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TMI Blog2013 (6) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty on the ground that the assessee's admission of additional income declared is on the basis of entries in the books of accounts, documents and transactions. 4. In the facts and circumstances of the case and in law, the Ld CIT(A)- I, Thane erred in deleting the penalty on the ground that as per explanation 5A (ii)(b) to section 271(1)(c), the assessee has deemed to have concealed the particulars of his income for the purposes of imposition of penalty u/s. 271(1)(c). 5. In the facts and circumstances of the case and in law, the Ld CIT(A)- I, Thane erred in deleting the penalty on the ground that the assessee did not file the return of income till the date of search which took place on 16- 10-2008, as the time for filing of return u/s.139(l) was 30-09- 2008. Due to which the additional income was detected otherwise the assessee would have concealed the additional income declared. 6. The Appellant prays that order of the CIT(A)-I, Thane on the grounds be set aside and that of the Assessing Officer be restored." 2. Facts in brief:- The assessee is a 50% partner in the FIRM m/S. Madhav Constructions, which is carrying out the business of housing development and builders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleted on the same income of Rs. 1,31,19,140 vide order dated 31st December 2010 on which return of income was filed. Thereafter, the Assessing Officer initiated the penalty proceedings under section 271(1)(c) and observed that, firstly, the income has been offered only as a consequence of search and seizure under section 132(1) and secondly, it was offered under the head "Income From Other Sources" for the assessment year 2008-09 in the return of income filed on 31st October 2009, whereas the original due date of the return of income was 30th September 2008, which has expired before the date of search. Thus, he held that the assessee's case is covered by Explanation 5A to section 271(1)(c). 4. The assessee, before the Assessing Officer, submitted that this additional income was offered voluntarily which was on estimate basis and and the same has been accepted in the assessment order as such, therefore, provisions of section 271(1)(c) is not applicable. The entire explanation of the assessee was rejected and finally, penalty was levied on the entire amount of Rs. 125 crores at Rs. 42,40,750. 5. Before the learned Commissioner (Appeals), the assessee made very detail submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led income in respect of which Inaccurate particulars had been furnished. I accordingly hold that A.O. Is not justified in levying penalty u/s. 271(1)(c) of the IT Act 1961 in the assessee's case. The penalty levied is accordingly cancelled." 7. Before us, the learned Departmental Representative submitted that this is not a case of estimate made by the Assessing Officer in the regular assessment proceedings but it is a case of search and seizure, wherein the assessee has himself declared additional income in the statement recorded under section 132(4). Even if such surrender was based on estimate, then also it represents the undisclosed income which has been owned by the assessee. Thus, the penalty cannot be deleted on the pleading that penalty has been levied on estimate basis. In this case, Explanation 5A is clearly applicable. Under Explanation 5A to section 271(1)(c), in case of a search which has been conducted after 1st June 2007, if any undisclosed income has been found which has not been shown in the return of income either prior to the date of search or on the due date of filing of return of income, penalty has to be levied. This is evident from the plain language of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action was taken place after 1st June 2007 i.e., on 16th October 2008. The assessee, during the course of statement recorded under section 132(4), has offered income of Rs. 1.25 crores as additional income for the previous year ending before the date of search i.e., year ending 31st March 2008 relevant to the assessment year 2008-09. The due date for filing of the return of income under section 139(1) for assessment year 2008-09 was 30th September 2009, whereas the assessee has filed the return of income on 31st October 2009 i.e., after one month from the date of filing of the return of income as provided in section 139(1). The due date for filing of the return of income under section 139(4) for the assessment year 2008-09 was 31st March 2010. Thus, the return of income filed by the assessee in this case was at best under section 139(4). The issue before us is whether the return of income filed under section 139(4) can be held to be the "due date" for filing the return of income for such previous year as mentioned in clause (b) of Explanation 5A to section 271(1)(c) and, if so, whether the penalty can be levied on the facts of the present case under the Explanation 5A. For better ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of search i.e., such income has not been declared therein and secondly, the due date for filing the return of income had expired i.e., the assessee has not shown this income in the return of income filed on or before the due date; (iv) then on such income declared by him in the return of income furnished on or after the date of search, he is liable for penalty under section 271(1)(c) and he is deemed to have concealed the particulars of his income or furnish inaccurate particulars of income. 