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TMI Blog2008 (4) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against the assessee. In the present case, there is no finding that any such tangible assets/documents are found in the search. There is also no satisfaction of the AO of the person who has been subjected to search that such tangible assets or documents belong to the assessee. In our considered view, the provisions relating to the satisfaction of the AO for initiating assessment proceedings after search are pari materia with s. 158BD. So far as conditions required to be satisfied before invoking s. 153C are concerned, they are the same which are required to be satisfied for initiating block assessment proceedings against other person as per s. 158BD. The recording of satisfaction of the AO of the person searched for coming to a belief that tangible assets/documents found in the search of the person against whom search warrant was issued is necessary for giving jurisdiction to the AO of such other person to whom such tangible assets/documents are required to be handed over. Since in the present case, neither there was any seizure of any tangible assets/documents which could belong to the assessee nor there is any satisfaction of the AO of Shri Paramjeet Singh, husband ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO on the basis of an apparently invalid assessment order and by invoking the provisions of Expln. 5 which, on the face of it, are not applicable, as no tangible asset belonging to assessee has been seized. As a result the appeals filed by the Revenue are dismissed. - Member(s) : D. C. AGRAWAL., DR. O. P. SHUKLA. ORDER-D.C. AGRAWAL, A.M.: These are two appeals filed by the Revenue against the orders of learned CIT(A) cancelling the penalty of Rs. 25,000 and Rs. 1,10,000 for asst. yrs. 2000-01 and 2004-05 respectively, levied by the AO under s. 27l(1)(c) of the Act. 2. The Revenue has raised following grounds in asst. yr. 2000-01: "1. That the learned CIT(A)-I, Kanpur has erred in law and on facts in deleting the penalty of Rs. 25,000, without appreciating the facts of the case. 2. That in doing so, the learned CIT(A)-I, Kanpur has erred in law and on facts in holding that, there was no mens rea in this case, without appreciating the fact that the mens rea is proved by the fact that the advance tax, on the income of Rs. 60,000 offered as cash found short in the return filed under s. 153A, had not been paid and the additional income was offered without any ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of concealment of income does not arise. Keeping the above facts in view the penalty proceedings initiated may kindly be dropped." 7. The AO did not consider the reply as acceptable. He noted that no surrender was made during the course of search under s. 132. The AO considered this case to be covered by Expln. 5 to s. 271(1)(c) of the Act and levied penalty of Rs. 25,000 for asst. yr. 2000-01. 8. For asst. yr. 2004-05, the assessee filed return on an income of Rs. 4,10,465 on 31st March, 2006 in response to notice under s. 153A. The AO made an addition of Rs. 14,860 on ad hoc basis in the declared trading results and assessed the income at Rs. 4,25,324 vide his order dt. 29th Dec., 2006. He also initiated penalty proceedings under s. 271(1)(c) of the Act. In response to penalty notice, the assessee furnished following reply: "...... That the return was filed on 31st March, 2006 showing the total income of Rs. 4,10,465 and the assessment was completed by adding Rs. 14,860 on ad hoc basis in the declared trading income. Though few entries were written in pencil but trading results had been worked out. The learned AO did not point out any particular entry which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less and until there is some evidence to show or some circumstances are found from which it can be gathered amount was attributable to an intention or desire on the part of the appellant to or conceal the income so as to avoid the imposition of tax thereon. 6. In the light of above, the facts of the present case are required to be examined. It is observed that no search warrant was issued in the name of appellant and no statement of the appellant was ever recorded at the time of search action or thereafter. In spite of it, notice under s. 153A of IT Act has been issued to the appellant. In turn, the appellant has complied with the notice and filed return of income in response to notice under s. 153A of IT Act, declaring therein total income of Rs. 2,05,950. In the assessment framed thereafter, no further additions have been made. Courts have consistently held that mens rea is an essential ingredient for the purpose of levy of concealment penalty under s. 271(1)(c) of IT Act. Since no statement of the appellant was ever recorded, there was no occasion for the appellant to make any surrender of income. The appellant has surrendered the amount of Rs. 60,000 in the return filed respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch warrant is admittedly issued against the assessee. It was issued only against husband of the assessee and other family members. In any case, the learned Departmental Representative could not bring on record any search warrant issued against the assessee in spite of learned CIT(A)'s giving a clear finding to this effect. Once there is no search warrant in the case of the assessee then provisions of s. 153A could not be invoked against the assessee. In this regard, we refer to s. 153A as under: "153A. Assessment in case of search or requisition.-Notwithstanding anything contained in s. 139, s. 147, s. 148, s. 149, s. 151 and s. 153, in the case of a person where a search is initiated under s. 132 or books of account, other documents or any assets are requisitioned under s. 132A after the 31st day of May, 2003, the AO shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in cl. (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r tangible items must be found in the search in the form of money, bullion, jewellery or other valuable article or thing or books of account or documents (i.e. tangible assets/documents) and they should not belong to a person searched. Second requirement is that the AO should be satisfied that such tangible assets/documents belong to a person other than the person searched. 18. In the present case, there is no finding that any such tangible assets/documents are found in the search. There is also no satisfaction of the AO of the person who has been subjected to search that such tangible assets or documents belong to the assessee. In our considered view, the provisions relating to the satisfaction of the AO for initiating assessment proceedings after search are pari materia with s. 158BD. So far as conditions required to be satisfied before invoking s. 153C are concerned, they are the same which are required to be satisfied for initiating block assessment proceedings against "other person" as per s. 158BD. The recording of satisfaction of the AO of the person searched for coming to a belief that tangible assets/documents found in the search of the person against whom search warrant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng (wholly or in part) his income,- (a) for any previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date or, where such return has been furnished before the said date, such income has not been declared therein; or (b) for any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under cl. (c) of sub-s. (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, unless,- (1) such income is. or the transactions resulting in such income are recorded,- (i) in a case falling under cl. (a), before the date of the search; and (ii) in a case falling under cl. (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Chief CIT or CIT before the said date; or (2) he, in the course of the search, makes a statement under sub-s. (4) of s. 132 that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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