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TMI Blog2013 (10) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that in the case where action U/s 132 is initiated on or after 01/06/2007, penalty cannot be levied U/s 271 (1)(c)of the Act. Penalty can be levied only U/s. 271AAA of the Act when certain conditions stipulated therein is not complied - Decided in favour of assessee. - IT Appeal Nos. 1429 & 1430 (Hyd.) of 2012 - - - Dated:- 24-5-2013 - P.Madhavi Devi And B.Ramakotaiah , JJ. For the Appellant : V. Siva Kumar. For the Respondent : Dayasagar. ORDER:- PER : B. Ramakotaiah These two appeals are by the assessee against the orders of the CIT(A) V, Hyderabad dated 31.7.2012 for the assessment years 2008-09 and 2009-10, levying penalties under S.271(1)(c) worked out at 300% by the Assessing Officer, confirmed by the CIT(A). 2. Briefly stated, the appellant is a resident of Kolwada Village in Vijapur Taluka of Mehsana District of Gujarat and is carrying on the 'Angadia' business. The employees of the assessee were detained by the Task Force of the Police, as they were carrying large amount of cash and the case was handed over to the IT department and searches were completed on 26.03.2008, wherein cash of Rs.24,04,000 was found with three persons stated to be em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 5A to the provisions of S.271(1)(c) do not apply to the facts of the case and relying on various case-law alternately admitted for levy of penalty under S.271AAA. The learned CIT(A) vide the detailed order for the assessment year 2008-09, however rejected the contentions of the assessee, and confirmed the penalty, ultimately stating as under- "7.5 As if the aforementioned action of the department in seizing the cash and conducting investigations was not enough, the appellant still did not come out with truth. He stated that he had filed a return of income voluntarily and there was no concealment of income. He stated he had voluntarily filed returns of income through RPAD for AY 2008-09 on 02.03.2009 and for AY 2009-10 on 13.7.2009 declaring disclosed income well before the initiation of search asst. proceedings. This claim was also found to be incorrect as no return had ever been received by any income tax office pertaining to the above so called RPADs. Obviously, the appellant had never filed any returns of income as stated and had merely managed to obtain some RPAD numbers from somewhere to further hoodwink the revenue. This act of the appellant convincingly shows the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, which was accepted by the Assessing Officer. Therefore, it was submitted that the observation of the CIT(A) that reliance cannot be placed on the so called sending of return by RPAD is not correct. Further, the learned counsel also explained the provisions of S.271(1)(c) and Explanation 5A invoked by the Assessing Officer to submit that this provision does not apply, whereas the case falls under S.271AAA of the Act. It was fairly submitted that as the assessee has waived the proceedings of assessment to be initiated directly under S.153C and also has not objected if penalty was confirmed under S.271AAA, the request which was made before the CIT(A) as well, which is not accepted. 6. The learned Departmental Representative however, relied on the orders of the Assessing Officer and the CIT(A) and reiterated the Revenue's stand. 7. We have considered the issue and the rival contentions. There is no dispute with reference to the fact that the amounts ultimately accepted by the Assessing Officer in the assessments were almost the same as that of the amounts admitted by the assessee in the returns, except for a small amount of Rs.31,770 added in assessment year 2008-09. It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 7.5 quoted above. 9. Coming to the issue of levy of penalty, assessee's contention that Explanation (5A) does not apply to the facts of the case is correct. Explanation 5A to S.271(1)(c) reads as under- "Explanation 5A.- Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of- (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and,- (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous year has expired but th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day of June, 2007 but before the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) Nothing contained in sub-section (1) shall apply if the assessee,- (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income. (3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation. For the purposes of this section,- (a) "undisclosed income" means- (i) any income of the specified previous year represented, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 271AAA of the Act it becomes abundantly clear that where search has been initiated u/s 132 of the Act, on or after 01-06-2007, section 271AAA comes into play while as section 271(1) ( c) is barred by virtue of section 271AAA sub section (3). Section 271AAA sub section (1) and (3) are reproduced herein below for reference: Penalty where search has been initiated. 271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1)." 8. It is clear from the above that the learned AO has not invoked the correct provisions of law for levying the penalty. In this case search was conducted in the premises of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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