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TMI Blog2011 (7) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(c) of the Act for the A.Ys. 2002-03, 2003-04, 2004-05 and 2005-06. As the facts as well as the issue are common in all these appeals hence they are disposed off by this common order. The solitary issue for our consideration in all these appeals is whether the Ld. CIT (A) is justified in confirming the penalty levied by the A.O. u/s.271(1)(c) of the Act. 2. Briefly stated the facts which revealed from the records are as under. There was a search and seizure operation against the assessee u/s. 132 of the Act on 12.9.2006. During the course of search, the assessee offered the undisclosed income on account of sale of scrap in the statement recorded u/s. 132(4) of the I.T. Act. The A.O. issued the notices to the assessee u/s.153A and in response to the notices u/s.153A, the assessee furnished the return of income declaring the loss as under:- Amt. in rupees Sr. No. A.Ys. Dt. Of return u/s.153A Loss declared in the returns filed to Notices u/s.153A Loss determined by A.O. in assessment orders 1. 2002-03 14.09.2007 Rs. (-)7,79,84,630 Rs. (-)7,79,84,630 2. 2003-04 14.09.2007 Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the assessment years 2003-04, 2004-05 and 2005-06, no regular returns were filed by the assessee under sec. 139 nor notices were issued by the A.O. under sec. 142(1) and for the first time, the returns were filed for above 3 years in response to notice u/s.153A declaring only loss. So far as A.Y. 2002-03 is concerned, the assessee had filed the return of income on 22.12.2004, which was beyond the time limit prescribed u/s. 139(4) of the Act and hence, the return filed for the A.Y. 2002-03 was non est return. 5.1 The Ld. Counsel took us through Explanation-3 to sec. 271(1)(c) land submits that as the assessee filed the returns of income for all these four years for the first time, no penalty can be levied by invoking Explanation 3 to section 271(1)(c) of the Act. He further argues that the loss declared by the assessee in the returns filed in response to notices u/s. 153A have been accepted by the A.O. without a single rupee reduction in all the years. He submits that as there was no addition or reduction in the loss declared by the assessee, no penalty can be levied. He further submits that as undisclosed income declared by the assessee is based on some documents/papers f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer or the Commissioner (Appeals) is satisfied that in respect of such assessment year such person has taxable income, then, such person shall, for the purposes of clause (c) of this sub-section, be deemed to have concealed the particulars of his income in respect of such assessment year, notwithstanding that such person furnishes a return of his income at any time after the expiry of the period aforesaid in pursuance of a notice under section 148." 8. Admittedly, in the present case, in all the assessment years the A.O. has finally determined the loss as declared by the assessee and the returns were filed for the first time. Even if the assessee had filed the return of income for A.Y. 2002-03 that was beyond the time limit permissible u/s. 139(4) which is in the normal parlance called "belated return". As the said return was not filed within the permissible limit prescribed under sec. 139(4), it is as good as non-filing of the return and same is non est as rightly argued by the Ld. Counsel. The assessment framed by the A.O. proved that the assessee has no taxable income and hence, there was no statutory duty to file the returns of income u/s. 139 for relevant years. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of South Indian Finance (supra) and identical view has been taken by the ITAT Chennai Bench in the case of T. Kodeeswaran L/H of Late A. Thangam (supra):- "20. In the present case, the main item of addition of Rs. 15,15,284, representing income from Arrack shops, was worked out by the A.O on the basis of pure estimation. The income from other business activities was also estimated in a similar manner. 20.1 One can see from a plain reading of Expln. 5 that it is applicable to a situation where, in the course of a search under s. 132 of the Act, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing and the assessee claims that such assets had been acquired by him by utilising, wholly or in part, his income for any previous year which had already ended before the date of the search or which is to end on or after the date of the search. 20.2 Manifestly, the aforesaid additions, to which the provisions of Expln. 5 have been applied by the CIT (A), do not represent money, bullion, jewellery or other valuable article or thing, of which the assessee was found to be the owner, in the course of search. Therefore, in our considered op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee by taking the contention that the assessee declared the additional income u/s.131(4) in the case of the search and also paid the taxes and interest there on and offered the said income for taxation in the returns in response to notices u/s.153A and since, the returns had been accepted by the A.O. in the assessments made u/s.153A, the assessee was entitled for the immunity in view of the Explanation 5(2) to section 271(1)(c) of the Act. Even in reference made to the Third Member, the issue of the applicability of Explanation-5 when any money, bullion, jewellery or other valuable article or thing are not found whether in such situation could Expl.-5 be applied was not the issue. In our humble understanding, the decision in the case of Kirit Dayabhai Patel (supra) is on the interpretation of clause-(2) to Explanation 5 of sec. 271(1)(c) of the Act and hence, the reliance placed by the Ld. CIT (A) is misplaced. 11. One of the important mandates of sec. 271(1)(c) is that in consequence of 'concealing' particulars of income or 'furnishing' inaccurate particulars of income, 'tax' must be sought to be evaded. A 'tax' liability is there if assessment result in to positive income. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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