TaxTMI 
TaxTMI 
2024 (11) TMI 386
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....posed the penalty by generally referring to the provision of Section 271(1)(c) of the Act and not specifically referring to Explanation 5A." 3. At the outset, the ld. counsel for the assessee submitted that the case of the assessee is squarely covered by the decision of this Hon'ble Tribunal in the case of ACIT Vs. Hitech Construction in ITA Nos.133, 134 & 135/GTY/2020 dated 13th April, 2023. He also submitted that the impugned penalty has been levied on the income admitted during the course of search and disclosed in the income tax return filed in compliance o notice u/s 153A of the Act and ld. AO has accepted the return income, in other words, no addition has been made by the ld. AO. He also submitted that the income admitted during the course of search was on mere estimate basis and therefore, the ld. CIT (A) has rightly deleted the impugned penalty placing reliance on plethora of judgements which are squarely applicable on the facts of the assessee. 4. On the other hand, the ld. DR vehemently argued and supported the order of the ld. AO and stated that assessee has himself admitted the undisclosed income earned from unrecorded sales and the assessee has declared huge ....
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....o a notice under Section 153A/153C of the Act. Thus, if there is no variation in the income shown in the return filed under Section 153A and the assessment made, no penalty is leviable under Section 271(1)(c) of the Act. In the case of Kirit Dahyabhai Patel vs. ACIT [(2017) 80 taxmann.com 162 (Gujarat}], it was held, as follows, by the Hon'ble Gujarat High Court: "In view of specific provision of section 153A, the return of income filed in response to notice under section 153A is to be considered as return filed under section 139, 'as the Assessing Officer has made assessment on the said return and, therefore, the return is to be considered for the purpose of penalty under section 271{1){c} and the penalty is to be levied on the income assessed over and above the income returned under section 153A, if any. In the case of Pr. CIT vs. Neeraj Jindal [(2017) 393 (TR 1 {Del)], it was held, as follows, by the Hon'ble Delhi High Court: - The levy of penalty under section 271(1)(c} of the Income-tax Act, 1961, is not automatic. For levy of penalty under section 271(1)(c) , the conditions laid out therein have to be specifically fulfilled. Section 271(1)(....
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....undisclosed income, does not grise at all, In the present case, the entire undisclosed income has been offered for tax by the appellant-company in the return income, which was subject matter of assessment before assessing officer. The return filed by the appellant has been accepted as such by your assessing officer, without any variation. Therefore, in the absence of any undisclosed income being found in the assessment vis-a-vis the return filed, the Issue of imposition of penalty does not, arise. - Decided in favor of assessee."" 6. From perusal of the above judgements, we noticed that it has been consistently held that return filed in response to notice u/s 153A of the Act is to be considered as return filed u/s 139 of the Act. Further, concealment of particulars of income or furnishing of inaccurate particulars of income / undisclosed income has to be seen vis-a-vis return filed by the appellant and once the income declared in the return u/s 139 read with 153A of the Act, is accepted as such in the assessment u/s 143(3) read with section 153A of the Act then the question of there being concealment / furnishing of inaccurate particulars of income does not arise at all....
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....n transpires on the part of the Appellant to retract the voluntary statement so made. Thus, no intention transpires on the part of the Appellant to not pay the amount of tax due to the exchequer. The law on Section 153A/153C is settled (read Judgment of Hon'ble Delhi high court in the case of Kabul Chawla) that no additions during the assessments pertaining to search cases can be made on any account until and unless some incriminating material on that account has been recovered by the Department. It is a settled proposition and requires no authority to bring home the contention that no penalty can be levied when the additions have been made merely on estimated basis. It cannot be said that the Appellant did not have access or could not have had to appropriate legal advice. Despite that there was no intention on the part of the Appellant to contest the additions pertaining to the income offered to tax, sans any incriminating material and not pay the amount of tax due to the exchequer. In this regard, it would also be relevant to peruse Section 271(1)(c) of the Income Tax Act, 1961, which is reproduced as hereunder: "271. (1) If the Assessing Officer or the Comm....
