TaxTMI 
TaxTMI 
2017 (5) TMI 718
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....n levying a penalty on the additional income of Rs. 22,00,00,000/- without appreciating the fact that the appellant had ITA No. 1967/MUM/2014 2 admitted the additional income during the search proceedings and offered the said income in the return of income and paid taxes along with interest only to buy peace of mind and avoid protected litigation. 3. In a nutshell, the facts of the case are that a search u/s 132 of the Act was conducted on 11.02.2010 at the premises of M/s. Orbit Corporation Ltd. (OCL) and its group concerns. The residence and business premises of the assessee were also covered during the course of search operation. The Assessing Officer (A.O.) issued notice u/s 153A to the assessee. In response to it, the assessee filed his return of income on 31.07.2010 declaring total income of Rs. 22,70,21,590/- which included a sum of Rs. 22,00,00,000/- declared as undisclosed income. The A.O. completed the assessment u/s 143(3) of the Act on 27.12.2011 by accepting the returned of income at Rs. 22,70,21,590/-. Then the A.O. levied penalty of Rs. 2,20,00,000/- being 10% of additional income of Rs. 22,00,00,000/- on the ground that the assessee had concealed income of Rs. 22,0....
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.... of the ITAT 'D' Bench, Mumbai in the case of Shri Dinesh Kiran Aggarwal for the A.Y. 2010-11 (ITA No. 2634/Mum/2013). 6. The learned DR relied on the order of the learned CIT(A) confirming the penalty of Rs. 2,20,00,000/- imposed by the A.O. u/s 271AAA. 7. We have heard the rival submissions and perused the relevant material on record. Now we discuss the decisions relied on by the learned counsel of the assessee. In the case of Mahendra C. Shah (supra), search operation took place at the premises of one M/s. Dinal Gems, Bombay u/s 132 of the Act on 3rd July, 1987. Admittedly, the respondent assessee i.e. Mahendra C. Shah (MCS) was also present at that point of time at the said premises. A personal search of the assessee was undertaken and diamonds worth Rs. 5,06,712/- were found from the person of the assessee and seized. On 25.02.1991 the A.O. completed the assessment u/s 143(3) on a total income of Rs. 5,77,600/-, including the value of diamonds found from the possession of the assessee i.e. worth Rs. 5,06,712/-. The A.O. initiated penalty proceedings u/s 271(1)(c) of the Act and levied a penalty of Rs. 5,61,464/-. The penalty levied by the A.O. was confirmed in first appeal ....
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..... 1.53 crore in the hands of the firm. The A.O. completed the assessment u/s 143(3) and initiated penalty u/s 271AAA. The A.O. held that the assessee could not specify the manner in which the undisclosed income has been derived and therefore, levied a penalty of Rs. 22,10,000/- u/s 271AAA being 10% of the undisclosed income of Rs. 2,21,00,000/-. The Tribunal held that 'where assessee had disclosed certain amount during course of search and had paid tax thereon, filed return showing said income as business income and same had been accepted by A.O. under head business income, penalty under section 271AAA was not leviable'. In M/s. Phoenix Mills Ltd. (supra), a search and seizure action u/s 132 was carried out at the business premises of the Phoenix Group on 20.02.2008. During the course of search, the Director of assessee-company disclosed an amount of Rs. 3,85,00,000/- in the statement recorded on oath u/s 132(4) on account of transactions with Runit Creations & Paridhi Udyog for purchase of tenancy rights. The A.O. imposed a penalty of Rs. 38,50,000/- u/s 271AAA on the ground that though the assessee had made the disclosure of income but it failed to specify the manner in which th....
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.... 31st July, 1987 and pay tax thereon particularly when the assessee conceded on August 1, 1987 that there was concealment of income. The third condition under clause (2) was that the assessee had to pay the tax together with interest, if any, in respect of such undisclosed income. However, no time limit for payment of such tax stood prescribed under clause (2). The only requirement stipulated in the third condition was for the assessee to "pay tax together with interest". In the present case, the third condition also stood fulfilled. The assessee has paid tax with interest upto the date of payment. The only condition which was required to be fulfilled for getting the immunity, after the search proceedings got over, was that the assessee had to pay the tax together with interest in respect of such undisclosed income upto the date of payment. Clause (2) did not prescribe the time limit within which the assessee should pay tax on income disclosed in the statement under Section 132(4)." 7.1 We may clarify that the order of the Tribunal in the case of Shri Dinesh Kiran Aggarwal for the A.Y. 2010-11 has no implication in the context of penalty u/s 271AAA in the case of the present asse....
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....se and would not have been found to be so had the search not been conducted. Specified previous year means the previous year (i) which has ended before the date of search, but the date of filing the return of income u/s 139(1) for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted. 7.3 Now we discuss the statement on oath of the assessee recorded by the Dy. Director of Income Tax (Inv.), Unit VIII (3), Mumbai u/s 132 of the Act during the course of search on 11.02.2010. The relevant question and answer are extracted below. Q. 16 During the course of search action the search party found cash of Rs. 12,69,85,000/-, kindly explain the source for the same. Ans. I am not in a position to explain the source of said cash of Rs. 12,69,85,000/-. My cash balance as per my books of account is around 21 lacs. Thus, I accept that the amount found in my house is in excess of my cash balance and has not been properly reflected in the books of accounts. Thus I offer the above income of Rs. 12,48,85,000/- for adding up to my total income for the current fin....
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....rwal, Managing Director of M/s. OCL. and the son of the assessee in his statement recorded during the course of search u/s 132(4) on 12.02.2010. A perusal of the statement extracted above indicates that the assessee has specified and substantiated the manner in which the above income was derived. As per the return of income filed on 31.07.2010, the assessee has paid advance tax of Rs. 4,00,00,000/- and TDS of Rs. 24,52,871/- 7.6 On a scrutiny of the factual score, it is noticeable that the assessee filed his return of income for the impugned assessment years on 31.07.2010 and offered Rs. 22,00,00,000/- over and above his income pursuant to the search dated 11.02.2010. The distillation of the decisions at para 7 here-in-above must now be applied to the facts of the case. The dispute then boils down to Rs. 9,51,15,000/- (Rs. 22,00,00,000/- minus Rs. 12,48,85,000/-). 7.7 In STC vs. Modi Sugar Mills, AIR 1961 SC 1047, p. 1051, his Lordship Shah, J. has said thus : "In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and ....