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2015 (9) TMI 1445 - AT - Income TaxLevy of penalty under section 271(1)(c) - return has not been filed by the assessee within the due date of filing of the return i.e. 31.7.2008 - Held that - In the case of the assessee, search had taken place on 15.7.2008. The due date of filing of the return for assessment year under appeal i.e. 2008-09 had not expired on the date of the search as the due date of filing of the return of income under section 139(1) was 30.9.2008. Thus, in the present case, the deeming provisions of Explanation 5-A cannot be applied because at the time of search, the relevant previous year for the assessment year under appeal, the due date of filing of the return of income had not expired. Further, the assessee explained that there was no variation in the return of income and assessed income as per the assessment order passed under section 153A r.w.s. 143(3) of the Act because the returned income was accepted including the surrendered income. The learned counsel for the assessee also explained that due to the bonafide error, surrendered income was no included in the return filed under section 139(1) or 139(4) of the Act because as per the advice, the surrendered income was to be declared in the return to be filed under section 153A of the Act. The Assessing Officer levied the penalty under deeming provisions of Explanation 5 A to section 271(1)(c) of the Act, which in our view, is not applicable to the facts and circumstances of the case. - Decided in favour of assessee
Issues Involved:
1. Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961. 2. Application of Explanation 5A to section 271(1)(c) in the context of the due date for filing the return of income. 3. Consideration of the due date for filing returns for partners in audit and non-audit firms. 4. Determination of concealment of income and furnishing inaccurate particulars of income. 5. Relevance of the return filed under section 153A of the Act. Issue-wise Detailed Analysis: 1. Levy of Penalty under Section 271(1)(c): The appeal challenges the imposition of a penalty of Rs. 22,42,867/- under section 271(1)(c) of the Income Tax Act, 1961. The penalty was imposed by the Assessing Officer (AO) on the grounds that the assessee did not file the return of income within the due date, invoking Explanation 5A to section 271(1)(c). 2. Application of Explanation 5A to Section 271(1)(c): The AO relied on Explanation 5A, which deems an assessee to have concealed income if the due date for filing the return has expired and the return has not been filed. The assessee argued that the due date for filing the return was 30th September 2008, not 31st July 2008, as the assessee was a partner in an audit firm, and thus Explanation 5A was not applicable. 3. Consideration of Due Date for Filing Returns: The assessee contended that as a partner in both an audit firm (Shiva Industries) and a non-audit firm, the due date for filing the return was 30th September 2008. This argument was supported by section 139(1) of the Act, which prescribes the due date for partners in audit firms as 30th September. The CIT (Appeals) acknowledged this but did not accept the assessee's contention, stating that the additional income was not disclosed in the original return filed under section 139(1). 4. Determination of Concealment of Income: The assessee argued that there was no concealment of income as the income was assessed at the returned income, and the surrendered amount was included in the return filed under section 153A. The assessee relied on the Delhi High Court's judgment in SAS Pharmaceuticals, which held that penalty under section 271(1)(c) cannot be imposed unless there is actual concealment or non-disclosure of income in the return filed. 5. Relevance of Return Filed under Section 153A: The assessee's return filed under section 153A included the surrendered income, which was accepted by the AO. The assessee argued that since the returned income was accepted, there was no basis for imposing a penalty. The Mumbai ITAT's decision in Kshiti R. Maniar was cited, which held that Explanation 5A cannot be applied if the due date for filing the return had not expired at the time of the search. Conclusion: The Tribunal considered the facts and the relevant legal provisions, concluding that the due date for filing the return for the assessee was indeed 30th September 2008, and thus, Explanation 5A was not applicable. The Tribunal also noted that there was no concealment of income as the returned income was accepted, including the surrendered amount. Consequently, the penalty under section 271(1)(c) was canceled, and the appeal filed by the assessee was allowed.
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