TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 30
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....0A of the act was levied by the learned AO in the sum of Rs. 5,11,281/-. This penalty appeal arose out of the quantum assessment proceedings completed u/s 153A read with section 143(3) of the Act on 19.09.2021 by the learned AO. This quantum assessment was quashed by the order of this Tribunal in ITA No. 1298/Del/2021 dated 13.12.2023. Since the quantum is quashed, the levy of penalty would have no legs to stand. Hence, we cancel the levy of penalty u/s 270A of the Act by allowing the ground of the assessee. ITA no. 1946/Del/2023 (A.Y. 2017-18 - u/s 271AAB of the I.T. Act, 1961]: 3. This appeal arises out of the order passed by the learned Commissioner of Income-tax (Appeals)-23, New Delhi [hereinafter referred to as the "learned CIT(A)"], in appeal no. CIT(A), Delhi-23/10323/2017-18 dated 12.05.2023, against the penalty order dated 30.01.2023, passed under section 270AAB of the Income-tax Act, 1961 [hereinafter referred to as the "Act"], passed by the Assistant Commissioner of Income Tax, Central circle-4, Delhi [hereinafter referred to as the "learned AO"], for assessment year 2018-19. 4. We have heard rival submissions and perused the material available on record. Pursuant to....
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....hat assessee had indeed made suo moto disallowance of Rs. 12,30,000/- in the return filed in response to notice issued u/s 153A of the Act. The penalty proceedings u/s 271AAB of the Act had been initiated only pursuant to search assessment completed u/s 153A of the Act on the assessee. In that search assessment, no concealment on the part of the assessee was even found/ detected. In these circumstances, whether penalty u/s 271AAB of the Act could be levied on the assessee is the dispute before us. We find that this issue is no longer res-integra in view of the decision of Hon‟ble Jurisdictional High Court in the case of Pr.CIT v. Neeraj Jindal (2017) 393 ITR 1 (Delhi), wherein it was held as under: "13. At the outset, it must be noted that pursuant to the search and seizure operation conducted under Section 132(4) of the Act, the assessee was given notice under Section 153A to file fresh return of his income. Thereafter, the assessee filed revised returns and the return filed by the assessee under Section 153A was accepted as such by the A.O. However, the A.O. was of the opinion that inasmuch that the income disclosed by the assessee under Section 153A was higher than the i....
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....e, the mere fact that some figure or some particulars have been disclosed by itself, even if takes out the case from the purview of nondisclosure, cannot by itself take out the case from the purview of furnishing inaccurate particulars. Mere omission from the return of an item of receipt does neither amount to concealment nor deliberate furnishing of inaccurate particulars of income unless and until there is some evidence to show or some circumstances found from which it can be gathered that the omission was attributable to an intention or desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon. In order that a penalty under Section 271(1)(c) may be imposed, it has to be proved that the assessee has consciously made the concealment or furnished inaccurate particulars of his income." 16. Thus, despite the fact that there is no requirement of proving mens rea specifically, it is clear that the word "conceal" inherently carries with it the requirement of establishing that there was a conscious act or omission on the part of the assessee to hide his true income. This was also the conclusion of the Supreme Court in the case of Dili....
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.... was an offer of additional income in the revised return filed by the assessee and such offer is in consequence of a search action, then if the assessment order accepts the offer of the assessee, levy of penalty on such offer is not justified without detailed discussion of the documents and their explanation which compelled the offer of additional income. The Madras High Court in the case of S.M.J. Housing v. Commissioner of Income Tax, (2013) 357 ITR 698 held that where after a search was conducted, the assessee filed the return of his income and the Department had accepted such return, then levy of penalty under Section 271(1)(c) was not justified. From the above cases it would be clear that when an assessee has filed revised returns after search has been conducted, and such revised return has been accepted by the A.O., then merely by virtue of the fact that such return showed a higher income, penalty under Section 271(1)(c) cannot be automatically imposed. 19. The whole matter can be examined from a different perspective as well. Section 153A provides the procedure for completion of assessment where a search is initiated under Section 132 or books of account, or other document....
