Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (9) TMI AT This

  • Login
  • Cases Cited
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2012 (9) TMI 325 - AT - Income Tax


Issues Involved:
1. Applicability of Explanation 5 to Section 271(1)(c) for searches conducted between 01.06.2003 to 31.05.2007.
2. Imposition of penalty under Section 271(1)(c) based on undisclosed income declared in returns filed under Section 153A.
3. Relevance of precedents and judicial interpretations in similar cases.

Issue-wise Detailed Analysis:

1. Applicability of Explanation 5 to Section 271(1)(c) for searches conducted between 01.06.2003 to 31.05.2007:
The core contention of the appellant was that Explanation 5 to Section 271(1)(c) does not apply to searches conducted between 01.06.2003 and 31.05.2007. The CIT (A) rejected this contention, stating that the appellant's case falls within the general provisions of Section 271(1)(c) as well as Explanation 5. It was emphasized that the appellant failed to establish that their case does not fall within the general provisions of Section 271(1)(c). The CIT (A) cited various judgments to support this view, including Pradip Chandulal Patel v. P.G.Karode, where it was held that penalty was imposable independently of Explanation 5.

2. Imposition of penalty under Section 271(1)(c) based on undisclosed income declared in returns filed under Section 153A:
The assessee argued that the additional income declared in returns filed under Section 153A, based on documents found during the search, should not attract penalties under Section 271(1)(c). The CIT (A) upheld the penalties, stating that the income declared was not voluntary but a result of the search, and thus, the appellant was deemed to have concealed particulars of income or furnished inaccurate particulars. The CIT (A) referenced several judgments, including Sangam Enterprises v. Commissioner of Income-tax and M.Shahul Mameed Batcha v. Income-tax Officer, which supported the imposition of penalties when concealment is discovered during a search.

3. Relevance of precedents and judicial interpretations in similar cases:
The appellant's representative cited the ITAT decision in the case of Prem Arora, where penalties under Section 271(1)(c) were deleted for additional income declared in returns filed under Section 153A following a search on 22.11.2006. The ITAT in the present case found the facts similar to Prem Arora's case and noted that the Finance Act, 2007, which inserted Explanation 5A, applies only to searches initiated on or after 01.06.2007. The ITAT concluded that Explanation 5 did not apply to entries recorded in seized material for searches conducted before 01.06.2007. Consequently, the ITAT directed the deletion of penalties, aligning with the precedent set in Prem Arora's case.

Conclusion:
The ITAT allowed the appeals, setting aside the orders of the authorities below for levying penalties under Section 271(1)(c) for all the assessment years in question. The decision was based on the interpretation that Explanation 5 does not apply to searches conducted before 01.06.2007 concerning entries recorded in seized material. The ITAT's judgment emphasized the importance of judicial consistency and the applicability of legal provisions as amended by the Finance Act, 2007.

 

 

 

 

Quick Updates:Latest Updates