2013 (6) TMI 12 - AT - Income Tax

Penalty proceedings u/s 271(1)(c) - declaration of additional income during statement u/s.132(4) - assessee s own working of the WIP - due date of filing of return - whether CIT(A) erred in deleting the penalty on the ground that the assessee did not file the return of income till the date of search which took place on 16- 10-2008 as the time for filing of return u/s.139(l) was 30-09-2008 due to which the additional income was detected otherwise the assessee would have concealed the additional income declared? - Held that - Once the legislature has not specified the due date as provided in section 139(1) in Explanation 5A then by implication it has to be taken as the date extended under section 139(4). In view of the above it is held that the assessee gets the benefit / immunity under clause (b) of Explanation to section 271(1)(c) because the assessee has filed its return of income within the due date and therefore the penalty levied by the AO cannot be sustained on this ground. Even though the findings and the conclusions of the Commissioner (Appeals) cannot be affirmed however penalty is deleted in view of the interpretation of Explanation 5A to section 271(1)(c). Consequently the ground raised by the Revenue is treated as dismissed.

Issues Involved:
1. Cancellation of penalty levied by the AO.
2. Deletion of penalty based on additional income declared during statement u/s.132(4).
3. Deletion of penalty based on the assessee's admission of additional income.
4. Deletion of penalty under Explanation 5A(ii)(b) to section 271(1)(c).
5. Deletion of penalty due to non-filing of return of income till the date of search.
6. Request to set aside the CIT(A)'s order and restore the AO's order.

Detailed Analysis:

1. Cancellation of Penalty Levied by the AO:
The Revenue challenged the CIT(A)'s decision to cancel the penalty levied by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2008-09. The AO had initiated penalty proceedings because the additional income was offered only as a consequence of search and seizure under section 132(1).

2. Deletion of Penalty Based on Additional Income Declared During Statement u/s.132(4):
The additional income of Rs. 1,25,00,000 was declared by the assessee during the search and seizure action under section 132(1) on 16th October 2008. This amount was included in the return of income filed on 31st October 2008. The AO held that the case was covered by Explanation 5A to section 271(1)(c) since the income was offered only due to the search.

3. Deletion of Penalty Based on the Assessee's Admission of Additional Income:
The assessee argued that the additional income was offered voluntarily on an estimate basis and was accepted in the assessment order. The CIT(A) deleted the penalty, stating that the income was offered on an estimate basis and could not be considered as concealed income or furnishing inaccurate particulars of income.

4. Deletion of Penalty Under Explanation 5A(ii)(b) to Section 271(1)(c):
The CIT(A) did not accept the assessee's explanation regarding Explanation 5A to section 271(1)(c) but deleted the penalty on the ground that the income was offered on an estimate basis. The CIT(A) concluded that the AO could not link the declaration of additional income with any material found during the search and that the income was offered on an estimate basis.

5. Deletion of Penalty Due to Non-Filing of Return of Income Till the Date of Search:
The AO observed that the return of income was filed on 31st October 2008, after the original due date of 30th September 2008. The AO held that the case was covered by Explanation 5A to section 271(1)(c) since the income was not shown in the return filed before the date of search.

6. Request to Set Aside the CIT(A)'s Order and Restore the AO's Order:
The Revenue requested that the CIT(A)'s order be set aside and the AO's order be restored. The Revenue argued that the penalty should not be deleted on the ground that it was levied on an estimate basis, as the income was declared during the search and represented undisclosed income.

Tribunal's Findings:

The Tribunal analyzed whether the return of income filed under section 139(4) could be considered as the "due date" for filing the return of income as mentioned in clause (b) of Explanation 5A to section 271(1)(c). The Tribunal referred to various High Court judgments, including CIT v/s Rajesh Kumar Jalan and CIT v/s Jagtar Singh Chawla, which interpreted the "due date" to include the extended period under section 139(4).

The Tribunal concluded that the "due date" mentioned in Explanation 5A could be inferred as the date extended under section 139(4). Therefore, the assessee's return of income filed on 31st October 2008 was within the "due date" as per section 139(4). Consequently, the penalty levied by the AO could not be sustained.

Conclusion:
The Tribunal held that the assessee was entitled to the benefit of clause (b) of Explanation 5A to section 271(1)(c) as the return of income was filed within the "due date" under section 139(4). The penalty levied by the AO was deleted, and the Revenue's appeal was dismissed. The order was pronounced in the open Court on 24th May 2013.

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