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2017 (11) TMI 1195
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....ses of the assessee. During the course of such search against the assessee, the authorised officer confronted the assessee with noting of the seized document identified as AS-1 page 5 found in the course of search conducted against Shri D. D. Modi on August 24, 2009 wherein "25,000 Govind Ji Lashkari" was noted. In its sworn statement recorded on oath, the assessee has stated he does not recall any such entry or any such transaction which has been made with Shri D. D. Modi. However, the assessee offered to tax Rs. 25,00,000 on account of the said entry for the financial year 2009-10 for peace of mind and avoid long litigation with the Department and agree to pay the self-assessment tax thereon. Thereafter, on December 27, 2010 the assessee revised his original return of income wherein additional income of Rs. 25,00,000 was disclosed under the head "Business income". Thereafter, the Assessing Officer issued notice under section 153A of the Act on June 7, 2011 and in compliance thereof, the assessee filed a return of income on June 21, 2011 declaring a total income of Rs. 1,47,06,480 which includes the additional income of Rs. 25,00,000 disclosed during the search operation and also ....
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.... lakhs in the return filed on December 27, 2010 which is a return filed after the date of search. The search has been initiated after June 1, 2007. Income of Rs. 25 lakhs pertains to the previous year 2009-10, which has been ended before the date of search. The return of income for that previous year has been furnished before September 30, 2010 but income of Rs. 25 lakhs has not been declared in that return then notwithstanding that income of Rs. 25 lakhs is declared by him in any return of income furnished on or after the date of search, the assessee, for the purpose of imposition of penalty under clause (c) of this section, is hereby deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. Because all the conditions laid down in Explanation 5A have been met and the deeming provisions of section 271(1)(c) are clearly applicable to the assessee. In view of the above, it was held by the Assessing Officer that it is established beyond doubt that the assessee has furnished inaccurate and/or concealed particulars of its income to the extent of surrender and interest earned thereon for Rs. 26,79,178 and levied penalty at 100 per cent. of....
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....r section 271(1)(c) of the Act by the Department, the assessee has tried to take shelter under the garb of section 139(4) of the Act so as to get immunity prescribed under section 139(5) of the Act. But this act of the assessee is of no use because the search operation was conducted against the assessee therefore, in view of this all proceedings of assessment/reassessment shall abate. 3.2.6 It is a fact that the satisfaction for concealment of particulars of income or furnishing of inaccurate particulars of income has to come from the assessment order passed as a consequence of the return filed under section 153A of the Act. In this case, there is no variation to the returned income filed under section 153A of the Act except computation of interest Rs. 1,79,178 at 12 per cent. for the intervening period between August 24, 2009 (date of search on D. D. Modi) till March 31, 2010 i.e., for 218 days. I do not find any infirmity in this as this is fair estimation for a loan advanced at 12 per cent. per annum. More so the assessee has not preferred any appeal against the addition made in this assessment order passed under section 153A read with section 143(3) of the Act. In view....
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....akhs money advance) computed for the intervening period of 228 days. The facts of this case are that since the assessee offered the said undisclosed income in the revised return after the search operation i.e., on being cornered by the Department, it was a deliberate act of concealment of income and the assessee deemed to have concealed the particulars of income for the year under consideration, and it spoke of volumes of contrivance by the assessee with apparent element of mens rea. Thereafter, where in pursuance of the search operation, the assessee has filed his revised return declaring higher taxable income (Rs. 25 lakhs as additional undisclosed income) since it is undisputed that the time of filing the original return the assessee was aware of the concealment, it has to be concluded that there was no compliance with section 139(5) of the Act and therefore, the revised return being filed non est, as the conduct of the assessee cannot be said to be bona fide, therefore, the penalty order so passed has to be sustained. On similar facts, the hon'ble Gujarat High Court has sustained the penalty order passed under section 271(1)(c) of the Act in the case of Snita Trans....
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....search to purchase peace and avoid litigation and the Department simply rested its conclusion on the act of the voluntary surrender by the assessee in good faith, the High Court was justified in holding that no penalty could be levied under section 271(1)(c). 5.1 It was further submitted that section 153A deals with the provision of framing the assessment in the case of search and seizure action made under the Act. The section starts with a non obstante clause relating to the normal assessment procedure covered by sections 139, 147, 148, 149, 151 and 153 in respect of the search made after May 31, 2003. The section, so excluded relate to filing of returns, assessment and reassessment proceedings. The provisions of sections 153A, 153B and 153C are a complete code for assessment wherein search and seizure has been initiated after May 31, 2003. Thus, there is complete detachment of assessment proceedings under section 143 or 147 from search proceeding under section 153A of the Act. For the purpose of imposition of penalty under section 271(1)(c) resulting as a result of search assessment made under section 153A, the original return of income filed under section 139 cannot be ....
