2022 (4) TMI 1074

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....ant's case in confirming the action of the Ld, A.O. in levying penalty U/s. 271(1)(C) of the Act of the 1,38,500/-. 2. Both the lower authorities have erred in law and on facts & circumstances of the appellant's case in not appreciating the fact that no penalty U/s.271(1)(C) of the Act can be levied. 3. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before hearing of the appeal. 3. The solitary issue raised by the assessee is that the learned CIT-A erred in confirming the penalty levied by the AO under the provisions of section 271(1)(c) of the Act. 4. Briefly stated facts are that the assessee in the present case is an individual who was subject to search under section 132 of the Act vide dated 22nd of September 2015. Thereafter, the notice under section 153A was issued to the assessee to file the return of income dated 25-05-2016. The assessee in response to such notice filed the return of income dated 8 July 2016 declaring total income at Rs. 10,14,160.00 only. 4.1 Besides the return in response to the notice issued under section 153A of the Act, the assessee also filed return o....

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.... be levied under explanation 5A to section 271(1)(c) of the Act which is deeming provisions. As per the explanation 5A to section 271(1)(c) of the Act if the assessee is found to be the owner of money, bullion, jewelry or any income based on any other document which relates to the previous year which has ended before the date of search and the due date for filing the return of income has expired but the assessee has not filed the return of income, then the income declared by the assessee in the return of income shall be deemed to have concealed the particular of income. 6.2 According to the learned CIT-A, in the case on hand, the due date for filing the income should be treated as provided under the provisions of section 139(1) of the Act and not under the provisions of section 139(4) of the Act. Likewise, the criteria for imposing the penalty under the provisions of section 271(1)(c) of the Act is difference between the income declared in the return filed before the date of search viz a viz the return filed in response to the notice under section 153A of the Act. Admittedly, in the given case, there was no return filed by the assessee before the date of search for the year under ....

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....e return of income was expired but the assessee has not filed the return of income. The relevant extract of the provisions of explanation 5A to section 271(1)(c) of the Act 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 (wholly or in part) for any previous year, which has ended before the date of search and,- (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwi....

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....ause (b) of Explanation to section 271(1)(c) because the assessee has filed its return of income within the "due date" and, therefore, the penalty levied by the Assessing Officer cannot be sustained on this ground. Even though we are not affirming the findings and the conclusions of the learned Commissioner (Appeals), however, as per the discussion made above, penalty is deleted in view of the interpretation of Explanation 5A to section 271(1)(c). Consequently, the ground raised by the Revenue is treated as dismissed. 10.2 In view of the above and after considering the facts in totality, we hold that the assessee has not contravened any of the provisions provided under explanation 5A to section 271(1)(c) of the Act so as to attract the provisions of penalty on account of concealment of income. Accordingly we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed. 10.3 In the result the appeal filed by the assessee is allowed. 11. Coming to ITA No.1409/Ahd/2019, an appeal by the Revenue. 12. The interconnected issue raised by the Revenue is that the learned CIT-A erred in delet....