2022 (7) TMI 1307 - HC - Income Tax

Penalty u/s 271(1) - whether defective notice issued? - Unaccounted cash receipts - assessment u/s 153A - as per Tribunal penalty order did not clearly advert to the ground on which the penalty was being levied, that is, for concealment of income or nondisclosure of material particulars in the original return - HELD THAT - First, the revised return filed pursuant to notice issued u/s 153A would not, by itself, lead to an inference that there has been concealment; the revenue would have to show that there was incriminating evidence available in that behalf before penalty could be imposed. Second, Section 153A of the Act is a complete code, the provisions of section 139 of the Act, which concerns original returns, would not be applicable. In other words, the so-called revised return filed, would be the original return. Third, if Explanation 5 to Section 271(1) of the Act were to be relied upon, the revenue would have to establish that the assets, such as money, bullion etc. were seized during the search conducted on the premises of the assessee and that the said assets related to the income of the assessee for the relevant assessment years. Explanation 5, as noted in the said judgement, was inserted in the statute by Taxation Laws (Amendment) Act, 1984, w.e.f. 01.10.1984. In our opinion, the conclusion reached by the Tribunal in the instant case that the notice for imposition of penalty under Section 271(1) (c) of the Act, did not specify which limb of the said provision the penalty was sought to be levied is covered by various decisions of HC. We are in agreement with the view taken in SSA s Emerald 2016 (8) TMI 1145 - SC ORDER and Manjunatha Cotton 2013 (7) TMI 620 - KARNATAKA HIGH COURT ) and, in any event, are bound by the view taken by the coordinate bench of this court in the Sahara India case. Insofar as the view taken in the Neeraj Jindal case 2017 (9) TMI 123 - SC ORDER is concerned, that does not arise from the order of the Tribunal in this case, although, there is much weight in the conclusions reached by a coordinate bench in the said case. Like in the Neeraj Jindal case, in this case as well, search was conducted against the Bakshi group which led to the issuance of notice under of the Act. Appeal dismissed.

Summary

Issues:
1. Appeal against Income Tax Appellate Tribunal order.
2. Disclosure of taxable income in return for Assessment Year 2007-2008.
3. Search conducted under Section 132 of the Income Tax Act, 1961.
4. Assessment by Assessing Officer under Section 143(3) of the Act.
5. Penalty proceedings under section 271(1)(c).
6. Tribunal ruling in favor of the respondent/assessee.
7. Interpretation of penalty provisions under Section 271(1)(c).
8. Application of Section 153A in revised returns.
9. Condonation of delay in filing the appeal.

Analysis:
1. The appeal was filed against the order of the Income Tax Appellate Tribunal concerning the assessment year 2007-2008. The respondent disclosed taxable income of Rs. 11,76,296 in the return. A search was conducted under Section 132 of the Income Tax Act in 2012, leading to scrutiny by the Assessing Officer and an assessment under Section 143(3) pegging taxable income at Rs. 9,61,76,296, including unaccounted cash receipts of Rs. 9,50,00,000. Subsequently, penalty proceedings under section 271(1)(c) were initiated, resulting in a revised penalty amount of Rs 2,13,18,000. The Tribunal ruled in favor of the respondent, citing ambiguity in the penalty order regarding the grounds for levying the penalty.

2. The judgment referred to the Neeraj Jindal case, where the issue of penalty under Section 271(1)(c) was discussed. The court emphasized that penalty under this provision is not mandatory and must fulfill specific conditions. The revised return filed under Section 153A was considered the original return, and the revenue had to provide incriminating evidence to justify a penalty for concealment of income. The court highlighted the strict construction required for penal provisions and the need to establish concealment of income.

3. The court further examined the application of Section 153A in post-search assessments, emphasizing that the revised return filed under this section replaces the original return for all other provisions of the Act. The judgment in the Neeraj Jindal case favored the assessee on grounds related to concealment, the completeness of Section 153A, and the requirements of Explanation 5 to Section 271(1). The court dismissed the appeal, citing precedents including decisions by a coordinate bench and the Karnataka High Court.

4. Additionally, an application seeking condonation of delay in filing the appeal was filed, involving a delay of 440 days. However, since the appeal was dismissed, the application was deemed infructuous, leading to its closure by the court.