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....so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. 20. Therefore, the position that emerges from the above-mentioned provision is that once the assessee files a revised return under Section 153A, for all other provisions of the Act, the revised return will be treated as the original return filed under Section 139. On similar lines, the Gujarat High Court in the case of Kirit Dahyabhai Patel v. Assistant Commissioner of Income Tax, (2015) 280 CTR (Guj) 216, held that: "In view of specific provision of s. 153A of the I.T. Act. the return of income filed in response to notice under s. 153A of the I.T. Act is to be considered as return filed under s. 139 of the Act, as the AO has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under s. 271(1)(c) of the I.T. Act and the penalty is to be levied on the income assessed over and above the income returned under s. 153A, if any." 21. 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 ....
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....section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income unless, - (1) such income is, or the transactions resulting in such income are recorded, - (i) in a case falling under clause (a), before the date of the search ; and (ii) in a case falling under clause (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the said date ; or (2) he, in the course of the search, makes a statement under subsection (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub-section (1) of section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income. 23. Explanation-5 to Section 271....
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....r Commissioner before the date of the search; second, in the course of the search, the assessee makes a statement under Section 132(4) that the assets found in his possession have been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of the time specified in Section 139(1), and also specifies in the statement the manner in which such income has been derived and pays the tax together with interest, if any, in respect of such income. 24. The purpose of inserting Explanation-5 in the statute books was explained by the Supreme Court in K.P. Madhusudan v. Commissioner of Income Tax, (2001 251 ITR 99, wherein the Court held- "Learned Counsel for the assessee then drew our attention to the judgement of this Court in Sir Shadilal Sugar and General Mills Ltd. v. CIT (1987) 168 ITR 705. He submitted that the assessee had agreed to the additions to his income referred to hereinabove to buy peace and it did not follow therefrom that the amount that was agreed to he added was concealed income. That it did not follow that the amount agreed to be added was concealed income is undoubtedly what was laid down by this Court i....
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....ee claims have been acquired by him by utilizing (wholly or in part) his income for any particular previous year, and then declares such income (which he utilized in acquiring the assets found) in a subsequent return filed after the date of search, would it be deemed that the assessee has concealed his income. In other words, the assets seized during the search must relate to the income of the particular assessment year whose return is filed after the date of the search. Such a conclusion is only logical, considering that assessment under the Act is with respect to a particular assessment year and the penalty imposed under Section 271(1)(c) would also be for concealing income in that particular assessment year, which concealment was revealed by the discovery of certain assets in the assessee's possession during the search conducted under Section 132. Here, it would be beneficial to reproduce the dictum of the Rajasthan High Court in Commissioner of Income Tax v. Kanhaiyalal, (2008) 299 ITR 19 (Raj), where it held that- "We may consider the things from yet another aspect, viz., that under the set up of IT Act, in whatever eventuality the assessment may have to be made, i.e. wh....
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....ures. It is settled law that suspicion howsoever strong, it cannot take place of actual evidence and hence the contention of the Revenue that assessee was in possession of cash throughout the period of six assessment years has to be rejected. In view of above discussion we are of the considered opinion that even the amended provisions of Explanation 5 cannot be applied in assessment year 2004-05. Consequently penalty u/s 271(c) cannot be imposed by invoking Explanation 5 of the Act in assessment year 2004-05 in respect of cash found in previous year relevant to assessment year 2007-08." 28. Basing its reasoning on this decision, the ITAT in the present case held that in the case of the assessee, the search was conducted on 11.01.2007 and cash of Rs. 5,26,530/- was recovered from the possession of the assessee; and so the cash was admittedly, not seized during the relevant assessment years in consideration before the Tribunal. In other words, while the assessee had surrendered undisclosed income, the cash was seized during search in A.Y 2007-2008, and not in the relevant assessment years. However, in the relevant assessment year under consideration in the instant case, the assesse....