TaxTMI 
TaxTMI 
2012 (8) TMI 1076
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....ed of undisclosed family expenses of ₹ 4,80,000/- and fictitious gifts of ₹ 5,00,000/- over and above what was detected as a result of search. The A.O. made estimated addition of ₹ 50,000/- to undisclosed income offered by the assessee of ₹ 9,80,000/- and another sum of ₹ 50,000/- towards 'on-money'. The A.O. initiated the penalty proceedings u/s. 271(1)(c ) and vide order dated 28.3.2008, levied the penalty of ₹ 4,50,000/- u/s. 271(1)(c ) of the Act. As observed by the A.O, the additional income on account of undisclosed cash credits and fictitious gifts to the extent of ₹ 9,80,000/- was offered in consequence to the search action only. The A.O has further observed that the assessee's case is covered by Explanation - 3 to Sec. 271(1)(c ). Considering the fact that assessee filed the return of income only after the date of search, he concluded that to the extent of ₹ 15,42,140/-, the assessee has concealed the income for the A.Y. 2002-03 and he levied the penalty to the extent of ₹ 4,50,000/- for the A.Y. 2002-03. The assessee challenged the penalty order before the Ld CIT(A). The Ld CIT(A) confirmed the penalty on the following....
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....assessee on 15.6.2004. During the course of search, cash of ₹ 35,59,100/-was found. So far as A.Y. 2002-03 is concerned, in response to notice u/s. 153A of the Act, the assessee filed the return of income disclosing total income of ₹ 14,92,138/-. The A.O completed the assessment making the addition to the extent of ₹ 1,00,000/-. The total income of the assessee declared in the return was comprised of the following income - Sr.No. Particulars Amount Rs. Ps. 1. Income from house property 1,67,389.00 2. Income from share trading 4656.00 3. Short Term Capital Gain on sale of Shares 1,36,252.00 4. Interest + Dividend 1,93,166.00 5. Unexplained cash credit (Gifts + Personal expenditure of assessee and his sister ) 9,80,000.00 6. Unexplained Entry 10,676.00 Total 1,492,140.00 The A.O. made addition of ₹ 50,000/- on adhoc basis i.e. presuming that the assessee might have paid 10% commission on the gift shown and another adhoc addition of ₹ 50,000/- presuming that assessee might not have disclosed some income to that extent. The assessee challenged the said addition before the Ld CIT(A) and those additions were deleted. The A.O. levied t....
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....ct of the personal expenditure of the assessee and his divorcee sister as some entries were found in the diary and to avoid future probe by the tax sleuth, assessee offered the said amount as the undisclosed income. In the present year, in addition to the income towards the gift of ₹ 5,00,000/-, assessee also offered ₹ 4,80,000/- towards personal & household expenditure. The assessee also declared the income from the share trading and income from capital gain. The assessee also paid taxes on the income declared in the return in response to notice u/s. 153A though the income offered by the assessee in respect of alleged gift of ₹ 5,00,000/- and his personal and sister expenditure of ₹ 4,80,000/- which may be based on some entries in the diary but the facts remains that the Explanation -5 to Sec. 271(1)(c ) has no application to the assessee's case for the A.Y. 2002-03 as no addition is made which is based on any money, gold, jewellery etc., found during the course of search. 8. While deciding assessee's appeal for A.Ys. 1999-2000 and 2001- 02, the penalty levied on the income offered towards the personal expenditure of the assessee and his divorcee sister ha....
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....ice u/s. 148. The said Explanation is also silent in the situation if the assessee has not filed the return of income for any particular A.Y. but filed the return of income for the first time in response to notice u/s. 153A, then what would be the legal presumption ? In our opinion, Explanation-3 has no application, when the return is filed in response to notice u/s. 153A. We, therefore, hold that as per the facts of this case and law applicable, there is no justification to levy the penalty for the A.Y. 2002-03 in the income declared by the assessee in the return of income in response to notice u/s. 153A even for the said income is based on some entries found in the diaries or other documents or even Bank Account during the course of search. We, accordingly delete the penalty sustained by the Ld CIT(A). 10. Now we take up the assessee's appeal for A.Y. 2003-04 being ITA No. 236/PN/2010. In this year, the assessee filed the return of income disclosing the total income of ₹ 37,99,170/- and the A.O determined the total income at ₹ 38,39,170/- by merely making adhoc addition of ₹ 50,000/-. The income declared by the assessee in the return is as under : Sr.No. Par....
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....umstances, the decision of Madras High Court in the case of CIT-II Vs Shri. E.V. Balashanmugham (2006) 286 ITR 626 (Mad) relied upon by the appellant cannot come to the aid of the appellant. 5.7 It is also claimed that the records of the appellant were not well maintained and the appellant was not able to attend to his tax matters due to personal difficulties in his family. It is stated that he was overtaken by certain circumstances in the family and he has not deliberately attempted to conceal the particulars of income or furnished inaccurate particulars of income. This claim also cannot be accepted. Firstly, the claim made by the appellant that there were certain difficulties in the family at the material point of time is not supported by any evidence on record. On the contrary, the appellant made substantial deposits in the bank account and also dealt in shares regularly during the year and in subsequent years and earned substantial income by way of capital gains as per the details furnished during the appellate proceedings. It is also a fact that cash of ₹ 35,25,000/- was found and seized from the premises of the appellant during the search. The so-called personal diffi....
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....)(c ). Moreover, the addition was made in the present case on the basis of positive evidence i.e. entries in the bank a/c and other documents found during the search. For the same reasons, the decision by the ITAT Lucknow reported in 87 ITD 173 is also of no help to the appellant. Similarly, the decisions reported in 204 ITR 244 and 221 ITR 110 do not render any support to the case of the appellant as willful neglect, mens rea etc. is no longer a condition precedent for imposition of penalty. Thus, the decisions relied upon by the appellant are not applicable to the facts of the present case. At this juncture, reference can be made to the decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors Ltd. as reported in 306 ITR 277 wherein the Apex Court held that mens rea is not an essential ingredient of sec. 271(1)(c ) and there is no discretion with the Authority competent to impose penalty below the prescribed minimum." 13. In the A.Y. 2003-04, it is admitted factual position that the income declared by the assessee in the return of income filed in response to notice u/s. 153A is ₹ 37,99,170/-. In this year, the assessee filed the return of income o....