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2018 (6) TMI 1681
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....e on 13.10.2010. During the course of search on 13.10.2010, statements of assessee and his wife were recorded u/s 132(4) of the Act, wherein the assessee surrendered a sum of Rs. 25,00,000/- on account of unexplained cash and advances vide ans. to Q. 15. However, later on while filing the returns of income u/s 153A, the additional income so offered was enhanced to Rs. 32,66,194/, which was segregated financial year wise as under:- F.Y. 2006-07 (AY 2007-08) Rs. 2,13,014/- F.Y. 2007-08 (AY 2008-09) Rs. 3,25,004/- F.Y. 2008-09 (AY 2009-10) Rs. 24,84,676/- F.Y. 2009-10 (AY 2010-11) Rs. 2,43,500/- Total Rs. 32,66,194/- In A.Y. 2007-08 and 2008-09 the assessee did not file any return of income u/s 139 however, in A.Y. 2009-10 and 2010-11 the assessee filed return of income dated 30.03.2010 and 31.03.2011 respectively. Pursuant to the search, notices u/s 153A were issued in all the years on dated 12.10.2011 requiring the assessee to file the return within 30 days and in response thereto the assessee filled return of income declaring additional income of Rs. 2,13,014/-, Rs. 3,25,004/-, Rs. 24,84,676/- and Rs. 2,43,500/- for AY 2007-08, AY 2008-09, AY 2009-1....
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....sclosed income falls in the previous years other than the specified previous years then the concealment penalty provision of explanation 5A to Section 271(1)(c) straight way provide deeming provisions for concealment of income. It states where undisclosed income for any previous year is found in a case where search was initiated on or after 10-06-2007 but the tax payer has not filed the return for that previous year, although due date of filing has expired for the purpose of imposition of a penalty u/s 271(1)(c ) of the Act, the tax payer be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. 5.3 As per the explanation 5A to section 271(1)( c ) of the Act, where the course of search initiated under section 132 on or after 1-06-2007, the appellant is found to be the owner of - (i) Any money, bullion, jewellery or other valuable article or thing (hereinafter in this explanation referred to as assets) and the appellant claims that such assets have been acquired by him by utilizing (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 ....
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....w on concealment of penalty for search case in which search had been conducted on or after 01- 06-2007 but before 01-07-2012. 5.1 It is true that the appellant has honoured the undisclosed income that was surrendered during search and also has disclosed the same in respective previous years. The returns for these years as filed by appellant, includes the undisclosed income that was surrendered has also been accepted as it is. 5.2 However, as explained by the appellant himself, the concealment penalty provision u/s 271AAA rewards only those taxpayer whose undisclosed income falls within the specified previous year and if undisclosed income falls in the previous years other than the specified previous years then the concealment penalty provision of explanation 5A to Section 271(1)(c) straight way provide deeming provisions for concealment of income. It states where undisclosed income for any previous year is found in a case where search was initiated on or after 10-06-2007 but the tax payer has not filed the return for that previous year, although due date of filing has expired for the purpose of imposition of a penalty u/s 271(1)(c ) of the Act, the tax payer be de....
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....xtent the undisclosed income was pertaining to previous years other than the specified previous years was included in the statement u/s 132(4). Showing of undisclosed income surrendered in the relevant previous years with paying or relevant tax and interest thereon is merely consequential and cannot pull out the appellant from the yoke of the explanation 5A to section 271(1)( c) of the I.T. Act. Therefore, the penalty levied of Rs. 82,290/- is sustainable and is hereby confirmed.'' Assessment Year 2009-10 ''5. I have gone through the brief facts narrated by the assessing officer and the appellant and the applicable provision of law on concealment of penalty for search case in which search had been conducted on or after 01- 06-2007 but before 01-07-2012. 5.1 It is true that the appellant has honoured the undisclosed income that was surrendered during search and also has disclosed the same in respective previous years. The returns for these years as filed by appellant, includes the undisclosed income that was surrendered has also been accepted as it is. 5.2 However, as explained by the appellant himself, the concealment penalty provision u/s 271AAA rewar....
