TaxTMI 
TaxTMI 
2017 (1) TMI 1659
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....er section 271(1)(c) of the Income Tax Act, 1961 ["Act" in short]. First we shall take up assessee's appeal. I.T.A. No. 570/Mds/2015 : [A.Y. 2008-09] 2. In this case, the original assessment was completed under section 143(3) r.w.s. 153C of the Act vide assessment order dated 31.12.2009 by assessing income of the assessee at Rs..9,10,44,388/- as against the returned income of Rs..1,64,60,476/-. Later on, the assessee carried the matter in appeal before the ld. CIT(A), where, he has deleted certain additions. After this, the Assessing Officer reopened the assessment by issuing notice under section 148 of the Act for bringing the amount of Rs..1.65 crores unaccounted cash found during the course of search action under section 132 of the Act conducted at the premises of the assessee. Accordingly, the assessment was reopened and addition of Rs..1.65 crores was made. The assessee challenged this addition before the ld. CIT(A) and the ld. CIT(A) observed that the assessee has not properly explained the amount of Rs..1.65 crores found and seized in the course of search action. The assessee admitted at the time of search action that the assessee has not maintained any books of accoun....
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....peal before us regarding confirmation of the penalty levied under section 271(1)(c) of the Act by the Assessing Officer. The Revenue is also in appeal before us for deleting certain penalties by the ld. CIT(A) levied by the Assessing Officer. 5. Facts of the case are that the assessee is an AOP consisting S. Duraipandi and S. Thalavaipandian was engaged in the business of money lending. There was a search under section 132 of the Act in the residences of both the persons and also in their business premises on 16.05.2007. Consequently, notice under section 153C of the Act was issued to the assessee. In response to the notice, the assessee filed returns of income on 13.08.2009 declaring income as follows: A.Y. Income returned by the assessee Agricultural income declared by the assessee Income computed by the Assessing Officer 2002-03 NIL Rs..54.95 lakhs Rs..54,95,000/- 2003-04 Rs..1,16,419/- Rs..87.15 lakhs Rs..93,03,149/- 2004-05 Rs..68,93,960/- Rs..36.05 lakhs Rs..1,26,93,187/- 2005-06 Rs..1,98,93,840/- Rs..40.95 lakhs Rs..3,08,85,386/- 2006-07 Rs..3,10,91,760/- Rs..43.05 lakhs Rs..3,88,74,925/- ....
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....the return filed after the search could not attract the immunity provided by clause (2) of Explanation 5 of section 271(1)(c) of the Act. He pointed out that the additional income so disclosed in the statement of income recorded under section 132(4) of the Act, which was later on declared in the return of income provided by the assessee and it would be liable to levy of penalty under section 271(1)(c) of the Act. According to him, the immunity as per clause (2) is available only if the income has already been declared in the return, which is yet to be furnished under section 139(1) of the Act. In other words, if period for furnishing the return has already expired, then the immunity is not available. According to him, if the due date of filing of return of income for these assessment years lapses under section 139(1) and the return of income was filed within the specified time in response to notice under section 153A/153C of the Act, then the assessee is liable for penalty under section 271(1)(c) of the Act on the undisclosed income of the assessee if the return not filed in response to notice under section 153C of the Act. 5.3 On the other hand, the ld. AR submitted that the as....
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....eclared 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 [Chief 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 control, has been acquired out of his income which has not been disclosed so fa....
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....the purposes of s. 271(1)(c), be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income except in cases where such income is, or the transactions resulting in such income are, recorded on or before the date of the search in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the CIT before the date of the search. Thus, by the deeming provisions of Expln. 5, the assessee is fastened with the liability to penalty under s. 271(1)(c) in case he explains the acquisition of assets, recovered in the course of search, from out of income of a previous year which has already ended before the date of the search or which is to end on or after the date of search. The above clearly shows that if history of Explanation 5 is traced, then it becomes clear that for what purpose Explanation 5 was inserted. 5.6 The ld. counsel for the assessee has not disputed the position that section 271[1][c] is applicable to an assessment made under section 153A, it is not necessary for us to examine that position. The main question before us, which was debated at length, was whether the immunity ....