11. There are two saving clause in the aforesaid Explanation wherein penalty cannot be held to be leviable under section 271(1)(c), firstly, the assessee had shown such asset as mentioned in clause (i) or income as mentioned in clause (ii) in the return of income furnished before the date of search and, secondly, such asset and the income has been shown in the return of income filed on the due date. Thus, if any assessee falls under these saving clauses, Explanation 5A cannot be invoked. 12. For the purpose of the instant case, we have to see whether or not the assessee has shown the income in the return of income filed on the "due date". Provisions of section 139(1) provides for various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate under section 139(4) also. This proposition has been elaborated in the following decisions:- i) CIT v/s Rajesh Kumar Jalan, [2006] 286 ITR 276 (Gau.). wherein it has been observed and held as under:- "From a plain reading of sub-s. (2) of s. 54, it is clear that only s. 139 is mentioned in s. 54(2) in the context that the unutilised portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the return of the income-tax under s. 139. Sec. 139 cannot be meant only as s. 139(1) but it means all sub-sections of s. 139. Under sub-s. (4) of s. 139, any person who has not furnished a return within the time allowed to him under sub-s. (1) of s. 142 may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier. Such being the situation, it is the case of the assessee that the assessee could fulfill he requirement under s. 54 for exemption of the capital gain from being charged to income-tax on the sale of property used for residence upto 30th March, 1998, inasmuch as the return of income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the respondent also relies upon a Division Bench judgment of Gauhati High Court in CIT vs. Rajesh Kumar Jalan (2006) 206. CTR (Gau) 361 (2006) 286 ITR 274 (Gau). 10. Having heard learned counsel for the parties, we are of the opinion that sub-s. (4) of s. 139 of the Act is, in fact, a proviso to sub-s. (1) of s. 139 of the Act. Sec. 139 of the Act fixes the different dates for filing the returns for different assessee. In the case of assessee as the respondent, it is 31st day of July of the assessment year in terms of cI. (c) of the Expln. 2 to sub-s. (1) of s. 139 of the Act, whereas sub-s. (4) of s. 139 provides for extension in period of due date in certain circumstances. It reads as under:- 11. A reading of the aforesaid sub-section would show that if a person has not furnished the return of the previous year within the time allowed under sub-s (1) i.e., before 31st day of July of the assessment year, the assessee can file return before the expiry of one year from the end of the relevant assessment year." iii) CIT v/s Jagtar Singh Chawla, passed in Income Tax Appeal no.71 of 2012, vide judgment dated 20th March 2013 wherein it has been observed and held as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return under section 139(4). But, however, utilized the capital gains for purchase of property before the extended due date under section 139(4). The contention of the revenue that the deposit in the scheme should have been made before the initial due date and not the extended due date is an untenable contention." A Division Bench of this Court in which one of us (Hemant Gupta, J.) was a member, had an occasion to consider the provisions of Section 54(2) of the Act, wherein it has been held that subsection (4) of Section 139 of the Act is in fact a proviso to Section 139(1) of the Act. Therefore, since the assessee has invested the sale proceeds in a residential house within the extended period of limitation, the capital gain is not payable. The judgments in Rajesh Kumar Jalan's case and Fathima Bai's case (supra) were referred to. It has been held as under:- "Having heard learned counsel for the parties, we are of the opinion that sub- section (4) of Section 139 of the Act is, in act, a proviso to sub-section (1) of Section 139 of the Act. Section 139 of the Act fixes the different dates for filing the returns for different assesses. In the case of assessee as the res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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