TaxTMI 
TaxTMI 
2018 (11) TMI 1122
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....in following grounds have been raised by the assessee: 1. the Learned CIT(A) has erred in law & facts of the case in sustaining the penalty of Rs. 5,23,076/- u/s 271(1)(c) of the Income Tax Act, 1961, rejecting the submissions and explanations of the Assessee Company, which is arbitrary, unjustified and bad in law. 2. The assessee craves the right to add, amend or modify any ground of appeal. 3. Briefly stated facts of the case are that in the case of the assessee, a search and seizure action under section 132 of the Income Tax Act, 1961 (in short 'the Act') was carried out on 29/04/2008. During the course of search proceeding, statement of Sh. J.S. Chawla, Director of assessee company, were recorded on oath u/s 132(4) of the Act and he surrendered an aggregate amount of Rs. 27 crores as undisclosed income for the entire group for assessment year 2008-09 on the basis of the documents found in seized during the course of the search. The assessee did not file any regular return of income for the year under consideration, which it was required to file as per the provisions of section 139 of the Act. Consequent to the search action, the Assessing Officer issued not....
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....planation 5A to section 271(1)(c) of the Act in view of the voluntary declaration of the undisclosed income. The Assessing Officer rejected the contention of the assessee observing that in view of the deeming provisions of explanation 5A below the section 271(1)(c) of the Act, the assessee was liable for penalty and, accordingly, he levied penalty of Rs. 5,23,076/- at the rate of 100% of the tax sought to be evaded. On further appeal, the Ld. CIT(A) upheld the penalty. Aggrieved, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 4. In the sole ground, the assessee has challenged confirmation of penalty of Rs. 5,23,076/- levied under section 271(1)(c) of the Act. Before us, the Ld. Counsel submitted that there was reasonable cause in failure to report the income for the year under consideration and thus penalty levied may be deleted as the assessee has already paid taxes on the undisclosed income filed in assessment year 2008-09 and thus, there is no loss to Revenue. According to the Ld. Counsel, it was an honest error and there was no concealment on the part of the assessee. In the written submission filed the Ld. counsel submitted that expla....
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....deeming provision and thus assessee cannot escape from the liability of penalty under section 271(1)(c) of the Act. In support of the contention, the Ld. DR relied upon following decisions: 1. Saniav Aqqarwal Vs CIT f20in 15 taxmann.com 34 (Punjab & Haryana)/T20121 211 Taxman 178 (Punjab & Haryana)(MAG.) Assessee made disclosure during assessment proceeding under section 131(1) on 5-1-2006 and offered to surrender amount attributable to him in investment in property. Hon'ble P&H High Court held that no immunity could be claimed by assessee from levy of penalty in terms of Explanation 5 to section 271(1)(c) 2 CIT Vs Prasanna Duqar T20151 59 taxmann.com 99 (Calcutta)/T20151 371 ITR 19 (Calcutta)(MAG.)/r20151 279 CTR 86 (Calcutta) Where Hon'ble Calcutta High Court held that even where subsequent to search, O' assessee voluntarily disclosed a sum and offered said sum to tax, since said amount was not disclosed in original return, penalty levied under section 271(1 )(c) was justified 3. ACIT Vs Smt. J. Mythili (35 taxmann.com 86) where Hon'ble ITAT Chennai held that where there was a search upon assessee and she subsequent to sea....
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....e parties. The undisputed fact in the case is that no regular return of income was filed by the assessee and this income of Rs. 15,54,000/-was even not offered in the return of income filed in response to notice under section 153A of the Act. This income has been added by the Assessing Officer in assessment completed under section 153A of the Act and penalty has been levied invoking explanation 5A below section 271(1)(c) of the Act. The assessee has not filed any appeal against the addition in quantum proceedings under section 153A of the Act and only challenged the penalty levied under section 271(1)(c) of the Act. Since the penalty has been levied invoking Explanation 5A below the section 271(1)(c) of the Act, it is relevant to reproduce the said section 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 pre....
