2019 (7) TMI 1511 - AT - Income Tax

Penalty u/s 271(1)(c) - income declared by the assessee in return filed under section 153A - difference in the income declared in return filed u/s 139 and income disclosed in return filed u/s 153A - HELD THAT - Penalty under Explanation 5A to section 271 (1)(c) 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 the incriminating documents. Thus the issue arises whether the penalty can be levied under section 271 (1) (c) r.w. explanation 5A of the Act merely based on the statement furnished under section 132(4) of the Act and without having found of any incriminating materials found in search. In this regard, we are inclined to refer to the order of ITAT in the case of Ajay Traders Vs. DCIT 2016 (6) TMI 422 - ITAT JAIPUR no incriminating documents were found during the course of search, therefore, Explanation 5A to section 271(1)(c) is not applicable. Accordingly, the penalty was to be deleted. It is clear that 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. Hence the ground of appeal of the assessee is allowed. - Appeal of the assessee is allowed.

Summary

Issues Involved:
- Appeal against penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for different Assessment Years.

Detailed Analysis:
1. Issue 1: Confirmation of Penalty by CIT (A)
- The assessee contested the penalty imposed due to the difference in income declared in returns filed under sections 139 and 153A of the Act.
- A search under section 132 revealed a variance in income declared by the assessee in the two returns.
- The AO initiated penalty proceedings based on this difference, leading to a penalty of Rs. 1,54,070 under section 271(1)(c).
- The CIT (A) upheld the penalty, citing concealment of income by the assessee.
- The AR argued against penalty imposition, referencing a Gujarat High Court judgment.

2. Issue 2: Lack of Incriminating Evidence
- The ITAT analyzed whether penalty under section 271(1)(c) could be applied solely based on the statement furnished under section 132(4) without incriminating documents found during the search.
- The ITAT referred to a case where penalty was deleted due to the absence of incriminating evidence.
- Based on this precedent, the ITAT held that penalty under Explanation 5A to section 271(1)(c) cannot be imposed without incriminating documents.
- Consequently, the penalty was deleted in the present case as no such incriminating evidence was found.

3. Conclusion:
- The ITAT allowed the appeal, stating that penalty imposition without incriminating evidence is not justified under section 271(1)(c).
- The penalty was deleted for all appeals filed by different assesses, following the same reasoning.
- The judgment was pronounced on 19/07/2019 in Ahmedabad by the Appellate Tribunal ITAT Ahmedabad.

This detailed analysis covers the issues involved in the appeal against the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for different Assessment Years, providing a comprehensive overview of the judgment's key points and legal arguments presented.