distinguishable on facts and are not applicable. Thus, I find no merit in the submissions filed by the appellant and hold that AO was justified in initiating the proceedings u/s 271(1)(c) of the I.T. Act in accordance with the provisions of Explanation 5A to the said section. For this proposition, I place reliance on the Hon'ble Supreme Court judgement in the case of MAK Data Pvt. Ltd. vs. CIT, 358 ITR 593 (SC) - where it was held that even if amount surrendered in survey was to buy peace of mind, levy of penalty was valid.....

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....r Bench decision in the case of Shankar Lal Khandelwal vs. DCIT (ITA No. 878/JP/2013 date of order 11-03-2013 for the assessment year 2007-08) 2.4 The ld. DR relied on the orders of the lower authorities. 2.5 I have heard the rival contentions and perused the materials available on record. It is noted from the record that the assessee is an individual declaring income from house property and income from business or profession as proprietor of M/s. Mittal Enterprises. The return u/s 139(1) of the Act was filed on 25-10-2004 by the assessee declaring total income of Rs. 1,51,100/-. Search and seizure operations were carried out on 27-08-2008 on residential and business premises of the assessee. The return u/s 153 of the I.T. Act was filed on 31-03-2009 declaring total income of Rs. 5,85,090/- which included additional income surrender of Rs. 4,53,819/-. The assessment was made by the AO u/s 153A/143(3) of I.T. Act on total income of Rs. 6,18,980/- which included the addition of Rs. 33,892/- made by the AO on account of disallowance made from various expenses. In penalty proceedings, the AO imposed the penalty of Rs. 1,36,145/- being 100% of tax payable on additional income of R....

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....ate 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 imposing of penalty without specifying the limb for reasons to impose the penalty, whether it is for concealed particulars of income or furnished inaccurate particulars of income. The ld CIT(A) has considered all the aspect and held that Explanation 5A to Section 271(1)(c) is applicable as in this case, a search was carried out after 01/6/2007 and the assessee has furnished return for A.Y. 2007-08 before search and additional income has been disclosed U/s 153A. Therefore, deeming provisions are applicable. It is undisputed fact that the assessee has disclosed additional income in return filed U/s 153A on the basis of incriminating document found during the course of search. We have considered view that Explanation 5A is not required to be mentioned by the Assessing Offi....

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.... proceeding for concealing/furnishing of inaccurate particulars of income. The Hon'ble Punjab & Haryana High Court has expressed different view on initiation of penalty proceedings even notice U/s 274 issued by putting oblique between concealing and furnishing of inaccurate particulars of income whereas the Hon'ble Karnataka High Court has held that the Assessing Officer has to satisfy at the time of initiation of penalty proceeding and issuing notice U/s 274 of the Act that whether penalty is for concealed particulars of income or furnishing of inaccurate particulars of income. There were two opinions of the Hon'ble Courts. The Hon'ble Supreme Court has held that in case of two views of the court, favourable view of the assessee would be taken as held in the case of CIT Vs Vegetable Products Ltd. (1973) 88 ITR 192 (SC) and a recent decision in the case of CIT Vs. Vatika Township P Ltd. (2014) 367 ITR 466 (SC). Therefore, we are of the considered view that initiation of penalty proceedings is not as per law and Assessing Officer did not have any jurisdiction to impose penalty U/s 271(1)(c) of the Act. As the matter has been decided on technical issue, we are not expressing any ....