TaxTMI 
TaxTMI 
2018 (9) TMI 1238
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....gains and income from other sources. Assessee has not filed his original return under section 139 for the assessment year under appeal. The assessee filed his return for assessment year under appeal only on 31.08.2016, in response to notice under section 153A of the I.T. Act issued on 22.08.2016. The A.O. issued statutory notice for completion of the assessment. It is noted here that prior to the search on Neha Jewellers group of cases, search and seizure action was carried on R.K. Kedia group of cases from 13.06.2014 to 17.06.2014, Mr. R.K. Kedia deposed before the Income Tax Authorities in his statement on oath that he is a Commission Agent who arranges different type of accommodation entries such as bogus long term capital gain through various entry operators. Mr. R.K. Kedia has further admitted on oath that various paper companies are controlled and managed by various accommodation entry operators not doing any actual working but are being used for providing bogus long term capital gain to various beneficiaries. Neha Jewellers group was also a beneficial of such bogus long term capital gain arranged by Mr. R.K. Kedia through these companies. During search operations on Mr. R.K.....
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....ther revised his return of income on 16.12.2016 declaring total income of Rs. 7,15,82,750/- including income from other sources of Rs. 6,93,73,402/- in respect of shares in the revised return. The assessee has further disclosed income from other sources of Rs. 18,65,587/- in respect of shares in the name of Smt. Kanika Agarwal and commission expenses of Rs. 13,80,014/-. 4.1. The A.O. after discussion made the assessment on revised return of income at Rs. 7,15,82,750/-. Thus, return of income was accepted. The A.O. however, noted that since the assessee did not file return of income under section 139 of the I.T. Act and return is only filed in response to notice under section 153A of the I.T. Act, therefore, the above surrendered income represents undisclosed income of the assessee as per the provisions of Section 271AAB of the I.T. Act and A.Y. 2014- 2015 under appeal is the specified year of the assessee as the assessee is a working partner of M/s. Brijwasi Jewellers. Hence, penalty proceedings under section 271AAB of the I.T. Act is initiated. The A.O. vide separate order levied the penalty under section 271AAB of the I.T. Act, 1961. 5. The assessee challenged the pen....
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.... is no satisfaction recorded by the A.O. The power to initiate penalty proceedings under section 271(1)(c) of the Act is with the A.O. only and not with the appellate authority. The assessee relied upon the decisions of ITAT, Pune Bench in the case of ACIT, Central Circle, Kolhapur vs. D.M.Corporation Private Limited in ITA.Nos.137 to 141/Pune/2016 and in the case of Ajit Ramchandran Jadhv vs. ACIT, Circle-3, Nanded (2017) 82 taxmann.com 58 (Pune - Tribunal). The penalty proceedings could not be initiated for both the limbs of Section 271(1)(c) of the Act. It was submitted that Explanation 5A to Section 271(1)(c) of the Act is not attracted in the case of the assessee. No incriminating material was found during the course of search. Surrender was not based on any material found during the course of search. Since the A.O. accepted the revised return filed by the assessee under section 153A of the I.T. Act, the original return under section 139 abates and become non-est. The assessee relied upon the decision of Hon'ble Delhi High Court in the case of Pr. CIT vs. Neeraj Jindal & Another (2017) 393 ITR 1 (Del.) (HC). 5.2. The Ld. CIT(A), however, did not accept the contention of ....
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....me from other sources" at Rs. 6,93,73,702/- and ultimately declared total income of Rs. 7,15,82,750/- which is accepted by the A.O. as it is in the Order under section 153A r.w.s. 143(3) of the I.T. Act. The A.O. initiated the penalty proceedings under section 271AAB of the I.T. Act. The A.O. did not initiate the penalty proceedings under section 271(1)(c) of the I.T. Act. The A.O. vide separate order levied the penalty under section 271AAB of the I.T. Act, which have been deleted by the Ld. CIT(A) vide impugned order on the reasons that the time for filing of income tax return for assessment year under appeal has already been expired before date of search and therefore, provisions of Section 271AAB are not applicable to assessment year under appeal. The Ld. CIT(A), however, initiated the penalty proceedings under section 271(1)(c) of the I.T. Act read with Explanation 5A to Section 271(1)(c) of the I.T. Act. Learned Counsel for the Assessee submitted that Explanation 5A to Section 271(1)(c) of the I.T. Act is not applicable to the facts of the case because no return was filed by assessee before the date of the search. The assessee has not filed the return of income and the return ....
