TaxTMI 
TaxTMI 
2020 (9) TMI 1134
X X X X Extracts X X X X
X X X X Extracts X X X X
....was perverse in holding that the Assessee had not originally filed his return of income u/s.139(1) of Income Tax Act, 1961, on 30.11.2006? Tribunal exceeded its jurisdiction (ii) Whether on the facts and the circumstances of the case, the Income Tax Appellate Tribunal has exceeded its jurisdiction, when there was no ground raised by the Department and without affording any opportunity to the Assessee, proceeded to hold that the Assessee shall be liable for penalty even on the income declared u/s.139(1) on 30.11.2006, which was prior to the search on 10.01.2008? (iii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in upholding the levy of penalty u/s.271(1)(c) of the Act on the entire income including the income declared in the original return of income which was not a subject matter of the Appeal before it? Penalty on additional income offered in return filed in response to notice u/s.153A (iv) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in upholding the levy of penalty u/s.271(1)(c) of the Act in respect of additional income of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e doing so, he has ignored the return filed by assessee before the date of search on 28.11.2006 declaring income of Rs. 1,01,46,668/-. No penalty could be levied on such voluntary income admitted by the assessee u/s.139(1) prior to the date of search. Hence, the issue for adjudication is the additional income of Rs. 1,53,98,570/- towards withdrawal of land development charges and Rs. 13,000/-being disallowance u/s.40(a)(ia). 6.1. As regards the penalty on additional amount of Rs. 1,53,98,570/-, being withdrawal of land development charges, the AO has stated that but for search, the assessee would not have disclosed any income filed in response to notice u/s.153A. He has, however, not given any definite finding as to how it constitutes concealed income. While considering an appeal against an order made u/s.271(1)(c), what is required to be examined is the record which the AO imposing penalty had before him and if that record can sustain that there has been concealment or furnishing inaccurate particulars of income, that would be sufficient to sustain the penalty. At this juncture, it would be appropriate to note that the Explanation contained section in u/s.271(1)(c) is sel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....esponse to the notice u/s.153A wherein it has offered additional income of Rs. 1,53,98,570/- by withdrawing the claim of land development expenses. The AO has also accepted the above income in the assessment order. There is no definite finding regarding concealment of income of furnishing of inaccurate particulars of such income. The appellant did not file any appeal because addition of Rs. 13,000/- only was made u/s.40(a)(ia) to the returned income. Moreover, it is well settled that assessment and penalty proceedings are separate. In view of these facts and respectfully following the above decision, I am of the considered opinion that penalty cannot be levied on the additional income offered by the assessee. 6.2. As rewards disallowance u/s.40(a)(ia), it may be stated that penalty was not initiated on this addition of Rs. 13,000/- in the assessment order. However, penalty has been levied because the entire assessed income was subjected to penalty u/s.271(1)(c). The Hon'ble ITAT(SB), Vishakhapatnam in the case of Merilyn Shipping & Transport v. Addl. CIT, (2012) 20 taxmann.com 244 has held that provisions of sec.40(a)(ia) are applicable only to amounts of expenditure p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s that no return of income had been filed prior to the date of search and had been only after the issue of notice u/s.153A, on 12/8/2009. While the Revenue relied on the findings in assessment and the penalty orders, the ld. AR would on the decisions in Rawatmal Harakchand v. CIT (1981) 129 ITR 346 and in P.V.Doshi v. CIT (1978) 113 ITR 22, averring that even the initiation of the penalty is bad in law. 4. We have heard the parties, and perused the material on record. 4.1. We may proceed by delineating the respective cases of the parties before us. The Revenue's case is that the filing of the return by the assessee is only subsequent to the search and upon discovering that it had no reasonable explanation for the 'advance from allottees' credited in its books in cash, in the like sum, i.e., Rs. 153.99 lakhs, corresponding to the expenditure booked under the account head 'development charges', and which is admittedly on money paid to the persons from whom land or rights therein had been acquired. The basis for the relief by the first appellate authority is that the assessee having already filed its return on 30/11/2006, it is only the additional income (of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch. Accordingly, the assessee having not furnished any explanation for not returning the income chargeable to tax, it shall be liable for penalty on the income of Rs. 101.15 lakhs. The issue is in fact squarely covered by Explanation 3 to section 271(1)(c), which reads as under; the time period prescribed u/s.153 expiring on 31/3/2009: 'Explanation 3. -- Where any person fails, without reasonable cause, to furnish within the period specified in sub-section (1) of section 153 a return of his income which he is required to furnish under section 139 in respect of any assessment year commencing on or after the 1st day of April, 1989 and until the expiry of the period aforesaid, no notice has been issued to him under clause (i) of sub-section (1) of section 142 or section 148 and the Assessing Officer or the Commissioner (Appeals) is satisfied that in respect of such assessment year such person has taxable income, then, such person shall, for the purposes of clause (c) of this sub-section, be deemed to have concealed the particulars of his income in respect of such assessment year, notwithstanding that such person furnishes a return of his income at any time after the expiry of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome has not been declared therein; or (b) the due date for filing the return of income for such year has expired and 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 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. Where, therefore the assessee is found in the course of search to be the owner of any asset, the source of which is attributable to income, or otherwise as the owner of any income (for any previous year) based on any entry in the books of account, documents or transactions, which has not been disclosed per the return of income for the relevant year ended prior to the date of search (or in respect of which year no return had been filed despite the expiry of the due date for furnishing the return of income as on the date of search), then, notwithstanding it being returned as income per the return filed subsequent to be deemed to have concealed the particulars of h....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Revenue. Again, in view of the foregoing, reference to the admission being voluntary, or to the decisions, as the case of Suresh Chandra Mittal (supra), is completely misplaced. As afore-noted, that the income is admitted, and the disclosure voluntary, is the reason or the basis for the application of Explanation 5A. Even on facts, it is to be appreciated that it is the search and the concomitant discovery of the books of account, duly completed, reflecting the said credit as well as expenditure claimed, that has led to the disclosure, with the assessee having no answer to the various aspects of the credit or the amounts credited to the account head 'advance to allottees' as well as the corresponding debit to the account 'development charges', claimed as deduction. There is no confirmation from the transferor/s of the real estate to having received on money, i.e., qua the amount debited to the said (latter) account, which has in any case been claimed and allowed as deduction. As explained in Mak Data (P) Ltd. v. CIT (2013) 358 ITR 593 (SC), the plea as to the disclosure being only to buy peace of mind, etc., is only a ruse or a make believe. The assessee's case, on th....