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TMI Blog2012 (6) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... of concealment was complete. Therefore, penalty on additional incomes declared in the returns is clearly leviable. Penalties levied by the Assessing Officer are confirmed. Revenue's appeals are allowed. Decided in favour of revenue. - IT APPEAL NOS. 281 TO 285 and 709 to 711 (MUM.) OF 2010 - - - Dated:- 13-1-2012 - T. R. Sood And Vijay Pal Rao, JJ. Dr. K. Shivram for the Appellant Sanjiv Dutt for the Respondent ORDER 1. These cross appeals are heard together and are being disposed of by this common order. 2. I.T.A. Nos. 281 to 285-M-10 [assessee's appeals] : In all these appeals common ground has been raised regarding confirmation of levy of penalty u/s. 271(1)(c). 3. Brief facts of the case are that a search was conducted in the business premises of the assessee wherein certain incriminating documents were found and seized. During the search some additional income was declared in various years u/s.132(4) and when notice u/s.153(A)(a) was issued returns were filed incorporating additional income declared during the search. During the course of search it was noticed that assessee was indulging in suppression of sales and material evidencing such suppr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 18 as given by you without any adjustment or correction in same. From which following facts can be verified. [Accounting Year Assessment Year Sales per day Peak Amount (Rs.) Date Annual Turnover (Rs.) 1999-2000 2000-2001 0 0 0 2000-2001 2001-2002 28,467 26-2-2001 175,545 2001-2002 2002-2003 94,902 25-9-04 722,774 2002-2003 2003-2004 52,616 3-7-2002 811,190 2003-2004 2004-2005 82,466 30-02-2004 1,570,341 2004-2005 2005-2006 128,061 18-01-06 2,948,564 2005-2006 2006-2007 167,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his litigation, we have make the above proposal and request again we do hereby submit that all investments in immovable property are duly recorded in books of accounts and not a single investment in immovable is out of books. So far as certain suppressed investment of movable property i.e., small cash in savings account or the payment to LIC, ppf shares are concerned, we have already disclose in while filing either the firm return of parties return. The AO after examining the above noticed that assessee's purchases are not authenticated and suppression of sales is already detected. Accordingly, he estimated the profit @ 10% in respect of the short fall and added a sum of ₹ 49,003/- as undisclosed income on this account in A.Y 2002-03. Similarly, a sum of ₹ 74,086/-, ₹ 1,11,849/-, ₹ 1,83,886/- and ₹ 4,33,355/- was added in A.Yrs. 2003-04 to 2006-07, respectively. Penalty proceedings in respect of the total undisclosed income u/s.271(1)(c) were initiated. In response to a notice it was mainly stated that certain incomes were already declared during the search and the returned income has been enhanced u/s.153A, therefore, penalty could not be lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmission dated 15/11/07, the appellant has agreed for an addition of ₹ 66,435/- on account of net peak amount arising out of unrecorded sales. In other words, the appellant has on his own admitted the element of concealment in this regard. It is, therefore, established that there is a clear case of concealment of particulars on part of the appellant leading to concealment of income, accordingly, I hold that the action of the AC in imposing penalty on the addition of ₹ 49,003/-made to the returned income u/s 153A is within law and the same is confirmed. In other years also, penalty on account of undisclosed income which was assessed as additional income has been confirmed on the above basis. 5. Before us, Ld. Counsel of the assessee submitted that similar search was conducted in another group concern known as Gopal Shyam Brothers wherein similar additional income was assessed and penalty which was levied was deleted by the Tribunal and in this regard he filed a full set of papers containing the assessment order, penalty order and the order of the Tribunal in I.T.A.Nos.707 708, 278 to 280/M/10. He also relied on the decision of the Hon'ble Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have furnished inaccurate particulars of his income. The meaning of the word particulars used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee the penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return, must not be accurate, not exact or correct, not according to truth or erroneous. Where there is no finding that any details supplied by the assessee in its return, found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of the claim, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of search proceedings the assessee had already declared additional income in the statement recorded u/s.132(4) and such income has been duly returned in the returns filed u/s.153A which have been accepted by the department and, therefore, AO was not justified in levying the penalty. It was further contended that in such situation immunity provided by clause (2) of Explanation 5 of sec.271(1)(c) would be applicable and penalty could not be levied and reliance was also placed on the decision of the Hon'ble Rajasthan High Court in the case of CIT v. Kanhaiyalal Sarupaia [2008] 299 ITR 19. The ld. CIT(A) after examining the submissions agreed with the contentions raised by the assessee and deleted the penalty on the additional income disclosed in the returns filed u/s.153A on the basis of the decision of the Hon'ble Rajasthan High Court in the case of Kanhaiyalal Sarupaia ( supra ). 