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....am Balmukund (1972) 84 ITR 183 (All.). He has submitted that Ld. CIT(A) has no jurisdiction to initiate penalty in another penalty proceedings. Learned Counsel for the Assessee, therefore, submitted that there were no justification for the Ld. CIT(A) to levy penalty under section 271(1)(c) of the I.T. Act. 7. On the other hand, Ld. D.R. relied upon the Order of the Ld. CIT(A). He has submitted that the Board Circular do not apply to assessee as assessee has no business income, therefore, due date of filing of the return was 31.07.2014. He has submitted that power of Ld. CIT(A) is co-terminus to that of the A.O. The assessee filed revised return which showed concealment of income. He has submitted that since no original return was filed disclosing the returned income, therefore, penalty was rightly imposed. He has relied upon the decision of Hon'ble Calcutta High Court in the case of CIT vs. Prasanna Dugar (2015) 371 ITR 19 (Calcutta) (HC), Order of ITAT, Madras Bench in the case of ACIT vs. Smt. J. Mythili 35 taxmann.com 86, Order of ITAT, Delhi Bench in the case of Smt. Kiran Devi vs. ACIT (2009) 125 TTJ 631 (Del.), Judgment of Hon'ble Kerala High Court in the case of CIT vs....
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....sessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,- (a) a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year, if such assessee- (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) on or before the specified date- (A) pays the tax, together with interest, if any, in respect of the undisclosed income; and (B) furnishes the return of income for the specified previous year declaring such undisclosed income therein; (b) a sum computed at the rate of twenty per cent of the undisclosed income of the specified previous year, if such assessee- (i) in the course of the search, in a statement under sub-section (4) of section 132, d....
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....intained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted." 8.2. Hon'ble Delhi High Court in the case of Pr. CIT vs. Neeraj Jindal & Another (2017) 393 ITR 1 (Delhi) held as under : "The levy of penalty under section 271(1)(c) of the Income-tax Act, 1961, is not automatic. For levy of penalty under section 271(1)(c), the conditions laid out therein have to be specifically fulfilled. Section 271(1)(c) of the Act, being in the nature of a penal provision, requires strict construction. The word "conceal" in section 271(1)(c) would require the Assessing Officer to prove that specifically there was some conduct on the part of the assessee which would show that the asses see consciously intended to hide his income. When an assessee has filed revised returns after a search has been conducted, and such revised returns have been accepted by the Assessing Officer, merely by virtue of the fact that such return showed a higher income, penalty under section 271(1)(c) cannot be automatically imposed. Considering that the non obstante clause under section 153A exclu....
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.... a notice under section 153A. The Assessing Officer completed the assessment under section 153A read with section 143(3) of the Act accepting the declared income. He imposed penalty under section 271(l)(c). The penalty was deleted by the Commissioner of Income-tax (Appeals) and this was confirmed by the Tribunal. On appeal: Held, that since the return under section 153A had been accepted by the Assessing Officer there was no concealment of income. Moreover, for the relevant assessment years, 2005-06 and 2006-07, no material was recovered during the search. Rather, the assessee added Rs. 21,65,932 in the return filed pursuant to notice under section 153A. That amount was not relatable to any sum recovered or article seized. Therefore, the question of adding or not adding amounts after the search and falling within the mischief of Explanation 5 to section 271(1)(c) could not arise in the facts and circumstances of this case. The deletion of penalty was justified." 8.3. ITAT, Chandigadh Bench in the case of Shri Praveen Garg, Moga vs. ACIT, Central Circle-II, Chandigarh in ITA.No.350/Chd./2013 for the A.Y. 2008-2009 vide Order dated 09.09.2015 (Author by one of us....
