TaxTMI 
TaxTMI 
2024 (2) TMI 632
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.... was also covered. In response to notice u/s 153A, the assessee filed his return of income admitting total income of Rs. 70,78,070/-. 4. The Assessing Officer observed that during the course of search & seizure in the residential premises of the assessee, a red diary (Mahavir Collection Book) was found and seized vide Annexure A/KKA/RES/02. At page 89 of this annexure, certain amounts were written and the page was titled as "Chit A/c". When the assessee was asked to explain the contents and the amounts written on this page, the assessee stated that the amounts mentioned in page no. 89 reflect the chit contributions made by family members of the assessee, which are amounting to Rs. 72,61,750/-. But it is replied that the amount of Rs. 17,41,150/- mentioned against date 27/10, reflects the prize money of the chit. The balance amount of Rs. 55,20,600/- is the chit contributions made by the assessee and his family members. Then the assessee was given an opportunity to produce the evidences for sources of these chit contributions. Since the assessee could not produce any evidence to substantiate the sources of money for the contributions made to the chits, the assessee had agreed to ....
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....8/38 Taxmann.com 203 8.1 He accordingly submitted that no penalty u/s 271(1)(c) of the I.T. Act is leviable. 9. The learned Counsel for the assessee without prejudice to the above submission referring to various decisions submitted that in view of the Explanation 5A to section 271(1) which is a deeming provision, no penalty is leviable u/s 271(1)(c) of the Act since the assessee has declared such income explaining the manner in which the income was derived and paid the taxes thereon. He accordingly submitted that the penalty levied by the Assessing Officer and sustained by the learned CIT (A) is not in accordance with law and therefore, the same should be deleted. 10. The learned DR, on the other hand, strongly supported the order of the learned CIT (A). Referring to the decision of the Pune Bench of the Tribunal in the case of Sarita Kaur Manjeet Singh Chopra vs. Income Tax Officer reported in 174 TTJ 516 (Pune Trib.) and the decision of the Chennai Bench of the Tribunal in the case of ACIT vs. J. Mythili reported in (2014) 149 ITD 275 (Chennai Trib.) she submitted that in view of the specific provision of Explanation 5A to section 271(1)(c) of the Act, penalty was rightl....
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....cisions relied on by the learned Counsel for the assessee are concerned, these all relate to the searches that have taken place before the first day of June, 2007 and therefore, are not applicable to the facts of the present case. In view of the above discussion and in absence of any decision brought to our notice by the learned Counsel for the assessee to the proposition that penalty cannot be levied u/s 271 (1)(c) of the Act in a case where search has taken place after 1.7.2007 and the assessee has declared the additional income in the return filed in response to notice u/s 153A/153C, we do not find any infirmity in the order of the learned CIT (A) in confirming the penalty levied by the Assessing Officer. Accordingly, the grounds raised by the assessee are dismissed. 14. In the result, appeal filed by the assessee is dismissed. Order pronounced in the Open Court on 18^th January, 2024 ============= Document 1 6. Decision: I have gone through the grounds of appeal, statement of facts, penalty order and the submissions of the appellant. The only issue involved in the present appeal is levy of penalty of Rs.17,05,680/- u/s 271(1)(c) of the Act. The appellant has....
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....come returned was accepted, therefore, there was no concealment of income on part of the appellant. Further, the appellant also argued that no proper satisfaction was recorded by the Assessing Officer in the assessment order before initiation Document 2 of penalty proceedings and it was merely stated in the assessment order that "the penalty proceedings under section 271(1)(c) of the Act are initiated separately. Therefore, the appellant has requested to delete the penalty of Rs.17,05,680/-. I have considered the submissions of the appellant and the penalty order of the Assessing Officer. It is seen that the Assessing Officer has levied penalty of Rs.17,05,680/- according to the Explanation 5A of 271(1)(c) of the Act. The relevant Explanation 5A of section 271(1)(c) of the Act is reproduced as under: "271(1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or fumished inaccurate particulars of such income, he may direct that such person shall pay by way of penalt....
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.... income furnished on or after the date of search, shall be deemed to have concealed the particulars of income. In the present case of the appellant, the search action was conducted on 23.03.2018 i.e. after 01.06.2007, the appellant was found to be the owner of chits of Rs.55,20,600/- in the AY 2016-17 and in the sworn statement recorded during search, the appellant has admitted that he has purchased the chits by utilizing his unaccounted income. However, the original return of income for the AY 2016-17 was filed on 30.05.2016 with only Rs.15,58,070/-. on 30.05. As per Explanation 5A of clause (a) of section 271(1)(c), the income of Rs.55,20,600/- declared by the appellant in the return filed u/s 153A i.e. after the date of search, shall be deemed to have been concealed. Therefore, the Assessing Officer has rightly treated the income of Rs.55,20,600/- as concealed income and accordingly, penalty of Rs.17,05,680/- levied u/s 271(1)(c) of the Act at the rate of 100% of the tax sought to be evaded is hereby upheld and the grounds no.2, 4, 5 & 6 of the appeal are dismissed. In ground no.3, the appellant has contended that the proper sat....
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....lared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed the particulars of his income or furnished inaccurate particulars of his income. 17. The deeming provisions of Explanation 5A under section 271(1)(c) of the Act are applicable to all the searches initiated under section 132 of the Act on or after first day of June, 2007. The conditions laid down in the Explanation 5A is where during the course of search, the assessee is found to be in possession of any money, bullion, jewellery, valuable articles or things and the assessee claims that such assets have been acquired by him by utilizing wholly or in part his income, for any previous year on any income based on any entries in books of account, or other documents or transactions and he claims that such entries in the books of account or other documents or transactions represent his income for any previous year, then in cases where the return of income for such previous year had been furnished by the assessee prior to the date of search, but the said income had not been declared in the said return of income or the due date fo....
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....under: "7. The definition of 'income' in clause (24) of Section 2 of the Act is an inclusive definition. It adds several artificial categories to the concept of income but on that account the expression 'income' does not lose its natural connotation. Indeed, it is repeatedly said that it is difficult to define the expression 'income' in precise terms. Anything which can properly be described as income is taxable under the Act unless, of Document 6 17. course, it is exempted under one or the other provision of the Act. It is from the said angle that we have to examine whether the amount paid by Ballarpur by way of tax on the salary amount received by the assessee can be treated as the income of the assessee. It cannot be overlooked that the said amount is nothing but a tax upon the salary received by the assessee. By virtue of the obligation undertaken by Ballarpur to pay tax on the salary received by the assessee among others, it paid the said tax. The said payment is, therefore, for and on behalf of the assessee. It is not a gratuitous payment. But for the said agreement and but for the said payment, the said tax amount would have ....
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....nished inaccurate particulars of such income." 19. So far as the present assessee is concerned, clause (ii) to Explanation 5A is applicable. Admittedly, the expenditure which was not recorded has been found by way of entries in the seized documents. While explaining the scope of Explanation 5A in the case of Chandan K. Shewani (supra) the Tribunal has held that to patch out the lacuna due to the judicial interpretation of Expl. 5 of Sec. 271(1)(c) which was on the statute book upto 31-5-2007, Explanation 5A Document 7 has been substituted for Expl. 5 by the Finance Act, 2007 w.e.f 1-6-2007. The said explanation was further amended by the Finance (No.2) Act, 2009 with retrospective effect from 01-07-2007 which is reproduced hereinabove. The Ld. Counsel has raised an important legal question whether the income declared by the assessee which is pertaining to the unrecorded expenditure can said to be the income which is contemplated in Explanation 5A(ii)? The answer to this question is in sec. 69-C which reads as under- 20. "Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source o....