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2015 (4) TMI 787 - AT - Income TaxPenalty for unaccounted income - Income disclosed in the return of income & paid tax with interest thereon - Penalty for unaccounted Investment in land - Held that - We have considered rival submissions and perused the orders of the lower authorities. We find that the issue is covered in favour of the assessee, by the order of this Tribunal 2015 (4) TMI 664 - ITAT AHMEDABAD , dated 30-1-2015 in the case of the assessee itself. Further, in the present case, it appears from the record that the assessees had satisfied all the conditions which are required for claiming immunity from payment of penalty under section 271(1) of the Act. The provision does not specify any time limit during which the aforesaid amount i.e. the amount of penalty with interest has to be paid. Admittedly when the assessees herein have paid the entire amount with interest, the Assessing Officer ought to have granted them immunity available under Section 27I(1)(C) of the Income Tax Act. In view of the aforesaid facts of the case and also the principle laid down in the decisions relied upon by the learned senior counsel for the appellant more particularly the principle laid down in the case of Gebilal Kanhailal 2004 (7) TMI 86 - RAJASTHAN High Court and Abdul Rashid 2013 (5) TMI 328 - CHATTISGARH HIGH COURT , we are of the considered opinion that the penalty under Section 271(1) (C) of the income Tax Act cannot be levied on the income shown in the return filed under Section 153 of the I.T. Act. Before us, Revenue has not brought any binding contrary decision in its support. We therefore respectfully following the decision of Hon ble Gujarat High Court in the case of Kirit Dayabhai Patel 2015 (1) TMI 201 - GUJARAT HIGH COURT , hold that no penalty is leviable in the present case and thus direct its deletion. - Decided against the revenue. In the case of Hon'ble Gujarat High Court decision of Kirit Dahyabhai Patel 2015 (1) TMI 201 - GUJARAT HIGH COURT , it was held that considering the facts and circumstances of the case and also considering the decisions relied upon by learned senior advocate for the appellant, we are of the considered opinion that the view taken by the Tribunal is erroneous. The CIT(A) rightly held that it is not relevant whether any return of income was filed by the assessee prior to the date of search and whether any income was undisclosed in that return of income. In view of specific provision of Section 153A of the I.T. Act, the return of income filed in response to notice under Section 153(a) of the I.T. Act is to be considered as return filed under Section 139 of the Act, 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 ) of the I.T. Act and the penalty is to be levied on the income assessed over and above the income returned under Section 153A, if any. Following the this decision, we set aside the order of the CIT(A) and delete the penalty. - Decided in favour of assessee.
Issues Involved:
1. Deletion of penalty related to unaccounted income disclosed under section 153A. 2. Penalty on unaccounted investment in land. 3. Penalty on unaccounted income found during the search. Issue-wise Detailed Analysis: 1. Deletion of Penalty Related to Unaccounted Income Disclosed Under Section 153A: The Revenue appealed against the deletion of a penalty of Rs. 8,29,400/- related to unaccounted income of Rs. 26,00,000/- disclosed by the assessee in the return filed under section 153A. The assessee had declared a total income of Rs. 29,25,680/- which included the undisclosed income of Rs. 26 lakhs. The Assessing Officer (AO) levied the penalty under section 271(1)(c) for concealment of income. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the penalty, referencing decisions from the Rajasthan High Court and Madras High Court, which held that immunity from penalty under Explanation-5 of section 271(1)(c) cannot be denied if the income disclosed during the search is included in the return and tax is paid. The Tribunal upheld this view, noting that the return filed in response to notice under section 153A should be treated as a return under section 139, and no penalty is leviable if the disclosed income is accepted by the AO without any additions. Thus, the appeal by the Revenue was dismissed. 2. Penalty on Unaccounted Investment in Land: The assessee appealed against the upholding of a penalty of Rs. 8,67,700/- under section 271(1)(c) related to an unaccounted investment in land amounting to Rs. 25,36,720/-. The AO had made this addition during the assessment and subsequently levied the penalty. The CIT(A) confirmed the penalty. However, the Tribunal noted that the addition on which the penalty was based had been remanded back to the AO for fresh adjudication in a separate quantum appeal. Therefore, the Tribunal set aside the penalty order and remanded the matter back to the AO for fresh adjudication in light of the decision in the quantum proceedings. This appeal was allowed for statistical purposes. 3. Penalty on Unaccounted Income Found During the Search: The assessee appealed against the confirmation of a penalty of Rs. 13,67,813/- under section 271(1)(c) for unaccounted income of Rs. 40.02 lakhs found during a search. The AO levied the penalty based on incriminating documents found during the search, which showed unaccounted income. The CIT(A) confirmed the penalty, relying on a Third Member decision of the ITAT, Ahmedabad, which held that the benefit of Explanation-5(2) to section 271(1)(c) is not available for years where the due date for filing the return under section 139(1) had expired. However, the Tribunal, referencing a Gujarat High Court decision, held that the return filed in response to a notice under section 153A should be treated as a return under section 139, and the penalty is to be levied only on the income assessed over and above the income returned under section 153A. The Tribunal noted that the assessee had satisfied all conditions for immunity from penalty under section 271(1)(c). Thus, the Tribunal set aside the CIT(A)'s order and deleted the penalty, allowing the appeal. Conclusion: The Tribunal dismissed the Revenue's appeal, allowed the assessee's appeal for statistical purposes, and deleted the penalty for the subsequent year. The decisions were pronounced on 20th February 2015 at Ahmedabad.
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