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....0 i.e. after the due date for filing the return 31-07-2009. That makes the explanation 5A to section 271(1)(c ) of the Act clearly applicable. 5.6 Even no return was filed on 30-03-2010 u/s 139 was belated one as it was filed after due date for filing the return i.e. 31-07-2009. The total income returned in original return was only Rs. 2,28,500/- that was revised to Rs. 27,13,170/- in the return in response to Notice u/s 153A is Rs. 3,13,050/-. Hence, the pleading on the ground of equity also fails. 5.7 Thus though surrender was during the search in course of statements u/s 132(4), the disclosure u/s 132(4), by itself cannot redeem the appellant from deeming provisions of the explanation 5A to section 271(1)( c) of the Act. Factually speaking the statement u/s 132(4) was wrong and incorrect to the extent the undisclosed income was pertaining to previous years other than the specified previous years was included in the statement u/s 132(4). Showing of undisclosed income surrendered in the relevant previous years with paying or relevant tax and interest thereon is merely consequential and cannot pull out the appellant from the yoke of the explanation 5A to section 2....
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....or such year has expired and the appellant 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 section 271(1)( c) of the Act, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. 5.4 Precisely for this reason of applicability of the explanation 5A to Section 271(1) ( c ) of the Act, the assessing officer has levied the penalty as mentioned at page 3 of the penalty order. 5.5 At the cost of repetition, it is to mention here that in the instant case, the Assessment Year involved is A.Y. 2010-11 and the due date of filing the return was 31-07-2010. The search operation was conducted on 13-10-2010 i.e. after the due date for filing the return 31-07-2010. That makes the explanation 5A to section 271(1)(c ) of the Act clearly applicable. 5.6 Even no return was filed on 31-03-2010 u/s 139 was belated it was filed after the due date for filing the return i.e. 31-07-2010 and much after the date of search date 13-10-2010. The total income returned in origi....
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....s. The ld. AR who appeared for the assessee submitted that these are purely legal grounds of appeal and do not require any fresh investigation of facts and therefore relying upon the judgment of National Thermal Power Corporation Ltd. 229 ITR 383 (SC), prayed that the same may be admitted, considered and decided. 2.5 We have heard the rival contentions and perused the materials available on record. Moreover, it is also not disputed that the relevant facts to decide the additional grounds are already available on record, otherwise also these are pure legal grounds. Accordingly, in view of the decision of Hon'ble Supreme Court in case of National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (supra) the additional grounds raised by the assessee are admitted for adjudication. 2.6 Since the additional ground No 4 of the assessee goes to the root of the legality of levy of penalty, therefore, we are deciding the same first. While pleading on behalf of the assessee, the ld AR has submitted written submissions wherein he has made the pleadings, which are reproduced as under: ''In all the above years, the facts and the controversy is identical therefore, this common WS is filed....
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....ok Pai (2007) 292 ITR 11 (SC) at page 19. This was taken note in Manjunatha (Supra) in Pr. 61. The use of both the limbs by the AO mechanically, clearly shows a complete non application of mind on his part and the requisite satisfaction, this way, is not at all discernable from the assessment orders nor from the penalty orders of all the years. 2.2. Supporting Case Laws: 2.2.1. The Hon'ble Karnataka High Court in the case of CIT & Anr. v. Manjunatha Cotton and Ginning Factory 359 ITR 565 (Karn), has held that notice u/s 274 of the Act should specifically state as to whether penalty is being proposed to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income. The Hon'ble High court has further laid down that certain printed form where all the grounds given in Sec. 271 are given would not satisfy the requirement of law. In the said case in Pr. 59 it was held that: "NOTICE UNDER SEC. 274 59. As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds m....