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.... question to the assessment year in consideration and assessee has not objected against the same and even not challenged the said addition in appeal. This conduct of the assessee of not objecting the addition of income to the assessment year under consideration shows that the claim of income relevant to the year under consideration has been accepted by the assessee. In such circumstances, the assessee squarely falls under the deeming provisions of Explanation 5A below section 271(1)(c) and cannot escape from liability of penalty under section 271(1)(c) of the Act. The decisions relied upon by the Ld. DR are in relation to Explanation 5 to section 271(1)(c) of the Act and not in relation to Explanation 5A. The Explanation 5 pertains to search initiated before first day of June, 2007 whereas Explanation 5A pertain to searches initiated on after first day of June, 2007. The main part of the Explanation 5 is pari materia with Explanation 5A except the conditions where levy of the penalty has been excluded. In the cases relied upon by the Ld. DR the penalty was held to leviable in terms of Explanation 5 to section 271(1)(c) of the Act despite the income was disclosed in the return filed....
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....come of Rs. 40,16,465/-including an additional income surrendered of Rs. 28, 30,000/-. The detail of the said surrendered income are as under: S. No. Page No/Annexure/Party Amount (in Rs.) 1. Party 2, Annexure 1, Page 17 26,00,000/- 2. Cash seized from locker no. 421 with Punjab & Sindh Bank, in the name of Mr. Deepak Kumar & Rita Kumar 2,30,000/- Total 28,30,000/- 6.1 The Assessing Officer completed the assessment by accepting the income returned by the assessee at Rs. 40,16,465/-, however, he initiated penalty under section 271(1)(c) of the Act in respect of the surrendered amount of Rs. 28,30,000/-. The Assessing Officer rejected the contention of the assessee opposing levy of the penalty and he levied penalty amounting to Rs. 9,52,578/- at the rate of 100% of the amount of tax sought to be evaded. The Ld. CIT(A) sustained the penalty holding that the assessee has not discharged the primary burden of presumption of concealment with cogent explanation. 7. Thus we find that in the present case, the assessee has offered the income of Rs. 28,30,000/- ( i.e. on which penalty has been levied) in the return of income filed in response....
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....nalty under section 271(1)(c) of the Act. Accordingly, in view of the deeming provisions of Explanation 5A to section 271(1)(c) of the Act, we hold the assessee liable for penalty under section 271(1)(c) of the Act for concealment of particulars of income or inaccurate particulars filed. The ground of the appeal of the assessee is accordingly dismissed. ITA No.2558/Del/2012 for AY:2008-09 (Revenue) 10. Now, we take up appeal of the Revenue having ITA No. 2558/Del/2012 for assessment year 2008-09, wherein following grounds have been raised:- a) Whether the order of CIT(A) is completely contrary to the facts and provisions of Explanation 5 A to section 271(1)(c) of the I.T.Act particularly ignoring the following provisions, "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 clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particular of such income. b) Whether on facts and circumstances the learned CIT(A) erred in deleting the penalty of Rs. 95,65,435/- lev....
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....lar return of income filed. 11.1 In the assessment order the Assessing Officer has reproduced the detail of undisclosed income of Rs. 27 crore surrendered in the course of statement recorded under section 132(4) as under: Unexplained cash and jewellery: Rs.5.00 crores Unexplained cash investment as per agreement to sell: Rs.8.00 crores Unexplained income as per loose papers seized Rs.4.00 crores Unaccounted income in respect of Spazedge Project Rs.10.00 crores Total : Rs. 27.00 crores 11.2 The Assessing Officer has also reproduced the detail of the undisclosed income of Rs. 26,71,70,000/-offered to tax for the year under consideration (Rs.28,30,000/- in assessment year 2007-08) as under: 1. Unexplained cash investment as per agreement to sell vis-à-vis M/s Kay Kay Designer T Owners Pvt. Ltd. Rs.8,00,00,000/- 2. Income lying as unaccounted cash (asset): [this is out of undisclosed incomes, documents relevant to which were found during the search to the extent of income of Rs. 4,66,86,971/- only] Rs.5,22,50,000/- 3. Undisclosed income untilized for undisclosed expenditure, as traced out from the seized documents Rs....
