TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 1240
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....the tune of Rs. 1,49,450/- under section 271(1)(C) of the Act by the Id. AO on addition made on account of disclosure of additional income while filing return as part of search proceedings. While doing so, the Hon'ble CIT (Appeal) failed to appreciate that there was no addition made by the ld. AO during the course of assessment proceedings u/s 143(3) r.w.s 153A of the Act to the returned income under section 153A of the Act, and therefore appellant cannot be treated to be assessee concealing income. 1.02 Your appellant prays to hold so now and delete the impugned penalty. 2.00 YOUR APPELLANY CRAVES LEAVE TO ADD, AMEND AND /OR DELETE ALL OR ANY GROUND(S) TAKE HEREINABOVE." 3. The solitary grievance of the assessee is that the learned CIT(A) erred in confirming the order of the AO by sustaining the penalty of 1,49,450/- as per the explanation 5A of section 271(1)(c) the of the Act. 4. The facts in brief are that the assessee in the present case is an individual and proprietor of M/s Rishi Anand Sales. There was a search and seizure operation under section 132 of the Act in the "Dhanjimama Group" of cases dated 3rd July 2012. The assessee being the part of the g....
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....der section 132(4) of the Act which is placed on pages 125 to 133 of the paper book. 9. On the contrary, the ld. DR submitted that the additional income was offered to tax by the assessee as a result of search proceeding carried out under section 132 of the Act. The ld. DR vehemently supported the order of the Authorities Below. 10. We have heard the rival contentions of both the parties and perused the materials available on record. The penalty in the case on hand was levied under explanation 5A of section 271(1)(c) of the Act which reads 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 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 (wholl....
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....The assessee surrendered the additional income under section 132(4) at Rs. 15 lacs and requested not to impose penalty under section 271(1)(c). The Assessing Officer imposed the penalty by invoking the Explanation 5A to section 271(1)(c). For imposing the penalty under Explanation 5A on the basis of statement recorded during the course of search, it is necessary to be found incriminating documents and is to be considered at the time of assessment framed under section 153A. As no incriminating documents were found during the course of search, therefore, Explanation 5A to section 271(1)(c) is not applicable. Accordingly, the penalty was to be deleted." From the above order, it is clear that there cannot be any penalty under explanation 5A to section 271(1)(c) of the Act until and unless it supported on the basis of incriminating document. It is also pertinent to note that the additional was also not disclosed in the statement furnished under section 132(4) of the Act, 12. At the time of the hearing, a query was raised to the Ld. DR whether the income disclosed by the assessee in pursuance to the search was based on the incriminating document, but he failed to bring any material o....
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....r: "48[Penalty where search has been initiated. 271AAB. (1) The Assessing 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 49[but before the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the President50], the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,- XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (c) "undisclosed income" means- (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the 54[Principal Chief Commissioner or] Chief Commissioner or 54[Principal Commissioner or] Commissioner before the date of search; o....
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....in the books of accounts or documents transactions were found during the course of search indicating the assets not recorded in the books of accounts or other documents maintained in the normal course, wholly or partly. The revenue did not find any undisclosed asset, any other undisclosed income or the inflation of expenditure during the search/ assessment proceedings. Though a loose sheet of page No.107 of Annexure A/GS/MA/1 was found that does not indicate any suppression of income but it is only projection of profit statement. The amount of Rs. 3571/- mentioned in the projections refers to cost and profit which is approximate sale price but not the cost as stated by the AO in the penalty order. The cost of construction in the projections projected at Rs. 2177/- which is in synch with the statement given by the assessee. The AO was happy with the disclosure given by the assessee and did not verify the factual position with the books of accounts and projections and bring the evidence to unearth the undisclosed income. Neither the A.O. nor the investigation wing linked the cost of profit or cost of asset to the entries in the books of accounts or to the sales conducted by the asses....