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....IT(A) as to whether there was concealment of income of furnishing of inaccurate particulars by the assessee, impugned order of the Tribunal upholding penalty u/s 271(1)(c) is not sustainable." 2.2.4.Covered issue: This aspect of the matter is now directly covered by the Shri Prakash Joy vs. ACIT ITA No. 585/JP/2013 vide order dated 24.02.2016 (DPB 21-41) in Pr. 7.6 thereof, wherein the earlier two decisions i.e. Manjunatha (Supra) and Suvaprasanna Bhattacharya (Supra) have been followed. Also kindly refer Radha Mohan Maheshwari vs. DCIT in ITA No. 773/JP/13 vide order dated 18.03.2016 for AY 2005-06, Prashant Tholia vs. ITO in ITA No. 391/JP/2015 dated 13.06.2016 (DPB 42-46) and Abhimanyu Singh vs. ITO in ITA No. 187/JP/2013 dated 21.06.2016 (DPB 47-60) which have taken a similar view. 2.2.5.Also kindly refer Parinee Developers Pvt ltd. Vs. ACIT (2015) 174 TTJ 0137 (Mum), Satyananda Achariya Biswas vs. DCIT (2015) 45 CCH 0328 (KolTrib), Uma Shankar Agarwal vs. DCIT (2016) 46 CCH 57 (koltrib), Shri Samson Perinchery (ITA Nos. 4625 to 4630/M/2013), dated 11.10.2013, M/s. Ittina Properties Pvt Ltd (ITA No.36/Bang/2014), dated 21.11.2014 (Bang), Dharini Devel....
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....) 181 CTR 362 permitted an appeal when the assessee had included certain asset in his return under mistake, admission or misunderstanding of the assessee, would not justify taxability. The Honble Jaipur Bench of ITAT in Kalindee Rail Nirman (Engineers) Ltd. vs. JCIT (2002) 28 Tax World 280 entertained appeal when the application of net profit rate was agreed subject to allowance of interest and depreciation and the Assessing Officer did not honour the agreement. 3.1.2. After the coming of Sec. 271AAA applicability of Sec. 271(1)(c) has been completely ruled out by Sec. 271AAA(3). Moreover, the provisions of Sec. 271AAA starts with a non-obstante clause and overrides all other provisions of the Income Tax Act which essentially includes Sec. 271(1)(c) and its Expl. 5A as well. 3.1.3. This submission is clearly supported by a CBDT Circular No.3/2008 dated 12.03.2008 (PB 65) wherein after discussing the provisions of Sec.271AAA as regards the applicability, the Board has opined/instructed as under: "Applicability- This amendment will take effect from the 1st day of June, 2007 and will accordingly apply in relation to assessment year 2007-2008 and subsequent y....
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....s can be found in the facts of the cited case and in the facts of our case, listed below: 1. In both the cases, search was conducted after 01.06.2007 but before 01.07.2012. 2. In both the cases, the assessee made surrender by way of statement recorded u/s 132(4). 3. In both the cases, additional income were declared in response to notice issued u/s 153A after search. 4. All the essential conditions as provided u/s 271AAA(2) were complied with. 5. In our case, search was conducted on dated 13.10.2010 and a penalty for all the years were imposed u/s 271(1)(c). In the cited case, search was conducted dated 10.02.2009 and penalty was imposed for AY 2008-09 u/s 271(1)(c). Thus, in both the cases penalty were imposed in the years other than the year of search. 6. In both the cases, AO initiated and imposed the penalty u/s 271(1)(c) but ignored the new provisions of section 271AAA. Thus, the facts and circumstances being quite identical, the decision of Hon'ble ITAT Bench, Delhi deserves to be applied on the facts of present case as well. Since in our case also, the AO has initiated penalty only u/s 271(1)(c) in all t....
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....he assessee also substantiated the manner of earning the undisclosed income being the income from the real estate business. Even otherwise no specific question was raised, asking the assessee to substantiate the manner in which the undisclosed income was derived and therefore, even assuming if this condition is not fulfilled, the assessee cannot be denied the benefit of the immunity so granted, as was held in the context of Sec. 271(1)(c) Expl. 5 in some cases. 5. Supporting case laws: ACIT vs. Shrithik Rolling Pvt. Ltd. (2015) 44 CCH 0223 (Panaji Trib) (DPB 69-73)" 11. Additional Submission: "This is in continuation and in addition of our earlier written submission filled on dated 26.04.2016, it is further submitted that the impugned penalty imposed in the present case, in the facts and circumstances of the case, is completely without jurisdiction. (For the sake of convenience Pr. Number are mentioned consecutive to the earlier w/s) 6.1 Also kindly refer CIT v/s Shri Samson Perinchery in ITA No. 1154, 953, 1097, 1226/2014 on dated 05.01.2017 (DPB 10-21). 6.2 Recently in the case of CIT & Anr. v/s. M/s SSA's Emerald Meadows in CC No. 114....