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.....-- 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 documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and,-- (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under claus....
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....r levy of penalty under Explanation 5A, it has to be seen whether any assets or income found on the date of search has been acquired out of the previous year and not afterwards for which penalty can be levied or initiated under other provisions of section 271(l)(c). Thus, in our opinion, once the due date had not expired for filing the return of income for the assessment year 2007-08, at the time of search, penalty cannot be levied under the deeming provisions of Explanation 5A. Consequently, we set aside the impugned order passed by the learned Commissioner (Appeals) and hold that on this preliminary ground, penalty levied by the Assessing Officer and as confirmed by the Commissioner (Appeals) cannot be sustained and same is deleted." 10. Considering the facts of the case in the light of the decision of I.T.A.T., Mumbai Bench in the case of Kshiti R. Maniar (supra), it is clear that in the case of the assessee, search had taken place on 15.7.2008. The due date of filing of the return for assessment year under appeal i.e. 2008-09 had not expired on the date of the search as the due date of filing of the return of income under section 139(1) was 30.9.2008. Thus, in the pres....
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.... Jewellers for the purpose of taxation. Thus, it is clear that assessee was a partner of M/s. Brijvasi Jewellers and due date of filing of the return in the case of the assessee was 30.09.2014 because assessee was a partner in the firm M/s. Brijvasi Jewellers which was audited under section 44AB of the I.T. Act. Learned Counsel for the Assessee filed copy of the CBDT Order dated 26.09.2014 whereby the due date for furnishing return of income from 30.09.2014 was extended to 30.11.2014 for the A.Y. 2014- 2015, in such a case, since assessee was a working partner of the firm i.e., M/s. Brijvasi Jewellers and accounts are to be audited under section 44AB of the I.T. Act. Thus, in the case of the assessee the due date of filing of the return under section 139 was extended up-to 30.11.2014. The A.O. issued notice under section 153A on 22.08.2018 and assessee immediately in response to such notice, filed return of income on 31.08.2016, which was further revised and assessee declared return of income of Rs. 7,15,82,750/- including the surrendered income which have been accepted by the A.O. as it is in the assessment order dated 21.12.2016 under section 153A read with Section 143(3) of the ....
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....f income for such previous year has expired but assessee has not filed the return of income, 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 purpose of imposition of penalty under section 271(1)(c) of the I.T. Act be deemed to have concealed the particulars of his income or furnishing inaccurate particulars of such income. Therefore, necessary ingredients for application of Explanation 5A to Section 271(1)(c) has been that the previous year has ended before date of the search and that where return of income for such previous year has been furnished before the said date but such income has not been declared therein or the due date for filing of the return of income of such previous year has expired but assessee has not filed the return of income. 10. In the instant case, considering the facts, Explanation 5A to Section 271(1)(c) of the I.T. Act, is not applicable in the case of the assessee, as the due date of filing of the return in the case of the assessee was extended up to 30.11.2014, which has not expired on the date of search on 16.10.2014. The assessee has filed the return of ....
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....e that the A.O. did not initiate the penalty proceedings under section 271(1)(c) of the I.T. Act and initiated the penalty proceedings under section 271AAB of the I.T. Act. Section 271AAB of the I.T. Act provides that the A.O. may, notwithstanding anything contained in any other provision of this Act, direct that, in a case where search has been initiated under section 132 on or after 1st July, 2012, assessee shall pay by way of penalty, in addition to tax, if any, payable by him - a sum computed @ 10% of the undisclosed income of the specified previous year. The definition of specified previous year means, the previous year which has ended before the date of the search, but the date of furnishing the return of income under section 139(1) for such year has not expired before the date of the search and the assessee has not furnished the return of income for the previous year before the date of the search. This provision is attracted in the case of the assessee because the due date of furnishing of the return under section 139(1) of the I.T. Act, for the assessment year under appeal has not expired before date of the search as it was 30.11.2014 and that assessee has not furnished the....