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....e statement of objects and reasons says that the amendment was being made "to remove an anomaly in the existing provisions in respect of cases where penalty is imposable for concealment of income even if the taxpayer has no intention to fabricate evidence or to conceal his undisclosed income after search and seizure". The anomaly and the remedial amendment made are explained by the above circular in the following words: "As per the existing Explanation 5 to section 271(1) of the Income-tax Act, if at the time of search, assets which are not recorded in the books of account are found, a taxpayer is liable to penalty for concealment even if he declares the full value of those assets as his income in the return filed after the search. This provision has been found to operate, even in cases where the assessee has no intention to fabricate any evidence and he includes in his return the income out of which such assets have been acquired. Hence, by the Amending Act, it has been provided that if an assessee in such cases makes a statement during the course of the search admitting that the assets found at his premises or under his control have been acquired out of his income which has not b....
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....oncerned with the levy of penalty and immunity under clause (1) of Explanation 5. Therefore, the above observations, in our opinion, are of binding nature. When similar situation arose before the Pune Bench in the case of DCIT vs. Omkareshwar R. Kalantri & Ors. [2010] 42 DTR 489, wherein assessee relied on the decision of the co-ordinate Bench in the case of Sarla M. Ahuja v. DCIT [I.T.A. No. 1301(PN)/2007] for deletion of the penalty but the revenue placed reliance on the decision of the Third Member in the case of ACIT vs. Kirit Dahyabhai Patel [121 ITD 159(Ahd)]. The issue has been discussed at para-11 which reads as under: "Considering the above submissions, we find substance in the contention of the learned Departmental Representative that the decision of Third Member Bench in the case of Asstt. CIT vs. Kirit Dahyabhai Pate! (supra) dt. 25th June, 2009 on the issue was not brought to the notice of the Pune Bench during the course of hearing of appeals in the cases of Narayandas Muiji Thakar and Karsandas Mulji Thakkar (supra) especially when the same was in existence at that time. The Third Member Bench decision in the case of Kirit Dahyabhai Patel (supra) had an occa....
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....tage. It is also because in the Third Member Bench decision, the order of Ahmedabad Bench in the case of Asstt. CIT vs. Rupesh Bholidas Patel (supra) has been followed, which is based upon the binding decision of (Hon'ble jurisdictional Bombay High Court in the case of Sheraton Apparels (supra). The Third Member Bench has also discussed the CBDT Circular No. 469, dt. 23rd Sept., 1986 [(1986) 162 ITR (St) 21] explaining the amendment showing benefit of immunity conferred by Expln. 5(2), as amended by Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, w.e.f. 10th Sept., 1986. Hence the same cannot be ignored. Certainly there would have been substance in the contention of the learned Authorised Representative for sending a proposal by this Bench for constitution of a Special Bench to decide the issue if the present Bench would not have agreed with the latest elaborate decision of Third Member Bench of the Tribunal on the issue or the Coordinate Bench would have passed a detailed order after discussing that the learned CIT(A) had properly applied the decision of the Bench in the case of Smt. Sarla M. Ahuja (supra). But it is not the case of the assessee. The present ....
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....(1) of the Act before the date of search. If we accept the argument that if undisclosed income is detected and then only same is admitted and offered by the assessee as his undisclosed income, whether further satisfaction is required to be recorded by the Assessing Officer? Our answer will be, No. So far as the undisclosed income unearthed in course of the search action, only protection the assessee gets to the extent provided in Explanation 5 to section 271(1)(c) and otherwise it is presumed that to that extent the assessee deemed to have concealed the particulars of his income or furnished inaccurate particulars of his income. So far as the decision of Rampur Engg. Co. Ltd's case (supra) is concerned, this is a case where the normal assessment is made. In the case where assessment is made in consequence of the search and if the assessee himself admits and offers an undisclosed income to tax then that is covered by Explanation 5 to section 271(1)(c) of the Act and in our opinion, no further satisfaction is required to be recorded by the Assessing Officer. We, therefore, hold the assessee has himself admitted the undisclosed income to the extent of Rs. 6,20,000 in respect of th....
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....years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. [(2) If any proceeding initiated or any order of assessment or reassessment made under subsection (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anythin....
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....urnishing of inaccurate particulars of income. In the recent judgement of the Hon'ble Supreme Court in the case of CIT v. Reliance Petro Products Pvt. Ltd. 322 ITR 158, their Lordships, after considering various decisions including the decision in the case of Dilip N. Shroff v. JCIT 291 ITR 519 (SC) and UOI v. Dharamendra Textile Processors 306 ITR 277 (SC), observed and held as under: "A glance at the provisions of section 271 (1)(c) of the Income-tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word "particulars" used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can ....