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TMI Blog2016 (4) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee would not be invited with the levy of penalty. We find that if the argument of the Learned DR that since the assessee had not offered the said income in return filed u/s 139(1) of the Act thereby levy of penalty is in order is to be accepted, then it would make the immunity provisions contemplated u/s 271AAA(2) of the Act redundant. The legislature in its wisdom had given a thoughtful consideration on the facts and circumstances under which the assessee would not be invited with the levy of penalty pursuant to the search subject to fulfillment of certain conditions stipulated in the said section . Hence in view of the above, we hold that the levy of penalty is not automatic and assessee is clearly entitled for immunity from levy of penalty. - Decided in favour of assessee - ITA No. 1081/Kol/2013 - - - Dated:- 15-4-2016 - Shri N. V. Vasudevan, Judicial Member And Shri M. Balaganesh, Accountant Member For the Appellant : Md. Ghayas Uddin Ansari, JCIT, ld.Sr.DR For the Respondent : Shri K.K. Chhaparia, FCA, ld.AR ORDER Shri M. Balaganesh, AM This appeal of the revenue arises out of the order of the Learned CIT(A), Central-I, Kolkata in Appeal No. 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of the assessee by journal entries. The Learned AO observed that during the financial year 2008-09, M/s Elegant Share Broking Private Limited had raised share capital including share premium of ₹ 10,35,00,000/-. The assessee had also raised share capital during the year for ₹ 3,25,00,000/- including share premium. Pursuant to the search, the assessee filed a disclosure petition before the ADIT (Investigation), Unit-III(4), disclosing additional income of ₹ 1,75,00,000/- for this year as evidences required in support of source of all such share capital may not be readily available. Accordingly the assessee filed the return of income in response to notice issued u/s 153A of the Act offering ₹ 1,76,31,590/- ( ₹ 1,31,590/- + ₹ 1,75,00,000/-). The assessment was completed u/s 153A / 143(3) of the Act on 11.5.2011 determining total income of ₹ 1,79,63,280/-. Penalty proceedings u/s 271AAA of the Act was initiated by the Learned AO. 5. The assessee pleaded before the Learned AO that the assessee had made disclosure petition u/s 132(4) of the Act soon after the search. The assessee pleaded that the said disclosure of ₹ 1,75,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(4) was included in the return filed u/s 153A of the Act and tax along with interest was paid thereon. It was also argued that there is absolutely no reference to any seized material brought on record by the Learned AO with regard to the additional income offered by the assessee and hence the entire addition has been accepted by the Learned AO only based on the offer made voluntarily by the assessee and not with reference to any seized materials. It was also argued by drawing attention to the disclosure petition u/s 132(4) of the Act that the assessee had been carrying out regular and bonafide transactions which has not been disapproved by the Learned AO and disclosure was pertaining to the transactions carried out by the amalgamating company which might not be satisfactorily proved by proper documentation and paper work at this juncture and accordingly had come forward to make additional disclosure of ₹ 1.75 crores to avoid unnecessary long drawn litigation and to buy peace with the department. It was also argued that the disclosure made u/s 132(4) of the Act does not represent any undisclosed asset or unrecorded entry in the books of accounts or false expenses and accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any with effect from 1.4.2008, pursuant to Kolkata High Court's order. The said Elegant Stock Broking Private Limited and ourselves have procured finance in the form of share capital and loans and such funds are routed into activities of financial sector. Such funds have been raised from various sources. Your goodself has raised a query on explaining the sources of all such receipts. We have been carrying out regular and bonafide transactions. However, we are not able to instantly produce all the relevant documentation or paper work which may be required by the department. Hence to demonstrate our co-operative attitude and to avoid unnecessary long drawn litigations with the department and to buy peace, we are offering an additional income of ₹ 1,75,00,000/- for Financial year 2008-09, which include income of the said Elegant Stock Braking Private Limited which got amalgamated into the Company. These funds have been deployed in regular financial activities of the Company including advancing of loans and securities business. We shall file return accordingly in accordance with law after making technical adjustments (if any) and pay taxes thereon. We also u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Penalty where search has been initiated 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 the course of a search under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the 87[Principal Chief Commissioner or] Chief Commissioner or 87[Principal Commissioner or] Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted; (b) specified previous year means the previous year- (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are as below:- 3. A search was conducted on the premises of the assessee on 14 and 15-10- 1987 and incriminating documents evidencing concealment of income by the assessee were unearthed apart from cash and jewellery found at the time of search. It was found that the appellant was maintaining double set of books and was accounting for only 50 per cent of sales in the regular set of books. This fact was admitted by Shri 1.S. Ramesh, a partner of the firm in the statement recorded under section 132(4) of the Act. Shri 1.S. Ramesh is the person-incharge of the entire group. The total turnover suppressed by the assessee for the assessment year 1987-88 was found to be to the tune of ₹ 44,07,783. These have been discussed in detail in the order of assessment. Assessing Officer estimated that the sales of the assessee were ₹ 50,000 per day, whereas the accounted sales were not found even 50 per cent of the total sales. Apart from this, it was found that certain purchases were also not being accounted for. Similarly certain payments made were not being accounted for. All these were pointed out to the assessee. The assessee came forward with offer of additional income. Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of income was offered by the assessees over a number of years. As the tax rates over the entire period was more or less the same, the tax effect, either from the point of view of the Department, or the assessee would have more or less the same, had the entire undisclosed assets been subjected to tax in the year of search or the entire income was spread over a number of years as has been done in the present assessments. In view of the deposition given under section 132(4) followed by the cooperating attitude of the assessee in paying up the tax, it would be clear that no penalty under section 271(1) would have been leviable had the entire undisclosed income been assessed in the year of search. Instead of going for that simple way, Sri Ramesh went into the question of admitting undisclosed income on estimated basis for the different past years. He must have felt that in that process alone, he would avoid the levy of penalty by the departmental authorities. The facts and circumstances strongly indicate that an inducement and an allurement had been provided to him at the time of search in that matter. Again, although incriminating materials were found out during the search, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material available on record. On consideration of the facts and circumstances of the case, we are inclined to hold that no definition could be given to the specified manner insofar as the very statement on oath u/s. 132(4) specifies the manner on which the assessee is prepared to pay tax thereon. The inscribing in the books of account was taken care of by the assessee when he filed the returns in pursuance to notice u/s. 153A accounting the assets. Therefore, the case laws cited at the Bar clearly indicate that the penalty is not automatic if one of the purported condition is not fulfilled although all the conditions have been agreed to of having fulfilled by the Assessing Officer insofar as the tax and interest has been recovered. Penalty has been levied after the tax has been recovered therefore answers the queries raised by the learned DR for that the said provisions become redundant was not the intention of the legislation. The manner, during the search operation, is noted by the search party which the Assessing Officer has acceded to. Therefore, following the decisions as relied upon by the learned Counsel for the assessee, wherein the Tribunal was pleased to consider cance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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