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TMI Blog2015 (1) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... en held that in order to get the benefit of immunity under clause(2) of explanation5 to Section 271(1)(c) of the Income Tax Act, it is not necessary to file the return before the due date provided that the assessee had made a statement, during the search and explained the manner in which the surrendered amount was derived, and paid tax as well as interest on the surrendered amount - the view taken by the Tribunal is erroneous - the assessees had satisfied all the conditions which are required for claiming immunity from payment of penalty u/s 271(1) - the provision does not specify any time limit during which the aforesaid amount i.e. the amount of penalty with interest has to be paid - when the assessees have paid the entire amount with interest, the AO ought to have granted them immunity available u/s 271(1)(c) – Relying upon Assistant Commissioner of Income Tax, Udaipur Versus M/s. Gebilal Kanhaialal HUF, Through Karta, Udaipur [2012 (9) TMI 297 - SUPREME COURT] - the penalty u/s 271(1)(c) cannot be levied on the income shown in the return filed under Section 153A – the order of the Tribunal is set aside - Decided in favour of assessee. - TAX APPEAL NO. 1181 of 2010 With TAX AP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the matter was referred to a Third Member, who, after giving his opinion referred the matter to the Division Bench of the Tribunal for passing the final order. Thereafter, the Division Bench of the Tribunal passed the final order and allowed the revenue s appeal by its order dated 17.07.2009. Hence, these appeals are filed at the instance of the assessees. 5. While admitting these appeals on 29.08.2011, the Court has formulated the following substantial question of law: Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in restoring the penalty imposed under Section 271(1)(c) of the Act holding that benefit under explanation 5 to Section 271(1)(c) of the Act would be available only for period where due date for filing the return under Section 139(1) of the Act had not expired ? 6. Mr. Soparkar, learned senior counsel for the appellants has submitted that the Tribunal has committed error in restoring the penalty imposed by the Assessing Officer and in setting aside the order of the CIT(A). He further submitted that the Tribunal has failed to appreciate the fact that the penalty under Section 271(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax, reported in [2013] 30 taxmann.com 10, more particularly paragraph Nos. 13 and 14, which reads as under: 13. From the record, this Court notices that after the search, and the statement recorded under Section 132 (4), the assessee, on being issued with notice under Section 153A did not file any return. The notice under Section 153A was issued on 20-7-2006. It was only when assessment proceedings were taken up for consideration, did the assessee, by letter dated 14-8-2007, request, that its return, filed on 31-10-2005, be treated as its return filed in response to the notice under Section 153A. Much later, it sought to revise its computation, on 14-12-2007. Therefore, this Court is of the opinion that the escape route , provided by Clause (2) to Explanation 5 in this case, was not available to the assessee. It has to be reiterated that the said provision is available, not merely when the assessee, in his statement offers or surrenders, to tax the amount in question which is later assessed, but also complies with the other conditions, of having filed the return. The allusion to Section 139 (1) is significant in this regard, because a notice and cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been furnished before the said date or, wherein such return has been furnished before the said date, such income has not been declared therein; or (b) for any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause(c) of subsection (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, unless, (1) Such income is, or the transactions resulting in such income are recorded,- (i) in a case falling under clause(a), before 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 of such income is otherwise disclosed to the [principal Chief Commissioner or Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner] before the said date; or (2) he in the course of the search, makes a statement under subsection (4) of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C). The first condition was that the assessee must make a statement under Section 132(4) in the course of search stating that the unaccounted assets and incriminating documents found from his possession during the search have been acquired out of his income, which has not been disclosed in the return of income to be furnished before expiry of time specified in Section 139(1). Such statement was made by the Karta during the search which concluded on August 1, 1987. It is not in dispute that condition No.1 was fulfilled. The second condition for availing of the immunity from penalty under Section 271(1)(C) was that the assessee should specify, in his statement under Section 132(4), the manner in which income stood derived. Admittedly, the second condition, in the present case also stood satisfied. According to the department, the assessee was not entitled to immunity under Clause (2) as he did not satisfy the the condition for availing the benefit of waiver of penalty under Section 271(1)(c) as the assessee failed to file his return of income on 31st July, 1987 and pay tax thereon particularly when the assessee concealed on August 1, 1987 that there was concealment of income. The thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, as the Assessing Officer has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under Section 271(1)(c) of the I.T. Act and the penalty is to be levied on the income assessed over and above the income returned under Section 153A, if any. 14. Further, in the present case, it appears from the record that the assessees had satisfied all the conditions which are required for claiming immunity from payment of penalty under Section 271(1) of the Act. The provision does not specify any time limit during which the aforesaid amount i.e. the amount of penalty with interest has to be paid. Admittedly when the assessees herein have paid the entire amount with interest, the Assessing Officer ought to have granted them immunity available under Section 271(1)(C) of the Income Tax Act. 15. The decision relied upon by learned advocate for the respondent will not apply to the facts of the present case. 16. In view of the aforesaid facts of the case and also the principle laid down in the decisions relied upon by the learned senior counsel for the appellant more particularly the principle laid down in the case of Assistant Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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