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....s been referred in the relevant assessment order as well as in the impugned penalty order, such income was offered for tax by the Appellant voluntarily through the statement recorded, honoring the statement so made the Appellant offered such income for tax, no retraction of such statement was made by the Appellant, the Appellant dutifully declared such income in the subsequent return under section 153A and paid the admitted taxes on the same, it cannot be said that there transpired any intention on the part of the Appellant of hiding any such income from the Department or to not pay the amount of tax due to the exchequer or that the conduct of the Appellant was contumacious and there was an intention to evade any tax. In that scenario, the discretion which vested in the AO for imposition of penalty should have been exercised in favour of the Appellant. It is settled law that any imposition of penalty under the Income Tax Act, 1961 is discretionary and not mandatory and whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion to be exercised judicially and on consideration of all relevant circumstances. Thus, penalty should n....
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....vertence just because the Act stipulates the imposition of penalty? That is a difficult question to answer. There can be mechanical imposition of tax on a particular receipt or expense which should have been taxed but there cannot be a mechanical imposition of penalty in such a situation. This also leads to the matter of explanations given by the assessee's in support of their contentions. Even if any assessee is not able to establish, by satisfactory evidence, the source of any income, it does not mean that the explanation furnished was false or that the assessee is guilty of deliberate suppression. Generally, a 'penalty' means a sum of money recoverable in a summary manner, for breach of some statutory provision. A penalty is provided for by a statute to punish a contravention of a statute or the doing of something which is prohibited by the statute. In order to enforce the mandatory provisions of a statute, the Legislature may impose sanctions of either of two kinds i.e. either declare it as an "offence" under the general law of crimes and make the person guilty of such offence punishable judicially or alternatively provide that the contravention will be punishable extra....
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....sessment order, it does not appear that the Appellant had deliberately concealed his income or furnished inaccurate particulars of income or hide any of its income. No evidence of concealment of particulars of income or furnishing of inaccurate particulars of income has been adduced, either by the Ld. AO during the course of assessment proceedings or by the Investigation Wing of the Income Tax Department in their investigations prior to the assessment proceedings, which could conclusively prove concealment of particulars of income or furnishing of inaccurate particulars of income by the Appellant. In the impugned penalty order or the assessment order, there is no shred of reference to any incriminating material whatsoever which was seized or recovered by the Investigation Wing either during the course of search proceedings or even later at the time of recording of the Statement under Section 132(4) of the Income Tax Act, 1961 and which was used by the Ld. AO for framing the assessment order and making the additions in the assessment order. The entire construction of the assessment order rests only on the bald edifice of a Statement recorded under Section 132(4) of the Income Tax Ac....
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.... not based on the incriminating materials. Penalty under Explanation 5A to section 271(1)(c), the of the Act can be attracted if the assessee was found to be the owner of any money, bullion, jewellery or other valuable article or thing or any income based on any entry in any books of account or other documents or transactions. But, in the case on hand, there was no such allegation against the assessee either in the assessment or penalty or the CIT (A) order referring to any specific incriminating documents. As relying on Ajay Traders Vs. DCIT [2016 (6) TMI 422 - ITAT JAIPUR] there cannot be any penalty under explanation 5A to section 271(1)(C) of the Act until and unless the quantum addition is based on some incriminating document. Accordingly, we hold that there cannot be any penalty under section 271(1)(C) of the Act in the given facts and circumstances. - Decided in favour of assessee. 11. Similar was the view taken by Coordinate Bench of Delhi in the case of Rishabh Buildwell P. Ltd vs. DOT [2019 (7) TMI 383 - ITAT DELHI] reads as under: "Penalty u/s. 271(1)(c) - income disclosed by the assessee under Section 153A - assessee has file....
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....ived (para 4.1 of AO), paid the taxes and filed the return. Hence, the assessee had made all the required conditions. At this juncture, it is to be adjudicated whether the levy of penalty is automatic or not under the present circumstances, we find that the rationale given in the case of 271(1)(c) so as to the requisite conditions for levy of penalty under the Income Tax law are equally applicable to the instant year also. Hence, the penalty levied is directed to be deleted. - Assessee appeal allowed." 12. Thus, respectfully following the judicial precedence and also considering the fact that the additional income offered by the assessee in the return filed in compliance to the notice u/s 153A of the Act which partakes the character of regular income filed u/s 139 of the Act and the said additional income being not offered on the basis of any incriminating material but is the voluntary disclosure made by the assessee and there being no other legal binding precedence referred to by ld. D/R, we fail to find any infirmity in the finding of ld. CIT(A) deleting the penalty levied u/s 271(1)(c) of the Act for AY 2014-15 & AY 2015-16, respectively. Thus, the grounds of appeal rai....