2012 (7) TMI 449 - AT - Income Tax

Penalty under section 271(1)(c) of the Income-tax Act - in the course of the search and seizure action, assessee admitted certain additional income in the course of statement recorded under section 132(4) of the Act - appellant has stated that since he has made the declaration u/s 132(4), and paid taxes on it, he is entitled to benefit of immunity under clause (2) of Explanation 5 to sec. 271(1)(c) Held that - Income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in s. 139(1) in clause 2 of explanation are intended to cover only such situations where the time-limit specified in s. 139(1) did not expire as on the date of the search - declaration of income was made for the earlier years for which due date for filing the return of income has already expired prior to the date of search - appellant is not entitled to benefit of immunity prided under clause 2 of Explanation 5 for the declaration made for the year under appeal - appeals are dismissed

Summary

Issues:
- Penalty under section 271(1)(c) of the Income-tax Act, 1961 for non-disclosure of additional income found during a search and seizure operation.
- Interpretation of Explanation 5 to section 271(1)(c) regarding immunity from penalty.

Analysis:
1. The judgment pertains to 7 appeals involving two assessees from the same group with a common issue. The appeals concern penalties imposed under section 271(1)(c) of the Income-tax Act, 1961, sustained by the Commissioner of Income-tax (Appeals). The appeals were heard together and disposed of in a consolidated order for convenience.

2. The appeals relate to two assessees, an individual, and a Hindu Undivided Family (HUF), for different assessment years. The penalty was imposed by the Assessing Officer for non-disclosure of additional income found during a search and seizure operation, which was subsequently declared under section 153A of the Act.

3. The main contention before the tribunal was the eligibility for immunity from penalty as per Explanation 5 to section 271(1)(c) of the Act. The assessees argued that the additional income was declared during the search and was included in the return filed under section 153A. However, the Commissioner of Income-tax (Appeals) held that the assessees did not fulfill the conditions of the Explanation 5 and were not entitled to immunity from penalty.

4. The legal position was discussed citing precedents, including decisions of other tribunals and the conditions specified under Explanation 5 to section 271(1)(c) were analyzed. The exceptions provided under the Explanation were examined, and it was concluded that the assessees did not meet the criteria for immunity from penalty.

5. The tribunal affirmed the order of the Commissioner of Income-tax (Appeals) based on the legal precedents and the interpretation of the provisions of the Act. The appeals were dismissed, maintaining consistency with previous decisions and the legal position established by the tribunal.

6. The judgment highlights the importance of complying with the provisions of the Income-tax Act, particularly regarding the disclosure of income found during search and seizure operations. The decision emphasizes the significance of meeting the conditions specified under the law to claim immunity from penalties under section 271(1)(c) and the relevance of legal precedents in determining such matters.