2022 (4) TMI 1074 - AT - Income Tax

Penalty u/s 271(1)(c) - proof of contravention of provisions provided under explanation 5A to section 271(1)(c) - in response to the notice issued u/s 153A assessee also filed return of income under the provisions of section 139(4) - HELD THAT - There is no dispute to the fact that the penalty in the instant case was levied under explanation 5A to section 271(1)(c) of the Act which is applicable to the particular assessment years - it is applicable for the search conducted on or after 1st day of June 2007 with respect to the previous year which has ended before the date of search and the income found in the search was not disclosed in the return of income filed by the assessee or the due date for filing the return of income was expired but the assessee has not filed the return of income. Whether the case of the assessee falls under clause b as discussed above i.e. the time-limit for filing the return of income for the relevant previous year has expired and the assessee has not filed the return of income ? - The answer stands in negative. It is for the reason that the assessee admittedly has furnished the return of income within the due date as specified under the provisions of section 139 of the Act. In fact, there are different dates provided under section 139(1) of the Act for filing the returns of income. For example, there are different dates for filing the return of income under section 139(1) of the Act depending upon the status of the assessee, turnover of the assessee etc. Likewise, under the provisions of section 139(4) of the Act, there is extended time available for filing the return of income even the time specified under section 139(1) of the Act has expired. On reference to the provisions of explanation 5A to section 271(1)(c) of the Act as discussed above, it is imperative to note that the word due date has been mention and not the due date as specified under the provisions of section 139(1) of the Act. Thus to our understanding, even the assessee files the return of income during the extended time provided under section 139(4) of the Act, it shall be interpreted as if the return of income has been filed within the due date. Thus we hold that the assessee has not contravened any of the provisions provided under explanation 5A to section 271(1)(c) of the Act so as to attract the provisions of penalty on account of concealment of income. Accordingly we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed. Addition of cash and jewellery found during the search u/s 132 - HELD THAT - Additions made by the AO in the assessment framed under section 143(3) of the Act has already been offered to tax before the settlement commission as evident from the finding of the learned CIT-A as discussed above. At the time of hearing the learned DR has not controverted the finding given by the learned CIT-A. Accordingly, we hold that there cannot be any addition in the year under consideration for the amount of income as discussed above otherwise it would lead to the double addition which is unwanted under the provisions of law. Accordingly, we do not find any infirmity in the order of the learned CIT-A and therefore we decline to interfere in his order. Hence the ground of appeal of the Revenue is hereby dismissed.

Summary

Issues Involved:
1. Penalty under section 271(1)(c) of the Income Tax Act, 1961.
2. Addition of unaccounted cash and jewelry found during the search.

Issue 1: Penalty under section 271(1)(c) of the Income Tax Act, 1961

The solitary issue raised by the assessee is whether the learned CIT-A erred in confirming the penalty levied by the AO under section 271(1)(c) of the Act. The facts reveal that the assessee, an individual, was subject to a search under section 132, leading to the issuance of a notice under section 153A. The assessee filed returns under sections 153A and 139(4) on the same date, declaring the same income. The AO treated the return under section 139(4) as void and levied a penalty, asserting that the income was disclosed due to the search and subsequent notice, thus constituting concealment of income.

The assessee contended before the learned CIT-A that the return was filed within the permissible time under section 139(4), and the same income was declared in both returns, which was accepted in the assessment proceedings. The learned CIT-A, however, upheld the penalty, referencing explanation 5A to section 271(1)(c), which deems income declared post-search as concealed if no return was filed before the search.

Upon appeal, the Tribunal considered the provisions of explanation 5A to section 271(1)(c), noting that the term "due date" includes the extended date under section 139(4). Since the assessee filed the return within this extended period, it was deemed filed within the due date. The Tribunal referred to a similar case (ITO vs. Gope M. Rochlani), concluding that the penalty could not be sustained as the return was filed within the due date. Thus, the Tribunal directed the AO to delete the penalty, allowing the assessee's appeal.

Issue 2: Addition of unaccounted cash and jewelry found during the search

The interconnected issue raised by the Revenue concerns the deletion of additions made by the AO for unaccounted cash and jewelry found during the search. The AO had added ?1,82,69,800 and ?14,79,250 for unaccounted cash and jewelry, respectively.

The learned CIT-A deleted these additions, noting that the amounts were included in the additional income declared before the Settlement Commission, which granted capitalization of the unexplained cash and jewelry. The CIT-A emphasized that retaining these additions would result in double taxation, which is impermissible under the law.

The Revenue appealed, but the Tribunal upheld the CIT-A's decision. The Tribunal found no infirmity in the CIT-A's order, as the additions had already been taxed by the Settlement Commission, and retaining them would lead to double taxation. Therefore, the Tribunal dismissed the Revenue's appeal.

Conclusion:

In the combined results, the Tribunal allowed the appeal filed by the Assessee regarding the penalty under section 271(1)(c) and dismissed the appeal filed by the Revenue concerning the addition of unaccounted cash and jewelry. The order was pronounced in the Court on 20/04/2022 at Ahmedabad.