TaxTMI 
TaxTMI 
2017 (1) TMI 1508
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....ls) erred in confirming the penalty levied by the AO amounting to Rs. 74998/- u/s 271(1)(c) of the Act for A.Y.2006-07 on the ground that return was not filed by the appellant within the due date u/s 139(1) without appreciating the facts of the case and submissions of the appellant. 2. The learned CIT (Appeals) erred in not appreciating the contention of the appellant that return of income filed by the appellant is not in response to notice u/s 153A but a regular return where in correct income is disclosed and merely rejected the contention without proving it to be false. 3. The learned CIT (Appeals) erred in not appreciating the following important facts and the submissions of the appellant that: a. Appellant has disclosed the correct income in the Return of Income filed relating to year in which survey U/Sec. 133A is carried out at the business premises. b. The disclosure made on account of errors and omission amounting to Rs. 9502.00 is not made because no such errors and omission were found. c. The learned A.O. has not found that the explanation of the assessee is false. d. The declaration of excess stock found during the co....
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....nation 5 to section 271(1)(c) of the Act was not available to the assessee in respect of additions made. The Assessing Officer noted two things as to whether the stock which was found to be excessive during the course of Survey under section 133A of the Act, whether the assessee could declare it and whether the immunity provided under section 132(4) of the Act could be enjoyed by him and secondly, if it is assumed that the immunity was available, whether the return which was not filed within time prescribed under section 139(1) of the Act, could save the assessee from the clutches of penalty. In reply to the show cause notice, the assessee explained that the excess stock was found from his possession during the course of Survey and the said amount was offered as additional income and the assessee paid the taxes thereon. The Assessing Officer noted that though the assessee had included excess stock of gold and silver but had not included the addition on account of errors and omissions of Rs. 9,502/- in its return of income. Since he had not offered the said income, the Assessing Officer held the assessee liable for penalty on addition of Rs. 9,502/-. Si....
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....tion 142(1) of the Act. He further stressed that Explanation 5 to section 271(1)(c) of the Act was not attracted as the amount was disclosed during the course of Survey and not during the course of search. He placed reliance on the decision of Pune Bench of Tribunal in Nandkishor Tulsidas Katore Vs. ACIT in ITA Nos.2174 to 2180/PN/2014, relating to assessment year 2002-03 to 2008-09, order dated 14.12.2016. 10. The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below. 11. We have heard the rival contentions and perused the record. The issue arising in the present appeal is against levy of penalty under section 271(1)(c) of the Act. The assessee is engaged in the business of jewellery. Survey action under section 133A of the Act was carried out at the business premises of assessee on 27.04.2005. Simultaneously, search action was also carried out at the residential premises of assessee. The instant assessment year in appeal is the year of search. During the course of Survey, the assessee declared certain additional income on account of excess stock found from his premises of gold and silver am....
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....- added in the hands of assessee on account of errors and omissions does not attract any penalty since no malafides have been attributed to the assessee in not offering the same as its income. 12. We find that Pune Bench of Tribunal in Nandkishor Tulsidas Katore Vs. ACIT (supra) while deciding the similar issue of additional income offered during the course of Survey and whether Explanation 5 to section 271(1)(c) of the Act is attracted had observed as under:- "11. We have heard the rival contentions and perused the record. In the facts of the present case before us dual action was taken against the assessee i.e. search under section 132 of the Act was carried out at the residence of assessee on 16.01.2009. Simultaneously, Survey was carried out at the hospital of assessee on 16.01.2009. During the course of Survey, evidence of certain unaccounted receipts, rough pages, note books, diaries, receipt books, etc. were found. The assessee admitted the fact of suppression of receipts from OPD, IPD, endoscopy charges, etc. The assessee has declared suppressed receipts for assessment years 2003-04 to 2008-09 on estimate basis as under:- ....
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....ealed (`) Penalty imposed u/s 271(1)(c) (`) 2002- 03 3,42,664 06/08/2002 9,47,960 9,47,960 6,05,291 1,80,052 2003- 04 2,36,714 08/01/2004 5,71,710 6,09,657 3,72,947 1,17,479 2004- 05 2,38,950 30/10/2004 6,05,710 7,56,152 5,60,437 1,55,713 2005- 06 2,97,960 26/02/2005 8,73,410 9,91,232 7,16,379 2,35,927 2006- 07 8,41,190 31/10/2006 14,57,430 17,11,731 8,70,949 2,93,160 2007- 08 13,65,163 30/10/2007 16,45,164 17,20,604 3,55,442 1,19,641 2008- 09 11,39,880 03/10/2008 15,34,880 16,00,084 4,60,210 1,56,425 13. The perusal of above details reflects that the returned income has been accepted with minor variations in the final assessed incomes. The issue which arises for adjudication before us is that where the additional income has been declared in his hands whether the same is liable for levy of penalty under section 271(1)(c) of the Act. The first issue raised by the learned Authorized Represen....
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....tention of the learned counsel for the Revenue relying upon the expression 'in the course of any proceedings under this Act' occurring in sub-s. (1) of s. 271 of the Act and contending that even during survey when it was found that the assessee had concealed the particular of his income, it would amount to concealment in the course of 'any proceedings'. The words 'in the course of any proceedings under this Act' are prefaced by the satisfaction of the AO or the CIT(A). When the survey is conducted by a survey team, the question of satisfaction of AO or the CIT(A) or the CIT does not arise. We have to keep in mind that it is the AO who initiated the penalty proceedings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. Decision to initiate penalty proceedings was taken while making assessment order. It is, thus, obvious that the expression 'in the course of any proceedings under this Act' cannot have the reference to survey proceedings in this case. 15. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the IT return filed by it. Th....
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.... the course of any proceedings under this Act could not have the reference to survey proceedings, in this case". Since the assessee had made complete disclosure in the return and surrendered the amount for the purpose of tax, the Hon'ble High Court held that there was no such concealment of non-disclosure and the assessee was held to be not liable for levy of penalty. Applying the said proposition to the facts of the present case, we hold that the assessee is not liable to levy of penalty on the additional income which was declared by the assessee during the course of Survey and was offered to tax in the revised return of income filed after the Survey." 13. The issue arising in the present appeal is in respect of Explanation 5 to section 271(1)(c) of the Act which was attracted in respect of searches conducted prior to 01.06.2007 and Explanation 5A to section 271(1)(c) of the Act is attracted to the searches carried out on or after 01.06.2007. But both the provisions deal with the cases of additional income offered pursuant to search action at the premises of assessee. As pointed out in the paras hereinabove, the additional income in the present case was ....