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2023 (4) TMI 268 - AT - Income TaxPenalty u/s 271(1)(c) - difference between the amounts available in the return filed originally, vis-a-vis return filed in response to notice under section 153A - case of the Revenue is that had the search not carried out, then the assessee would have not disclosed the income, which has been disclosed under section 153A - HELD THAT - We have noticed break-up of the amounts disclosed by the assessee in the return filed under section 139, vis-a-vis in re sponse to notice 153A. We have also taken note of the income disclosed under section 132(4) - Assessee has made disclosure under section 132(4) that does not mean some money, bullion, jewellery or valuable was found and seized. The extra income disclosed has not been demonstrated as representing that money, bullion or jewellery. The case of the assessee that Explanation 5A to section 271(1)(c) could only be invoked if during the course of search, any money bullion, jewellery or document, notings found during the course of search on the basis of which addition in the hands of the assessee are being made is correct. If an assessee enhanced his income voluntarily, then no penalty would be imposed upon the assessee. Assessee has relied upon the decision of Neeraj Jindal 2017 (2) TMI 1002 - DELHI HIGH COURT has also considered the scope of Explanation 5A and held that unless money, bullion, jewellery or asset found during the course of search representing the extra income disclosed by an assessee in response to section 153A, vis-a-vis the income filed under section 139(1), the assessee cannot be visited with penalty. We allow all these appeals of the assessee and delete the penalties.
Issues Involved:
1. Confirmation of penalty under section 271(1)(c) of the Income Tax Act for the assessment years 2008-2009 to 2012-2013, excluding 2011-2012. Issue-Wise Detailed Analysis: 1. Confirmation of Penalty Under Section 271(1)(c): The primary issue in these appeals is whether the penalty imposed under section 271(1)(c) of the Income Tax Act, amounting to Rs. 2,87,198/-, Rs. 1,62,495/-, Rs. 10,82,927/-, and Rs. 1,52,310/- for the assessment years 2008-09 to 2012-13 (excluding 2011-12), was justified. The penalty was imposed by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeals)-20, Kolkata. Facts of the Case: The assessee filed returns under section 139 of the Income Tax Act, which were later revised under section 153A following a search under section 132 at the premises of the Rashmi Group and its associates. The revised returns disclosed additional income, which led to the initiation of penalty proceedings under section 271(1)(c) for the additional income disclosed under section 132(4). Penalty Proceedings: The Assessing Officer initiated penalty proceedings and issued a notice under section 271(1)(c). The penalty was imposed based on the difference between the originally filed returns and the returns filed in response to the notice under section 153A, arguing that the additional income would not have been disclosed if not for the search. Assessee's Argument: The assessee contended that Explanation 5A to section 271(1)(c) applies only if money, bullion, jewellery, or documents found during the search led to the addition of income. The assessee argued that voluntary enhancement of income should not attract penalty. Tribunal's Consideration: The Tribunal referred to a similar case, Shri Mansukhbhai R. Sorathia, where it was held that penalty under section 271(1)(c) cannot be imposed solely based on voluntary disclosure of additional income in response to a notice under section 153A, unless it is demonstrated that the additional income represented money, bullion, or jewellery found during the search. Relevant Case Law: The Tribunal also considered the judgment of the Hon'ble Gujarat High Court in Kirit Dayabhai Patel Vs. ACIT, which emphasized that penalty under section 271(1)(c) can only be imposed if the conditions of Explanation 5A are met, including the discovery of unaccounted assets during the search. The Tribunal further referred to the Hon'ble Delhi High Court's decision in Principal Commissioner of Income Tax vs. Neeraj Jindal, reiterating that penalty cannot be imposed unless the additional income disclosed is linked to assets found during the search. Conclusion: The Tribunal concluded that the Revenue authorities failed to demonstrate that the additional income disclosed by the assessee was linked to any money, bullion, jewellery, or other valuable articles found during the search. Therefore, the penalty under section 271(1)(c) was not justified. Consequently, all appeals of the assessee were allowed, and the penalties were deleted. Delay in Filing Appeals: The Tribunal noted a delay of 95 days in filing the appeals, which was automatically condoned by the Hon'ble Supreme Court due to the COVID period. Hence, there was no delay in filing these appeals. Final Order: All the appeals of the assessee were allowed, and the penalties imposed under section 271(1)(c) were deleted. The order was pronounced in the open Court on 27th December, 2022.
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