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TMI Blog2015 (8) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... enue are dismissed. - Decided in favour of assessee. - CO No. 74/PN/2014, ITA No.1430/PN/2013 - - - Dated:- 12-8-2015 - SHRI R.K. PANDA AND SHRI VIKAS AWASTHY, JJ. For The Assessee : Shri S.N. Puranik For The Department : Shri.B.C. Malakar ORDER PER R.K. PANDA, AM : This appeal filed by the Revenue and the CO filed by the assessee are directed against the order dated 02-04-2013 of the CIT(A), Aurangabad relating to Assessment Year 2010-11. 2. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of construction of shopping mall. A search u/s.132 of the I.T. Act was conducted on 19-01-2010 at the business and residential premises of different members/associate concerns of the Tapadia Khinvansara and power groups of Aurangabad. The assessee was also covered. During the course of search, various registers and documents were seized from the premises of Shri Sanjay Kasliwal at 215-216, Apna Bazar, Jalgaon Road, Aurangabad. In response to notice u/s.142(1), the assessee filed his return of income on 27-09-2011 declaring total income at ₹ 6,84,35,910/-. During the course of assessment proceedings the AO noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the explanation given by the assessee. He referred to the provisions of sub-section (2) of section 271AAA of the I.T. Act according to which penalty is not imposable subject to fulfillment of the following conditions : (i) In the course of search, in a statement under sub-section (4) of sec.132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) Substantiates the manner in which undisclosed income was derived; and (iii) Pays the tax, together with interest, if any, in respect of the undisclosed income. He observed that the tax payable on the returned income was ₹ 2,11,46,696/- and interest payable till filing of the return was ₹ 14,51,222/-. Therefore, the assessee should have paid ₹ 2,25,97,918/- by way of tax and interest till the date of filing of return of income. However, till that date and even on completion of assessment the assessee has paid only ₹ 1,84,97,920/- and the balance amount of ₹ 40,99,998/- was recovered after assessment. Therefore, the condition laid down in the provisions of section 271AAA(2) of the Act does not get satisfied. He observed that as per the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above is considered then also the tax on income disclosed is to be regarded as fully paid on completion of the assessment. It was accordingly argued that the third condition that the assessee pays the tax together with interest, if any, in respect of the undisclosed income is also fulfilled. 7. It was brought to the notice of the CIT(A) that payment of ₹ 49,64,700/- raised by the AO for A.Y. 2010-11 vide order u/s.143(3) dated 29-12-2011 was paid on 22-03-2012, i.e., much before 28-06-2012, i.e. the date of penalty order u/s.271AAA for A.Y. 2010-11. Relying on the decision of the Kolkata Bench of the Tribunal in the case of DCIT Vs. Pioneer Marbles and Interiors Pvt. Ltd. reported in (2012) 14 ITR 608 it was argued that no penalty u/s.271AAA can be levied if the assessee has paid the tax and interest due thereon within the time limit provided in notice of demand u/s.156 and also well before the penalty proceedings were concluded. Relying on various decisions it was argued that no penalty u/s.271AAA of the I.T. Act could be levied on the assessee. 8. Based on the arguments advanced by the assessee and relying on the decision of Hon ble Supreme Court in the case of ACIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with interest, if any, in respect of the undisclosed income which was admitted in the statement recorded u/s.132(4) and the assessee is able to substantiate the manner in which such undisclosed income was derived. Since in the instant case the assessee has not paid the taxes due together with interest in respect of such undisclosed income, therefore, he is not entitled to the immunity granted in section 271AAA. He submitted that various case laws relied on by the assessee before the CIT(A) are not applicable to the facts of the present case. He accordingly submitted that the order of the CIT(A) be reversed and that of the AO be restored. 11. The Ld. Counsel for the assessee on the other hand while supporting the order of the CIT(A) submitted that the assessee had filed the return of income disclosing total income of ₹ 6,84,35,910/- as disclosed by the partner of the firm during the course of search. The assessee has paid an amount of ₹ 1,84,97,920/- towards income tax before filing of the return of income. The balance amount of ₹ 40,99,998/- was paid on 22-03-2012 after the completion of assessment but much before the penalty order which was passed on 28-06-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 10% of the unpaid tax. 12. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case the search took place on 19-01-2010 during which the partner of the firm had admitted undisclosed income of ₹ 6.94 crores in his statement recorded u/s.132(4) as income from business of builders. We find the assessee filed the return of income on 27-09-2011 declaring the aforesaid income of ₹ 6,94,02,079/-. Although the tax payable and interest payable on such income comes to ₹ 2,25,97,918 (tax ₹ 2,11,46,696/- + interest ₹ 14,51,222/-) we find the assessee had paid an amount of ₹ 1,84,97,920/- only till completion of assessment. Thus, the assessee has paid less by ₹ 40,99,998/- for which the AO held that the assessee had not paid tax due together with interest, if any, in respect of the undisclosed income and therefore penalty u/s.271AAA is leviable on the assessee firm. The AO accordingly levied penalty of ₹ 69,40,208/- which has been deleted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been set out by the statute, it cannot indeed be open to the Assessing Officer to read such a time limit into the scheme of the Section or to infer one. There is thus no legally sustainable basis for the stand of the Assessing Officer that in a situation in which due tax and interest has not been paid in full before filing of the relevant income tax return, the assessee will not be eligible for immunity under section 271 AAA(2). 8. While dealing with Explanation 5 to Section 271(1)(c), which is broadly on the same lines, Hon ble Gujarat High Court, in the case of CIT Vs Mahendra C Shah (299 ITR 305) has observed that, there is no prescription about the point of time when the tax had to be paid qua the amount of income declared in the statement under section 132(4) of the Act . We must, however, point out that even after making these specific observations Their Lordships had to treat the conclusion of assessment proceedings as outer limit for making payment of tax and interest but that was because of the peculiar nature of penalty provisions under section 271(1)(c) wherein Assessing Officer has to record the satisfaction in the course of assessment proceedings itse lf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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