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....hich was prevailing on the date the decision was rendered on 27.08.2012. In view of the observations made in the said judgment, we are of the opinion that the contention raised by the appellant is required to be accepted and in the finding of Assessing Officer in the assessment order it is held that the AO, has to give a notice as to whether he proposes to levy penalty for concealment of income or furnishing inaccurate particulars. He cannot have both the conditions and if it is so he has to say so in the notice and record a finding in the penalty order." 6.3.2 In the above case it was concluded that if in the assessment order, the AO has initiated proceedings for both the offenses, he has to say so in the notice as to whether he proposes to levy penalty for concealment of income or furnishing inaccurate particulars, otherwise he cannot have both the conditions. Whereas just contrary thereto, in the facts of present case the AO though initiated proceedings in the assessment orders w.r.t. both the offenses by using the conjunction "AND" i.e. for A.Y.2009-10 & 10-11 however, in the other two years i.e. 2007-08 & 08- 09, he did not make clear which of the two he chos....
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....sued in substantive disregard of law and principles of natural justice. Whether the subsequent penalty order based on the invalid notice is liable to be quashed? Held: Yes" And has taken the same view following the decision in the case of Manjunatha (supra). There apart the decision in the case of Shankar lal Khandelwal V/s DCIT ITA no. 878/JP/2013order dated 11.03.2016 has also been followed. The facts in the instant case are also the same and hence the ratios of the above referred decisions are fully applicable. 8. In the case of DCIT v/s M/s BJD Products in ITA No. 493/LKW/2010 in Pr. 8.14, after following the decision in the case of Manu Engineering, the Hon'ble ITAT held that "8.14 .........In the instant case, the action of the Assessing Officer cannot be held justifiable and tenable because there cannot be two offences i.e. to say, that the assessee has concealed particulars of his income and/or has furnished inaccurate particulars of such income......" 9. Very recent decisions on Penalty not valid based on deficient SCN: 9.1 Chandmal Kumawat vs. ITO in ITA No. 760/jp/2016 vide order dated 29.12.2016 (DPB-II 5-17)Pr. 15-1....
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....nowhere spells out or indicates that the AO was of the view that the assessee was guilty of either concealing particulars of income or furnishing inaccurate particulars of income. The offer to tax of income by the assessee has just been accepted.------------ 7. ------------- Therefore even the Hon'ble supreme court's decision [Mak Data 358 ITR 593] suggests that the satisfaction need not be recorded in a particular manner but from a reading of the assessment order as a whole such satisfaction should be clearly discernible. --------------we have read the order of assessment as a whole and are satisfied that satisfaction for initiation of penalty proceedings is not discernible from the order of assessment. We therefore concur with the argument of the learned counsel for the assessee that initiation of penalty proceedings was not proper in the present case and on that ground the imposition of penalty u/s.271(1)( c) of the Act is unsustainable." 11.2 Also refer Ms. Sandhya Gadkari Sharma vs. DCIT (2017) 82 Taxmann 73 (Mum. Trib) wherein it was held that: "Section 271(1)(c) lays down that the penalty proceedings can be initiated on the basis of either of the t....
