2016 (5) TMI 1526 - AT - Income Tax

Penalty proceedings u/s 271(1)(c) - assessment order u/s 153A - additional income disclosed in the return filed in response to the notice u/s 153A was a voluntary disclosure of income with a view to buy peace and therefore the alleged voluntary disclosure of income does not form within the mischief of deemed - HELD THAT - As far as the first fold of stand point is concerned deemed concealment of income ought to be supported by availability of money bullion jewellery not by an inference of existence of money bullion jewellery or valuable articles or entry. As far as second fold of submission raised by the ld.CIT(DR) in the written submissions is concerned we find that the case of the assessee does not fall under the main provision. There is no addition to the income of the assessee. Returned income has been accepted as it is. Only by virtue of Explanation-5 this additional income declared by the assessee can be categorized under the deemed concealment. In the main provision the case of the assessee cannot be brought. The assessee has placed on record copy of the statement recorded under section 132(4) of the Income Tax Act. We have perused the assessment order. AO has nowhere made a mention of any seized material. Thus on facts there is no disparity. Therefore all the appeals of the assessee are allowed and delete the impugned penalty for the respective assessment years.

Summary

Issues Involved:
1. Imposition of penalties under Section 271(1)(c) of the Income Tax Act for the assessment years 2004-05 to 2008-09.
2. Validity of the additional income disclosed in returns filed in response to notice under Section 153A.
3. Applicability of Explanation 5A to Section 271(1)(c) and its implications.
4. Comparison with similar cases and judicial precedents.

Detailed Analysis:

1. Imposition of Penalties under Section 271(1)(c):
The primary issue is whether the additional income disclosed by the assessee in response to the notice under Section 153A should attract penalties under Section 271(1)(c) for concealment of income. The penalties for the respective assessment years were confirmed by the CIT(A), leading to the appeals.

2. Validity of Additional Income Disclosed:
A search and seizure operation under Section 132 was conducted at the assessee's premises on 18.3.2010. Following this, a notice under Section 153A was issued, and the assessee filed returns declaring additional income for the assessment years 2004-05 to 2008-09. The Assessing Officer (AO) accepted the returned income without making any additions but initiated penalty proceedings under Section 271(1)(c).

3. Applicability of Explanation 5A to Section 271(1)(c):
The Tribunal examined whether the additional income disclosed in the returns filed in response to the notice under Section 153A was a voluntary disclosure to buy peace and whether it fell within the mischief of deemed concealment as per Explanation 5A of Section 271(1)(c). Explanation 5A deems concealment if, during a search, certain assets or income entries are found, and the income is declared post-search. The Tribunal referred to the case of Mansukhbhai R. Sorathia, where it was held that the deemed concealment should be supported by physical evidence of money, bullion, or assets found during the search.

4. Comparison with Similar Cases and Judicial Precedents:
The Tribunal considered the decision in Mansukhbhai R. Sorathia, where penalties were deleted as the Revenue authorities did not refer to any documentary evidence demonstrating that the voluntary income offered was unearthed during the search. The Tribunal also noted the Revenue's reliance on the Calcutta High Court's decision in CIT v. Prasanna Dugar and other cases, which upheld penalties under similar circumstances. However, the Tribunal found the facts of the present case aligned with Mansukhbhai R. Sorathia, where no specific seized material was mentioned in the assessment order to support the penalty.

Conclusion:
The Tribunal concluded that the additional income disclosed by the assessee in response to the notice under Section 153A was not supported by any seized material or documentary evidence found during the search. Therefore, the deemed concealment provision under Explanation 5A could not be applied. The Tribunal allowed the appeals of the assessee and deleted the penalties for the respective assessment years.

Order:
All appeals of the assessee were allowed, and the penalties imposed for the assessment years 2004-05 to 2008-09 were deleted. The order was pronounced on 6th May 2016 at Ahmedabad.