9911796707
TMI Blog2014 (8) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... gned assessment year, assessee had originally filed a return of income on 29-8-2008 declaring income of Rs. 69,48,870/-. Subsequently a search and seizure operation was conducted in the residential premises of assessee's husband Dr. B. Bhaskara Rao and also in cases of other group concerns on 20-08-2009. As alleged by the AO, during the search and seizure operation, certain incriminating material were found and seized from the residence of Dr. Bhaskarara Rao, amongst which were five numbers of promissory notes of Rs. 7 lakhs each totaling to Rs. 35 lakhs. During the post search proceedings, assessee's husband Sri Bhaskara Rao when was asked to explain the contents of the promissory notes, he stated that these were advances given to various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee that the seized document viz., promissory notes were neither found from the assessee nor any statement was recorded from her. It was submitted that the assessee has not declared any additional income either at the time of search operation or during the post search proceedings. It was only her husband who had declared the additional income in the hands of the assessee. The CIT (A) after considering the submissions of the assessee however confirmed the penalty imposed u/s 271(1)(c) of the Act by holding as under:- "7.0 The submissions of the appellant have been carefully considered. It may be noted that the appellant filed her original return of income declaring total income of Rs. 69,48,870/- and subsequent to search filed a return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no reasonable cause which prevented her from disclosing the true and correct income voluntarily and accordingly, the penalty levied u/s 271(1)(c) of Rs. 11,89,650/- is confirmed." 4. Reiterating the submissions made before the CIT(A), the learned AR submitted that neither the promissory notes reveal the assessee's name nor assessee during the search operation or post search proceedings has offered the additional income as mentioned in the promissory notes. It was submitted that it was the assessee's husband who had made declaration of additional income at the hands of the assessee. The learned AR submitted that Explanation 5A of section 271(1)(c) of the Act will not be applicable as neither there is any search or seizure operation u/s 132 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty is justified. In support of such contention, the learned DR relied upon the decision of Hon'ble Supreme Court in Civil Appeal No. 9772 of 2013 in case of Mak Data P. Ltd. Vs. CIT. 6. In his rejoinder, the learned AR submitted that the decision of Mak Data was rendered on a completely different set of facts, hence will not apply to the facts of the assessee's case. 7. We have considered the submissions of the parties and perused the orders of the revenue authorities as well as facts on record. It is clearly evident that the entire basis of the penalty u/s 271(1)(c) of the Act is the additional income of Rs. 35 lakh declared by the assessee in her return of income filed in pursuance to the notice issued u/s 153C of the Act. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his friends but surprisingly the additional income was offered in the hands of his wife, the present assessee, and was also declared as income by her in the return of income filed in pursuance to notice issued u/s 153C of the Act. When the amounts were advanced by the assessee'shusband Dr. K. Bhaskara Rao to his friends, in all fairness, it should have been treated as the income of Sri K. Bhaskara Rao and not the present assessee. However, not only the additional income was declared by the assessee in her return of income, but the department also accepted it in her hands. In fact, reading of the observation made by CIT (A) in para-7 of her order, would make it clear that the CIT (A), prime facie, was also of the view that the additional in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, in the present case, the seized materials have no reference to the assessee. Further, it is the assessee's husband Dr. K. Bhaskara Rao who has owned up the amount mentioned in the seized materials, but for inexplicable reasons offered it in the hands of his wife. Moreover, the income declared by the assessee in the return of income was accepted by the AO in the assessment order passed. In other words, there is no variation between the income returned and income assessed. In these circumstances, the decision in case of Mak Data P. Ltd. Vs. CIT (supra) will not apply to the facts of the present case. In view of the aforesaid, we hold that imposition of penalty u/s 271(1)(c) of the Act in the present case is not justified. Accordingly, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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