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2015 (4) TMI 664 - AT - Income TaxPenalty for income admitted during search - Income was disclosed in return and tax paid with interest - Held that - It is an undisputed fact that during the course of search and seizure action a disclosure of ₹ 5,01000/- was made by the Assessee and the same was also included by the assessee in the return of income filed in response to notice under section 153A of the Act. The return filed by the assessee has also been accepted by the AO and no addition has been made by AO. The AO in the present case had levied penalty on the amount surrendered by the assessee during the course of search and seizure operation and the aforesaid penalty was confirmed by Ld. CIT(A) by following the decision in the case of Kirit Dayabhai Patel. We find that the decision in the case of Kirit Dayabhai Patel was challenged by the assessee and the Hon ble Gujarat High Court vide order dated 03-12-2014 2015 (1) TMI 201 - GUJARAT HIGH COURT has reversed the order of Hon ble Tribunal. Revenue has not brought any binding contrary decision in its support. We therefore respectfully following the decision of Hon ble Gujarat High Court in the case of Kirit Dayabhai Patel 2015 (1) TMI 201 - GUJARAT HIGH COURT , hold that no penalty is leviable in the present case and thus direct its deletion. - Decided in favour of assessee.
Issues involved:
1. Penalty under section 271(1)(c) of the Income Tax Act - Whether penalty levied on the assessee is justified based on the disclosure of additional income made during search and seizure action. Detailed Analysis: The appeal was filed by the assessee against the order of CIT(A)-II, Ahmedabad for the assessment year 2006-07. The assessee, an individual engaged in the development and sale of flats of land, had disclosed additional income of Rs. 5,01,000 during a search and seizure action. The Assessing Officer (AO) accepted this disclosure, and no addition was made to the returned income. However, a penalty of Rs. 1,64,710 under section 271(1)(c) of the Act was levied by the AO, which was upheld by the CIT(A) based on the decision of a Special Bench of the Ahmedabad Tribunal in a similar case. The main contention raised by the assessee was that they were entitled to immunity under Explanation 5 to Section 271(1)(c) as they had paid tax along with interest on the undisclosed income. The assessee argued that the CIT(A) had relied on a decision that had been overruled by the Hon'ble Gujarat High Court in a different case. The High Court held that the return filed in response to notice under Section 153A of the Act should be considered as the return filed under Section 139 for the purpose of penalty under Section 271(1)(c). The High Court further stated that the penalty cannot be levied on the income shown in the return filed under Section 153 of the Act, provided all conditions for claiming immunity were satisfied. The Tribunal, following the decision of the Hon'ble Gujarat High Court, held that no penalty was leviable in the present case and directed its deletion. The Revenue failed to provide any contrary binding decision to support its stance. Consequently, the appeal of the assessee was allowed, and the penalty was set aside. In conclusion, the judgment revolved around the issue of penalty under section 271(1)(c) of the Income Tax Act concerning the disclosure of additional income during a search and seizure action. The decision highlighted the importance of following relevant legal provisions and precedents set by higher courts in determining the applicability of penalties in such cases.
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