12. Before us Ld. DR submitted that the CIT(A) has wrongly relied on the decision of the Hon'ble Rajasthan High Court in the case of Kanhaiyalal Sarupaia ( supra ). He carried us through Explanation 5 of sec.271(1)(c) and pointed out that immunity granted under this Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -ordinate Benches of the Tribunal in the cases of Ajit B. Zota v. Asstt. CIT [2010] 40 SOT 543 (Mum), Mahendra Mittal v. Asstt. CIT [2011] 132 ITD 80/9 taxmann.com 212 (Mum) and Dy. CIT v. Shri Sunil V. Sangoi in I.T. Appeal Nos. 615 to 619-(Mum) of 2010. 13. He filed a chart showing the due dates of filing of the returns which is as under: ITA NO. A.Y Date of filing original return Returned income (Rs.) Date of filing return in response to notice u/s.153A Income returned u/s.153A (Rs.) Date of assessment u/s 153A Assessed Income (Rs)/ 709/M/10 2004-05 30.10.2004 39,513 12.04.2007 6,65,083 31.12.2007 7,76,932 710/M/10 2005-06 31.10.2005 25,637 12.04.2007 10,68,629 31.12.2007 12,52,515 711/M/10 2006-07 30.10.2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court was on a different issue and the Kolkatta Bench ultimately followed the decision of the Hon'ble Madras High Court in the case of SVD Chandru ( supra ) and decision of the Rajasthan High Court in the case of Kanhaiyalal Sarupaia ( supra ), and deleted the penalty in similar circumstances. 15. As far as the contention of the Ld. DR that even in the return filed for the A.Y 2006-07 on 30-10-06 surrendered income was not declared is concerned, it was contended that assessee had not been able to procure copies of various documents from the department and that is why in the return filed u/s.139(1) income could not be declared. In this regard he filed a copy of the letter addressed to the department for supply of the documents. He also argued that in sec.153A it is clearly mentioned that earlier returns filed would abate, therefore, these returns are not in existence. The assessee has filed fresh returns in response to notice u/s.153A and assessed income and returned income being same, no penalty was leviable. 16. In the rejoinder, Ld. DR again referred to sec.153A and pointed out that as per 2nd proviso to sec.153A what would abate is only pending assessment. This me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulting in such income are recorded,- (i) in a case falling under clause (a), before the date of the search ; and (ii) in a case falling under clause (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 Commissioner or Commissioner] before the said date ; or (2) he, in the course of the search, makes a statement under sub-section (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in [* * *] sub-section (1) of section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income.] The highlighted portion clearly shows that if income has not been declared before the expiry of time under sub-sec.(1) of sec.139, then immunity is not available. This aspect has been considered by the Learned Accountant Member in the case of Kirit Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(c) in case he explains the acquisition of assets, recovered in the course of search, from out of income of a previous year which has already ended before the date of the search or which is to end on or after the date of search. The above clearly shows that if history of Explanation 5 is traced, then it becomes clear that for what purpose Explanation 5 was inserted. When Learned Judicial Member had difference of opinion in this case, the matter was referred to the Third Member. The Hon'ble Vice President of the Tribunal (as he then was) who decided the issue as a Third Member, after considering the submissions and also the decisions of the Rajasthan High Court in the case of Kanhaiyalal Sarupaia (supra) as well as the decision of the Hon'ble Madras High Court in the case of S.D.V. Chandru (supra) observed vide paras 11 to 13 as under: 11. I have considered the arguments. Since the learned counsel for the assessee has not disputed the position that section 271(1)(c) is applicable to an assessment made under section 153A, it is not necessary for me to examine that position. The main question before me, which was debated at length, was whether the immunity granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a view has already been taken as to the availability of the immunity under Explanation 5(2) to section 271(l)(c) by an order of the Ahmedabad Bench, that too in a case belonging to the same group and after referring to the judgment of the Madras High Court in S.D.V. Chandru's case (supra), judicial discipline requires that I should not deviate from that view. I accordingly, uphold the view of the learned AM that the immunity under the above Explanation is not available to the present assessees. 