TaxTMI 
TaxTMI 
2018 (4) TMI 1429
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....the order of the Ld. A.O. is bad in Law and against facts of the case. 2. That the Ld A.O. erred in not issuing a valid notice to the legal heir of the assessee making the order u/s. 271(1)(c) void ab initio. 3. That the Ld. A.O. erred in invoking section 271(1)(c) without noting proper satisfaction. 4. That the Ld. A.O. erred in invoking penalty on Rs. 23,550/- being difference of original return and return filed u/s. 153A. 5. That on facts and circumstances of the case the Ld. CIT erred to confirm the penalty on addition of Rs. 143917/- on account of foreign currency which addition was admitted in order to buy peace and no penalty proceeding was initiated in the assessment order for such addition. 6. That on facts and circumstances of the case the Ld. CIT erred to confirm the penalty on addition of Rs. 206834/- on account of construction expenses which addition was admitted in order to buy peace and no penalty proceedings was initiated in the assessment order for such addition. 2. The brief facts of the case are that a search was conducted by Delhi Police at residential premises F-58, Green Park, New Delhi of Shri M.V. Rao on 22.02.2007. During the search, cash o....
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....d during the search and sustained the penalty imposed on rest two additions. From the order of the ld. CIT(A) for deleting the penalty on the above two issues, the Revenue is in appeal and for sustaining of the penalty on rest two issues, the assessee is in cross objection before the Tribunal. 3. We take up the appeal of the Revenue first. The ld. DR relied on the order of the Assessing Officer and submitted that the ld. CIT(A) has wrongly deleted the penalty because the cash was found during the course of search. Had the police not raided assessee and Department not surveyed the assessee, he would have escaped from levy of tax and penalty. He further submitted that on 24.02.2012, a fresh search was conducted on legal heirs of late MV Rao, when 7.6 crores cash was also seized from the locker and huge addition was made of Rs. 123.28 crores. He was also having a foreign bank account with HSBC Genewa, which was not disclosed to the department during the period from 2005 to 2007. 4. On the other hand, the ld. AR submitted that the ld. CIT(A) has rightly deleted the penalty imposed by the Assessing Officer on account of Rs. 2.00 crores cash found during the search and additional incom....
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....e of the cash during the course of search and subsequently during the assessment proceedings. While at the time of search the appellant stated that the cash was sale proceed of ancestral land situated in his village in Andhra Pradesh, at the time of assessment proceedings it was submitted that the money was advance received against an agreement to sell the first floor residence occupied by the appellant and his wife at New Delhi in order to shift to a ground floor house. During the appellate proceedings, Ld AR has submitted valuation of the land located at Ponduru, District Srikakulam, from the Registration and Stamps Department, Govt. of AP which indicates that the value of the land measuring 4694.8 sq yds as on 12.07.2013 to be Rs. 65,72,720/-. The Ld AR has submitted another valuation in respect of the property at F-58, first floor, Green Park, New Delhi from a registered architect which has valued the said property as on 28.01.2007 at Rs. 3,37,92,000/-. These two valuations indicate that the said amount could not have been proceed of sale of the village land but could, relate to the New Delhi flat. The amount was undisputedly offered by the appellant as his income and he also p....
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....urn has been furnished before the said date, such income has not been declared therein ; or (b) for any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, unless,- (1) such income is, or the transactions resulting in such income are recorded,- (i) in a case falling under clause (a), before the date of the search; and (ii) in a case falling under clause (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the said date ; or (2) he, in the course of the search, makes a statement under sub-section (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his con....
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.... view, if the observations made by this Court in the above referred decision and more particularly clauses (p), (q) and (r) are considered, it was a case wherein the decision of this Court would apply and it cannot be said that the decision of this Court in the case of COMMISSIONER OF INCOMETAX AND ANOTHER v. MANJUNATHA COTTON AND GINNING FACTORY reported in [2013] 359 ITR 565 (KAR)(supra) would not apply. 11. In view of the aforesaid discussion, if the decision of this Court in case of COMMISSIONER OF INCOME-TAX AND ANOTHER v. MANJUNATHA COTTON AND GINNING FACTORY reported in [2013] 359 ITR 565 (KAR) (supra) is considered, the resultant effect would be that the notice in question issued under Section 271(1)(c) for levy of penalty and consequently the penalty imposed, both would be unsustainable and cannot stand in the eye of law." 8. In view of the above, we find no justification to sustain the penalty. 9. Apart from the above, it is an admitted fact that Mr. M.V. Rao breathed his last on 10.10.2011, information of which was duly furnished to the Assessing Officer on 14.10.2011. Yet, the notice for penalty was issued on 20.10.2011 in the name of Late M.V. Rao, i.e., the dead ....