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....s part of offer of Rs.1,92,65,493 9. Cash payment of Rs. 2,04,000/-considered as part of offer with Rs.1,92,65,493/- 10. Cash expenditure of Rs. 13,12,627/-considered as part of offer of Rs.1,92,65,493/- 11.7 In para 15 of the assessment order, the Assessing Officer also noted of issue of separate notice of penalty under section 271AAA in respect of the disclosure of Rs. 24,79,04,507/- containing amount discussed in paragraph 8 ( unaccounted cash of Rs. 5,22,50,000), paragraph 9 (unexplained investment purchase of the property amounting to Rs. 8 crore), paragraph 10 (undisclosed cash of Rs. 5.225 crores) , paragraph 12 ( undisclosed income in respect of the project amounting to Rs. 11,56,54,507/-). 11.8 The Assessing Officer issued show cause notice for levy of penalty under section 271(1)(c) of the Act in respect of the total amount of Rs. 1,33,19,328/- which consisted of Rs. 37,53,853/- and Rs. 95,65,435/-. The first amount of Rs. 37,53,853/- which comprised of Rs. 30,00,000/-; Rs. 7,02,437/- and Rs. 51,398.20 as mentioned in para 11.4 of this order. The second amount of Rs. 95,65,435/-comprised of the amounts as mentioned in para 11.6 of this order for....
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....essing Officer levied the penalty observing as under: "The above contention cannot be accepted since if the assessee considered addition made by the A.O. of Rs. 37,53,835/- as covered up by Rs. 55,63,029/- which is a balancing figure not covered up by any discrepancies then firstly the assessee should have objected to it during the course of assessment proceedings and should have proved how Rs. 55.63,029/- is only a balancing figure which was surrendered by the assessee in order to complete the lumpsum declaration of Rs. 27Cr.The assessee has failed to do so in assessment as well as in penalty proceedings, secondly, the total disclosure made by the assessee of Rs. 27 Cr is made by the assessee voluntarily after considering the documents, cash found and jewellery. Rather the assessee has itself in submission as per para No 2.3.3, stated that it had evaluated all the papers seized and then enhances its income while filing return u/s 153A of the I.T. Act. So there is no question of any amount being merely a balancing amount which covers no discrepancies, to that extent assessee's submission is self contradictory." 11.13 In this manner, the Ld. Assessing Officer levied pena....
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....sessee had covered himself with the immunity covered u/s 271(1)(c) on the date of search itself. The return of income u/s 139(1) was filed later without availing the copies of the seized documents and in the return filed in response to section 153A, the assessee amended any errors it may have inadvertently missed out earlier by declaring an income higher than the surrendered amount." 11.15 Aggrieved with the finding of the Ld. CIT(A) of deleting the penalty, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above. 12. Before us, the Ld. counsel of the assessee also filed application under rule 27 of the ITAT Rules, 1963 submitting that in the instant case penalty could have been levied under section 271AAA of the Act and not under section 271(1)(c) as only done by the Assessing Officer and, thus, order of the Ld. CIT(A) cancelling the penalty imposed under section 271(1)(c) might be sustained albeit on the ground of legal submission that in the specified year the penalty under section 271AAA could be levied. 13. The Ld. DR opposed admission of the application under Rule 27 of the ITAT Rules on the ground that under Rule 27, the assessee may sup....
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....rd the rival submissions and perused the relevant material on record. The undisputed facts in the case are that search was conducted on 29/04/2008 and the due date for filing return of income for the assessment year 2008-09 was not expired before the date of the search. 19. In the present appeal, the Assessing Officer has invoked Explanation 5A for levy of penalty under section 271(1)(c) of the Act. 20. From the plain reading of the Explanation 5A, it is evident that for invoking the clause (ii) or (ii) in respect of any previous year, which has ended before the date of the search either of condition as under should be satisfied: (a) the return of income for such previous year has been furnished before the said date but such income has not been declared in or (b) the due date for filing return of income for such previous year has expired but the assessee has not filed return of income. 21. We note that in the instant case the due date of filing of the return of income for the previous year corresponding to the year under consideration had not expired on the date of the search i.e. condition (b) and therefore the Explanation 5A could not be attracted for h....