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2020 (5) TMI 479 - AT - Income TaxCondonation of delay - delay of 583 days - Tribunal admission of appeal filed beyond the period of limitation where it is satisfied that there was sufficient cause for not presenting the appeal within the prescribed time - Department has decided to launch the prosecution proceedings u/s 276C(1) r/w section 277 before the Economic Offences Court, Jaipur - HELD THAT - Assessee in his averments has made out a clear case that there was sufficient cause which being beyond the control of the assessee, prevented him from filing the appeals in time before the Tribunal. The assessee was diligent and has sought advice from his counsel from time to time and was not guilty of negligence on his part and it cannot be said that the delay was due to the negligence and inaction on the part of the assessee, which could have been avoided by the assessee if he had exercised due care and attention. Due to subsequent developments wherein the assessee runs a serious risk of prosecution where the penalty is confirmed, he was advised to file the present appeals, we find that there is no culpable negligence or malafide on the part of the assessee in delayed filing of the present appeals and he does not stand to benefit by resorting to such delay - there exists sufficient and reasonable cause for condoning the delay of 583 days in filing the present appeals where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred. In exercise of powers under section 253(5) of the Act, we hereby condone the delay of 583 days in filing the present appeals as we are satisfied that there was sufficient cause for not presenting the appeals within the prescribed time. Penalty proceedings u/s 271(1)(c) - additional income admitted during the course of search - HELD THAT - The fact that the AO while passing the assessment order has taken note of said disclosure of the additional income by the assessee in his statement recorded u/s 132(4) during the course of search which has been subsequently been reported to tax in the return filed u/s 153A is therefore clear enough reflection of the mind of the AO and which clearly demonstrates that the Assessing Officer at the time of passing the assessment order was satisfied that the assessee is liable for penalty u/s 271(1)(c) of the Act qua the additional income. As far as recording of satisfaction at the time of passing of the assessment order is concerned, we find that the same is clearly discernable from the reading of the assessment order and there is a direction to this effect by the Assessing officer. Whether specific limb/charge for levy of penalty not discernible from the show-cause notice issued u/s 271 r/w 275 ? - In the instant case, we find that uncertain charge at the time of initiation of penalty proceedings is followed by uncertain charge even at the time of passing the penalty proceedings as the Assessing officer has not specified as to how the assessee is found guilty of both concealment of income as well as furnishing inaccurate particulars of income. Further, the decision of Sheveta Construction 2016 (12) TMI 1603 - RAJASTHAN HIGH COURT wherein held that the AO, has to give a notice as to whether he proposes to levy penalty for concealment of income or furnishing inaccurate particulars. He cannot have both the conditions and if it is so he has to say so in the notice and record a finding in the penalty order also supports the case of the assessee. Therefore, the penalty order so passed by the Assessing officer cannot be sustained and deserved to be set-aside on this ground itself. There is no finding recorded by the Assessing officer that the assessee is found to be the owner of income based on any entry in books of accounts or other documents or transactions found during the course of search. Therefore, in absence of any finding in the penalty order to the effect that the assessee is found to be the owner of income based on any entry in books of accounts or other documents or transactions found during the course of search and also the fact that the assessee has no where claimed that such narration on a piece of paper represent his income wholly or in part for any previous year which has ended before the date of search, the second condition is not satisfied in the instant case and consequentially, all the three conditions specified explanation 5A to section 271(1)(c) cannot be said to be satisfied individually as well as cumulatively and the impugned penalty proceedings deserve to be set-aside. Penalty u/s 271AAB - undisclosed income for the specified previous year found during the course of search in the case of assessee - HELD THAT - In the instant case, the notice initiating the penalty proceedings talks about initiation of penalty proceedings u/s 271AAB of the Act in respect of undisclosed income of the specified previous year. While passing the penalty order, the Assessing officer has given a clear finding as reflected in para 7 to 9 of the penalty order that the assessee is liable for penalty U/s 271AAB(1)(a) which provides for levy of penalty @ 10% of the undisclosed income. As held by the Coordinate Bench HPCL MITTAL ENERGY LTD. 2018 (8) TMI 507 - ITAT AMRITSAR an uncertain charge at the time of initiation of penalty has been made good and substituted with a conclusive default at the time of passing the penalty order and that in such a case, no fault can be found in the penalty order. In such a case, we donot see any legal infirmity in the initiation of penalty proceedings and consequent penalty order so passed by the Assessing officer and the contentions so raised by the ld AR in this regard cannot be accepted. As per sub-section (3) of Section 271AAB, the provisions of section 274 and section 275 as far as may be applied in relation to penalty under this section which means that before levying the penalty, the Assessing officer has to issue a show-cause granting an opportunity to the assessee. Thus, we find that the levy of penalty is not automatic but the Assessing officer has to decide based on facts and circumstances of the each case. It is a consistent view which has been taken by the