12. The statement of objects and reasons to the Taxation Laws (Amendment and Miscellaneous Provisions) Bill, 1986 (161 ITR St. 63), and the Circular No. 469 (162 ITR St. 21) to which my attention was drawn do not advance the case of the assessees. The statement of objects and reasons says that the amendment was being made to remove an anomaly in the existing provisions in respect of cases where penalty is imposable for concealment of income even if the taxpayer has no intention to fabricate evidence or to conceal his undisclosed income after search and seizure . The anomaly and the remedial amendment made are explained by the above circular in the following words: As per the exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the above it becomes clear that he has not merely followed the decision of co-ordinate Bench of the Tribunal in the case of Rupesh Bholidas Patel ( supra ), but has made elaborate discussions and also referred to the statement of objects and reasons to the Taxation Laws (Amendment Miscellaneous Provision Bills) 1986 as well as Circular no.469 and also decision of the Hon'ble Bombay High Court in the case of Sheraton Apparels ( supra ), and reached a conclusion that the immunity provided by Explanation 5 to sec.271(1)(c) would be available only to the return for the year in respect of which the previous year is yet to end or even though ended, or the time for filing the return u/s.139(1) is yet to expire. 18. The Ld. Counsel of the assessee has vehemently argued that this decision has already been distinguished by the Kolkatta Bench of the Tribunal in the case of Avinash Ch. Gupta ( supra ) and that the issue before the Hon'ble Bombay High Court in the case of Sheraton Apparels ( supra ) was not in respect of immunity under Explanation 5 to sec.271(1)(c). In the case of Sheraton Apparels ( supra ) a question of law raised before the Hon'ble High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n if an income is declared after the search, the same was deemed to have been concealed for the purpose of sec.271(1)(c). It cannot be said that these observations are totally out of context because the Hon'ble court was concerned with the levy of penalty and immunity under clause (1) of Explanation 5. Therefore, the above observations, in our opinion, are of binding nature. We further find that it is not always necessary to follow the decision of the co-ordinate Bench. The Ld. Counsel of the assessee has relied on the decision in the case of Gopal Shyam Bros. ( supra ) of the co-ordinate Bench wherein in identical circumstances the penalty was deleted. It is important to note that in that case the decision of the Third Member in the case of Kirit Dahyabhai Patel ( supra ) has not been noted. When similar situation arose before the Pune Bench in the case of Omkareshwar R. Kalantri ( supra ) wherein assessee relied on the decision of the co-ordinate Bench in the case of Sarla M. Ahuja ( supra ) for deletion of the penalty but the revenue placed reliance on the decision of the Third Member in the case of Kirit Dahyabhai Patel ( supra ). The issue has been discussed at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility and uniformity but rigidity beyond reasonable limits is inimical to the growth of law. The contention of the learned Departmental Representative also found significant to the effect that the decision of the Coordinate Bench of the Tribunal in the case of Smt. Sarla M. Ahuja (supra) actually supports the case of Revenue if it is read and understood in proper perspective which we will discuss in detail in the succeeding paras. Of course in absence of a decision of a Special Bench of the Tribunal on the issue, the Third Member Bench decision in this regard carries weightage. It is also because in the Third Member Bench decision, the order of Ahmedabad Bench in the case of Asstt. CIT v. Rupesh Bholidas Patel (supra) has been followed, which is based upon the binding decision of (Hon'ble jurisdictional Bombay High Court in the case of Sheraton Apparels (supra). The Third Member Bench has also discussed the CBDT Circular No. 469, dt. 23rd Sept., 1986 [(1986) 162 ITR (St) 21] explaining the amendment showing benefit of immunity conferred by Expln. 5(2), as amended by Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, w.e.f. 10th Sept., 1986. Hence the same cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Dahyabhai Patel ( supra ). Similarly, as pointed out by the Ld. DR the decision of Kirit Dahyabhai Patel ( supra ) has been followed in the case of Mahendra Mittal ( supra ) and para-9 of this decision reads as under: 9. The scope of Explanation 5 has been considered by the ITAT Ahmedabad in the case of Asstt. CIT v. Kirit Dahyabhai Patel [2009] 121 ITD 159 (Ahd.) (TM) and has held that the benefit of the immunity will only be available to the assessee in respect of the year where the due date of the filing of the return has not expired under section 139(1) of the Act before the date of search. If we accept the argument that if undisclosed income is detected and then only same is admitted and offered by the assessee as his undisclosed income, whether further satisfaction is required to be recorded by the Assessing Officer? Our answer will be, No. So far as the undisclosed income unearthed in course of the search action, only protection the assessee gets to the extent provided in Explanation 5 to section 271(l)(c) and otherwise it is presumed that to that extent the assessee deemed to have concealed the particulars of his income or furnished inaccurate particulars of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer 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 clause ( b ), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; ( b ) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six as ..... 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