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2015 (4) TMI 787 - AT - Income TaxPenalty for unaccounted income - Income disclosed in the return of income ble Gujarat High Court decision of Kirit Dahyabhai Patel 2015 (1) TMI 201 - GUJARAT HIGH COURT it was held that considering the facts and circumstances of the case and also considering the decisions relied upon by learned senior advocate for the appellant we are of the considered opinion that the view taken by the Tribunal is erroneous. The CIT(A) rightly held that it is not relevant whether any return of income was filed by the assessee prior to the date of search and whether any income was undisclosed in that return of income. In view of specific provision of Section 153A of the I.T. Act the return of income filed in response to notice under Section 153(a) of the I.T. Act is to be considered as return filed under Section 139 of the Act as the Assessing Officer has made assessment on the said return and therefore the return is to be considered for the purpose of penalty under Section 271(1) (c ) of the I.T. Act and the penalty is to be levied on the income assessed over and above the income returned under Section 153A if any. Following the this decision we set aside the order of the CIT(A) and delete the penalty. - Decided in favour of assessee.
Issues Involved:
1. Deletion of penalty related to unaccounted income disclosed under section 153A. 2. Penalty on unaccounted investment in land. 3. Penalty on unaccounted income found during the search. Issue-wise Detailed Analysis: 1. Deletion of Penalty Related to Unaccounted Income Disclosed Under Section 153A: The Revenue appealed against the deletion of a penalty of Rs. 8,29,400/- related to unaccounted income of Rs. 26,00,000/- disclosed by the assessee in the return filed under section 153A. The assessee had declared a total income of Rs. 29,25,680/- which included the undisclosed income of Rs. 26 lakhs. The Assessing Officer (AO) levied the penalty under section 271(1)(c) for concealment of income. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the penalty, referencing decisions from the Rajasthan High Court and Madras High Court, which held that immunity from penalty under Explanation-5 of section 271(1)(c) cannot be denied if the income disclosed during the search is included in the return and tax is paid. The Tribunal upheld this view, noting that the return filed in response to notice under section 153A should be treated as a return under section 139, and no penalty is leviable if the disclosed income is accepted by the AO without any additions. Thus, the appeal by the Revenue was dismissed. 2. Penalty on Unaccounted Investment in Land: The assessee appealed against the upholding of a penalty of Rs. 8,67,700/- under section 271(1)(c) related to an unaccounted investment in land amounting to Rs. 25,36,720/-. The AO had made this addition during the assessment and subsequently levied the penalty. The CIT(A) confirmed the penalty. However, the Tribunal noted that the addition on which the penalty was based had been remanded back to the AO for fresh adjudication in a separate quantum appeal. Therefore, the Tribunal set aside the penalty order and remanded the matter back to the AO for fresh adjudication in light of the decision in the quantum proceedings. This appeal was allowed for statistical purposes. 3. Penalty on Unaccounted Income Found During the Search: The assessee appealed against the confirmation of a penalty of Rs. 13,67,813/- under section 271(1)(c) for unaccounted income of Rs. 40.02 lakhs found during a search. The AO levied the penalty based on incriminating documents found during the search, which showed unaccounted income. The CIT(A) confirmed the penalty, relying on a Third Member decision of the ITAT, Ahmedabad, which held that the benefit of Explanation-5(2) to section 271(1)(c) is not available for years where the due date for filing the return under section 139(1) had expired. However, the Tribunal, referencing a Gujarat High Court decision, held that the return filed in response to a notice under section 153A should be treated as a return under section 139, and the penalty is to be levied only on the income assessed over and above the income returned under section 153A. The Tribunal noted that the assessee had satisfied all conditions for immunity from penalty under section 271(1)(c). Thus, the Tribunal set aside the CIT(A)'s order and deleted the penalty, allowing the appeal. Conclusion: The Tribunal dismissed the Revenue's appeal, allowed the assessee's appeal for statistical purposes, and deleted the penalty for the subsequent year. The decisions were pronounced on 20th February 2015 at Ahmedabad.
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