TaxTMI 
TaxTMI 
2017 (1) TMI 1193
X X X X Extracts X X X X
X X X X Extracts X X X X
....ates. This included search also at the residence of the assessee. During the course of search, the search party found out some material where the search party seen that M/s. Kaushalya Infrastructure Group companies had paid higher amount than cost of land to Abu Mansoor Ali and his associates i.e. Mamud Ali Mondal and Arepan Bibi. Such excess amounts were never given back to the M/s. Kaushalya Infrastructure Group companies but as can be seen from the ledger accounts of Abu Mansur Ali and his associates, maintained by the companies, that in the end all the excess amounts, be it small or big, as standing in the accounts of the associates, were transferred to the account of Abu Mansur Ali in the books of the companies. The argument of the assessee was that there is no element of profit in the said transactions. Based on this incriminating document the AO made the addition and he has initiated the penalty proceedings u/s. 271(1)(c) of the Act and levied penalty u/s. 271(1)(c) of the Act. When passing the penalty order u/s. 271(1)(c) of the Act the AO has observed the following: "After reminder dated 20.06.2011, which was served on same date the assessee submitted in reply to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., the submission filed by the assessee is not accepted. As such penalty u/s.271(I)(c) is imposed in this case as per calculation made hereunder: Total income assessed as per order u/s.153A/I43(3) dated 31/12/2010, subsequently rectified vide order u/s.154 dated 28.03.2011 ..... Rs. 14.16.514/- Tax on total income, E.Cess and Surcharge .... Rs. 4,35,357/- Considering the facts that at the assessment stage, the assessee cooperated with this office in respect of various requisitions etc., I decide to restrict the quantum of penalty to 100% of tax sought to be evaded, which comes to Rs. 4,35,3571-." 3. Aggrieved from the penalty order of the AO, the assessee filed an appeal before the Ld. CIT(A) who has also confirmed the penalty observing the following: "5.1 On perusal of Explanation 5A of section 271(1)( c) substituted by the Finance (No.2) Act, 2009 applicable with retrospective effect from 01.06.2007, it is apparent that in a case of an assessee where the search is initiated on or after 1st day of June, 2007 and such an assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing or having any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... For that in view of the provisions contained in I.T. Act, 1961 making clear distinction between the word "Person" and word "Assessee" the tax payer was not liable to the penalty under sec. 271(1)(c). 4. For that the Ld. CIT(A) erred in confirming the action of the AO in imposing penalty u/s. 271(1)(c) of Rs. 4,35,357/- being 100% of the tax on assessed income when even otherwise the assessee satisfied the conditions of 271(1)(c). 5. For that the Ld. CIT(A) erred in confirming the penalty by treating the total income as undisclosed income ignoring the returned income which was more or less equal to the returned income. 6. For that the Ld. CIT(A) erred in confirming the action of the AO in imposing penalty when the undisclosed income was admitted during the course of search the manner of deriving the undisclosed income from land dealings was substantiated and the CIT(A) erred in assuming that the taxes were not paid on the assessed income. 7. For that the Ld. CIT(A) erred in confirming the action of the AO in imposing penalty when the additions to the return income was made only on estimate basis not on the basis of any seized document. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h clear that assessee under consideration was not an assessee at the point of search. The assessee under consideration never filed the return of income before the search and at the time of search also he was not assessee. Therefore, the Ld. CIT(A) has wrongly confirmed the penalty u/s. 271(1)(c) of the Act of Rs. 4,35,357/-. However, it is also important to note here that the assessee had admitted during the course of search and seizure regarding the undisclosed income. The assessee has suo moto admitted before the search party about his undisclosed income. The Ld. AR for the assessee also mentioned that in the case of assessee under consideration the addition was made by the AO passed on the estimate and not on the basis of seized documents. Ld. AR for the assessee has also invited our attention to the show cause notice issued by the AO for the year under consideration u/s. 274 of the Act in the provided form, to point out that the irrelevant portion viz., 'furnishing inaccurate particulars of income' or 'concealed particulars of income' was not struck off by the AO although the ld. DR has contended in this regard that the relevant portion in the penalty notice having been ticked ....