various Co-ordinate Benches of the Tribunal and a useful reference can be drawn to the decision of the Co-ordinate Bench in case of ACIT vs Marvel Associates 2018 (3) TMI 946 - ITAT VISAKHAPATNAM - Levy of penalty under section 271AAB is not mandatory and it depends upon specific facts and circumstances of each case as to whether the same warrant the levy of penalty. In the instant case, it therefore needs to be examined the basis and findings of the Assessing officer for levy of penalty. For the purposes of levy of penalty u/s 271AAB, what has to be examined is whether the charge of undisclosed income for the specified previous year found during the course of search in the case of the assessee is satisfied or not. On perusal of the penalty order, we however find that the only finding which has been recorded by the Assessing officer is that the assessee has made a surrender of undisclosed income of ₹ 2,15,40,344 under various heads and all essential requirements/conditions prescribed under section 271AAB are satisfied and it is a fit case for levy of penalty and the AO accordingly levied penalty @ 10% of income so surrendered during the course of search. The question is whether the penalty is to be levied solely basis the surrender during the course of search, what was the necessity of bringing a specific definition of undisclosed income by the legislature while enacting the provisions of section 271AAB of the Act. In our view, once a specific definition of undisclosed income has been provided in section 271AAB, being a penal provision, the same must be strictly construed and the Assessing officer has to record a clear and specific finding to this effect and cannot be solely guided by the surrender made by the assessee during the course of search. Admittedly and undisputedly, in the instant case, there is no finding in the penalty order to this effect that undisclosed income so found and surrendered during the course of search falls under the definition of undisclosed income as so defined in section 271AAB and in absence thereof, on this ground itself, the impugned penalty proceedings deserve to be set-aside. When it comes to penalty proceedings, it is a settled legal proposition that the quantum and penalty proceedings are independent proceedings and while levying penalty, the provisions have to be read strictly and only where the charge against the assessee is clearly established and the conditions specified therein are satisfied, the penalty can be levied. In the instant case, we therefore find that the charge that the assessee is found to be owner of income based on entries in certain loose papers not disclosed before the date of search not been satisfied, the levy of penalty cannot be held justified and deserve to be set-aside. Regarding levy of penalty on remaining surrendered during the course of search, the said surrender may be the basis for assessment but can t form the basis for levy of penalty which are separate and distinct proceedings in absence of a specific finding as to how the same qualify as an undisclosed income as so defined u/s 271AAB of the Act. Hence, penalty levied thereon is also liable to be set-aside. - Assessee appeal allowed.
Issues Involved:
1. Condonation of delay in filing appeals. 2. Levy of penalty under Section 271(1)(c) for Assessment Years 2008-09 to 2012-13. 3. Levy of penalty under Section 271AAB for Assessment Year 2013-14. Detailed Analysis: 1. Condonation of Delay in Filing Appeals: The assessee filed appeals with a delay of 583 days. The delay was attributed to the advice of the local counsel, who believed no further appeal was necessary. The assessee, a layman, relied on this advice, and no appeal was filed initially. When prosecution proceedings were initiated under Section 276C(1), the assessee consulted another counsel and filed the appeals. The Tribunal found the assessee diligent and acting on legal advice, thus condoning the delay, emphasizing that substantial justice should prevail over technicalities. 2. Levy of Penalty under Section 271(1)(c) for Assessment Years 2008-09 to 2012-13: - Assessment Year 2008-09: The assessee declared additional income of ?20,000 in response to a search. The Tribunal noted the penalty proceedings initiated for concealment or furnishing inaccurate particulars were not clear. The penalty order did not specify the exact charge, violating the requirement for clear findings. Additionally, the Tribunal found no evidence that the additional income represented undisclosed income as defined under Explanation 5A to Section 271(1)(c). The penalty was thus deleted. - Assessment Years 2009-10 to 2012-13: Similar facts were noted for these years, with additional incomes declared in response to search proceedings. The Tribunal reiterated the need for clear charges in penalty notices and orders. It found no evidence supporting the claim that these amounts represented undisclosed income. The penalties for these years were also deleted. 3. Levy of Penalty under Section 271AAB for Assessment Year 2013-14: - The assessee declared additional income of ?2,15,40,344, including ?1,84,14,800 on account of flat bookings. The Tribunal examined the definition of "undisclosed income" under Section 271AAB and found no clear finding by the Assessing Officer that the income surrendered fell within this definition. The Tribunal noted contradictions in the assessee's statements and the lack of specific details in the seized documents. - The Tribunal emphasized that penalty under Section 271AAB is discretionary and not automatic. It found no basis for the penalty solely on the assessee's surrender during the search. The Tribunal also highlighted that the construction business was conducted by the company, not the assessee individually, and the entries in the seized documents related to the company's transactions. The penalty under Section 271AAB was thus set aside. Conclusion: The Tribunal condoned the delay in filing the appeals and deleted the penalties under Sections 271(1)(c) and 271AAB, emphasizing the need for clear charges and evidence of undisclosed income as per statutory definitions.
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