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....ore, it will not be justified to refer to returned income under section 139 for the purpose of imposition of penalty under section 271(1)(c). Where the returned income filed under section 153A is accepted by the Assessing Officer and there is no variation in the assessed income and the returned income, penalty under section 271(1)(c) cannot be imposed." (B) The hon'ble High Court of Madhya Pradesh in the case of CIT v. Shyamlal M. Soni [2005] 276 ITR 156 (MP) held laid down as under : "that no penalty under section 271(1)(c) could be levied in case, where income returned in revised returns was accepted and assessed in the hands of the assessee even though the revised returned were filed after search and subsequent to inquiries made by the Department during the course of assessment proceedings." (C) The hon'ble Supreme Court in case of CIT v. Suresh Chandra Mittal [2001] 251 ITR 9 (SC) held that where the assessee filed revised returns showing higher income after search to purchase peace and to avoid litigation penalty cannot be levied under section 271(1)(c) as the burden of proving the concealment has not been discharged. In the....
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....illon Rice Mills [2002] 256 ITR 447 (P&H) it was held that where additions were made on the estimate basis and the Department failed to prove the concealment of income penalty under section 271(1)(c) cannot be levied. In CIT v. SAS Pharmaceuticals [2011] 335 ITR 259 (Delhi) held that where addition on surmises, conjectures and possibilities on estimate there could be no penalty under section 271(1)(c). 5.5 It was further submitted that the learned Commissioner of Income- tax (Appeals) relied on the judgment in the case of CIT v. Usha International Ltd. [2012] 254 CTR (Delhi) 509 which is distinguishable on facts. In that case in survey discrepancy in cash, stock and renovation details found which were found which was incriminating material while in the case of assessment in search no material was found regarding advance of Rs. 25 lakhs to D. D. Modi or earning of any interest thereon. The other cases cited by the learned Commissioner of Income-tax (Appeals) is the concluding part of the order also distinguishable on facts as therein also some incriminating document/material was found with the assessee in search/survey proceedings which is not the case of the assessee. Thus the a....
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....We have heard the rival contentions and pursued the material available on record. The Assessing Officer has invoked the deeming provisions of Explanation 5A to section 271(1)(c) of the Act to levy penalty in the instant case. Section 271(1)(c) of the Act being in the nature of penal provisions require a strict interpretation and it is to be seen that the instant case falls within the four corners of the said provisions and conditions laid down therein are specifically fulfilled. Therefore, it would be relevant to examine the conditions specified in Explanation 5A which reads as under : "Explanation 5A.-Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of :- (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year ; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other d....
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....) for the proposition that there was voluntary disclosure in good faith to buy piece and avoid litigation and the same should not be a basis for levy of penalty. The said decision was rendered by the hon'ble Supreme Court much prior to the insertion of Explanation 5A by the Legislature in the statue books and hence, did not consider Explanation 5A and does not help the case of the assessee in the instant case. Recently, in the context of Explanation 5 to section 271(1)(c) of the Act, a similar contention came up for consideration before the hon'ble Delhi High Court in the case of Principal CIT v. Neeraj Jindal [2017] 393 ITR 1 (Delhi) and it was held that Explanation 5 was specifically inserted to deal with such situations where higher income was disclosed in the return filed consequent to search operation, and the assessee but for such explanation, can contend that addition made to his income in the return filed after the search operations were only to buy peace and did not tantamount to concealment. Here it would be relevant to refer to para 24 of the said decision of the hon'ble Delhi High Court which reads as under : "The purpose of inserting Explanation 5 ....
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....as held that the term "voluntary" has to seen in the context of statement not been recorded by applying force. It is in that sense a voluntary disclosure and it has been clarified by the assessee that he had not given any statement under pressure and he didn't want to rectify or modify the statement made by him. 7.4 In view of the above legal proposition laid down by the hon'ble Delhi High Court as well as the hon'ble Calcutta High Court, we are unable to subscribe to the view that in the instant case since there was voluntary disclosure in good faith to buy piece and avoid litigation, the same should not be a basis for levy of penalty as subscribing to such a view would make Explanation 5A otiose which has been specifically invoked in the instant case. 7.5 Now, coming to another contention of the learned authorised representative that for the purpose of imposition of penalty under section271(1)(c) resulting as a result of search assessment made under section 153A, the original return of income filed under section 139 cannot be considered. In our view, the said issue is no more rest integra. Considering the non obstante clause under section 153A which excludes the....