2015 (6) TMI 1081 - AT - Income Tax

Penalty u/s. 271(1)(c)- Revenue seeks to treat the impugned on-money receipts admitted in the course of search and declared in the return as concealment and furnishing of inaccurate particulars of income - Held that - We reiterate that the search is dated 06-01-2011 i.e. within the relevant accounting period. And the assesseWe reiterate that the search is dated 06-01-2011 i.e. within the relevant accounting period. And the assessee s return has come on 13-09-2011. The same stands accepted in the assessment framed therein. In these facts, we quote latest decision of hon ble jurisdictional High Court in Kirit Dayabhai Patel vs. ACIT case 2015 (1) TMI 201 - GUJARAT HIGH COURT holding that if no addition is made in furtherance to the post search return, the same has to be treated as the one filed u/s. 139 and no penalty is leviable in such a case. We deem it proper to observe that the section 271(1)(c) explanation 5A instead of explanation 5 applies to a search conducted on or after 01-06-2007. Be that as it may, the assessee has filed return admitting on-money receipts as its income. The deeming fiction of concealment stipulated therein is not attracted accordingly. We follow the hon ble jurisdictional high court s view and delete the impugned penalty. The assessee s arguments on merits succeed.e s return has come on 13-09-2011. The same stands accepted in the assessment framed therein. In these facts, we quote latest decision of hon ble jurisdictional High Court in Kirit Dayabhai Patel vs. ACIT case Tax Appeal no. 1181 of 2010 with 1182 of 2010 to 1185 of 2010 decided on 03- 12-2014 holding that if no addition is made in furtherance to the post search return, the same has to be treated as the one filed u/s. 139 and no penalty is leviable in such a case. We deem it proper to observe that the section 271(1)(c) explanation 5A instead of explanation 5 applies to a search conducted on or after 01-06-2007. Be that as it may, the assessee has filed return admitting on-money receipts as its income. The deeming fiction of concealment stipulated therein is not attracted accordingly. We follow the hon ble jurisdictional high court s view and delete the impugned penalty. The assessee s arguments on merits succeed.

Summary

Issues:
Penalty under section 271(1)(c) for alleged concealment and furnishing of inaccurate particulars of income based on on-money receipts declared post search.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad arose from the CIT(A)-XII, Ahmedabad's order confirming a penalty of Rs. 77,25,000 imposed on the assessee under section 271(1)(c) of the Income Tax Act. The case revolved around the assessee company, engaged in building and developing housing projects, and its declaration of on-money receipts following a 'search' conducted in the case of its partner. The Assessing Officer initiated penalty proceedings against the assessee, alleging concealment and furnishing of inaccurate particulars of income regarding the on-money receipts.

The Assessing Officer, in the penalty order, held that the assessee's declaration of on-money receipts was not covered by the explanation 5 immunity under section 271(1)(c), as it did not quantify the receipts separately and amounted to concealment and furnishing of inaccurate particulars of income. The CIT(A) upheld this penalty decision, leading to the appeal by the assessee.

During the proceedings, it was established that the 'search' took place within the relevant accounting period, and the assessee's return, including the on-money receipts, was filed after the search but accepted in the assessment. Citing a recent decision of the jurisdictional High Court, it was noted that if no addition is made post a search in the return, it should be treated as filed under section 139, and no penalty is leviable. The Tribunal observed that the deeming fiction of concealment did not apply in this case, as the assessee had admitted the on-money receipts as income in the return. Relying on the High Court's view, the Tribunal deleted the penalty, stating that the assessee's arguments on merits were successful.

Ultimately, the Appellate Tribunal allowed the assessee's appeal, setting aside the penalty imposed under section 271(1)(c). The judgment was pronounced on 09-06-2015 by the Tribunal.