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....n the contrary, S.153A of the Act is a separate code in itself and starts with a nonobstance clause. Further S.153A(1) of the Act excludes the applicability of section 139 of the Act from the beginning itself. Thereafter, Clause (a) prescribes a time limit which, is left to the discretion of the AO within which, the searched person is required to file his Return of income and all the provisions of the act so far as maybe, shall apply accordingly, as if, such return were a return required to be furnished u/s 139 of act. 12.3 Accordingly, the due date even for the purposes of Expl. 5A to section 271(1)(C) should be considered only the due date as prescribed by the AO in the notice issued u/s 153A of the act and none else. In any case, it cannot be a due date as prescribed U/s 139(1) of the act. Looking the issue from this angle, it will be found that in this case, notice/s u/s 153A in all the four subjected years were issued prescribing the due date Being 14.09.2011 whereas, the ROI pursuant to the said notices u/s 153A stood filed on 12 October 2011 itself. (PB- 68, 71, 74, 77) Thus, the ROI, as required by the AO, were filed "within the due date" and therefore Clause (b) t....
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....vied 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. 8. In the facts and circumstances of the case, the Ld. CIT(A) is not justified in confirming the penalty levied by the Assessing Officer. Accordingly, the order of the ld. CIT(A) and that of the A.O. is reversed and the A.O. is directed to cancel the penalty so levied. Thus, all the grounds of the assessee's appeal are allowed. 9. In the result, the appeal filed by the assessee in ITA No. 682(Asr)/2013 is allowed." 12.4.2. Davinder Sapra Prop. vs. ACIT (2014) 40 CCH 0287 (Asr Trib) (DPB) 12.4.3 ITO Vs Mr. Gope M. Rochlani [2014] 158 TTJ 120 (Mum. Trib) (DPB). 13. No difference between the return and assessed income hence no penalty levied imposable: 13.1 There is no dispute on the fact between the parties that the Ld. assessing officer assessed the same very income which was offered by the appellant as additional income ....
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....issioner of Income-tax (Appeals) is upheld." 13.2.3 In Pr. CIT vs. Neeraj Jindal 2017) 393 ITR 0001 (Delhi), it was held that: "Thus, it is clear that when the A.O. has accepted the revised return filed by the assessee under Section 153A, no occasion arises to refer to the previous return filed under Section 139 of the Act. For all purposes, including for the purpose of levying penalty under Section 271(1)(c) of the Act, the return that has to be looked at is the one filed under Section 153A. In fact, the second proviso to Section 153A(1) provides 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." What is clear from this is that Section 153A is in the nature of a second chance given to the assessee, which incidentally gives him an opportunity to make good omission, if any, in the original return. Once the A.O. accepts the revised return filed under Section 153A, the original return under Section 139 abates and becomes ....
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....ea that the return of income was not filed within the due date u/s 139(1) of the act in contravention of sec 80AC. The Hon'ble ITAT however, finding that the assessee did file a return of income within the time permitted in the notice u/s 153A wherein, this deduction was claimed, the assessee was held entitled to the deduction in as much as the return of the income filed u/s 153A is the return of income as contemplated for the purpose of sec 80-IB r/w sec 80AC. In that case it was held as under: "Deduction claimed under section 80-IB(10) in return filed under section 153A cannot be denied on ground that claim was not made earlier in return filed under section 139(1)- Where assessee filed return of income in response to notice issued under section 153A, interest under section 234A was liable to be charged from date of expiry of notice period given in notice under section 153A to date of completing assessment under section 143(3)" Also kindly refer Mehthan Ispat Ltd vs. DCIT (2015) 55 Taxmann 444 (Kolkata Trib.) Hence the impugned penalty deserves a complete deletion.'' 2.7 On the other hand, the ld. DR strongly relied on the orders of the authorities be....
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....ed which limb of the provision, the assessee was asked to reply. This does not meet with the requirement of law. The Hon'ble Karnataka High Court in the case of CIT vs. M/s Manjunatha Cotton & Ginning Factory & Ors.(2013) 359 ITR 565 (Karn) held that sending printed form where all the grounds mentioned in section 271 would not satisfy the requirement of law. The assessee should know the ground which he has to meet specifically, otherwise, the principle of natural justice is offended on the basis of such proceedings, no penalty could be could be imposed to the assessee. In that case it was held that "NOTICE UNDER SEC. 274 59. As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under Section 274, they could conveniently refer to the said order which contains the satisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discerned from the said order and if it is a c....