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TMI Blog2016 (5) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... on such addition in his hands. Accordingly, we reverse the order of CIT(A) and confirm the order of Assessing Officer in levying penalty under section 271(1)(c) - Decided against assessee - ITA No.1042/PN/2012 - - - Dated:- 23-3-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri Dheeraj Kumar Jain For The Respondent : Shri Nikhil Pathak ORDER PER SUSHMA CHOWLA, JM: This appeal filed by the Revenue is against the order of CIT(A)-I, Nashik, dated 05.03.2012 relating to assessment year 2006-07 against deletion of penalty levied under section 271(1)(c) of the Income-tax Act, 1961 (in short the Act ). 2. The Revenue has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case the learned CIT(A) erred in deleting penalty levied under section 271(1)(c) amounting to ₹ 14,55,140/- without appreciating that the assessee failed to offer any explanation regarding the difference in income returned vide return filed U/s 139 and 153A at ₹ 2,59,174/- and ₹ 45,17,2301-. 2. On the facts and in the circumstances of the case the learned CIT(A) erred in not appreciating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r expenses. Further documents were found on account of additional receipts and also investments in FDRs. The assessee declared additional income for assessment years 2004-05 to 2009-10 as per the tabulated details incorporated under para 5 at pages 2 and 3 of the appellate order deciding levy of penalty under section 271(1)(c) of the Act. For the year under consideration, on the basis of incriminating documents found and seized, addition on account of professional receipts to the extent of ₹ 42,58,054/- was made in the hands of assessee. Further, addition was made on account of deposits in savings bank account No.100230 in the name of assessee s wife totaling ₹ 56,583/-. During the course of penalty proceedings initiated under section 271(1)(c) of the Act, the claim of the assessee was that it had made true disclosure of its income by way of offering additional income in the return of income and hence, no merit in levy of penalty under section 271(1)(c) of the Act. Further, addition was made on account of deposits in the bank account of wife of the assessee. The Assessing Officer was of the view that in respect of both these additions, the assessee was liable for levy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of ₹ 2,04,91,850/- on 13.09.2010. Against the income from capital gains computed at ₹ 2,41,17,168/-, the assessee also claimed exemption under section 54 of the Act at ₹ 38,40,098/-, on account of investment in Mega Polis property. The Assessing Officer while completing assessment, noted that the assessee had not declared the sale consideration of ₹ 2.55 crores in the original return of income filed and subsequently after the search, the declaration was made on account of total amount of capital gains. The Assessing Officer recorded satisfaction in the body of the assessment order to the extent that the assessee had concealed the particulars of income and penalty proceedings under section 271(1)(c) of the Act were initiated. Beside the above said, there was another aspect of sale of property, wherein the assessee had claimed that it had sold fittings and fixtures of the said bungalow for ₹ 10 lakhs. However, in the absence of list of furniture or personal effects sold, the Assessing Officer was of the view that the fittings and fixtures attached to the property were inextricably linked to the building and consideration received thereon, was to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew thereof, we find no merit in the plea of the assessee in this regard. 15. Now, coming to the issue that where the assessee had offered the income in the return of income filed after surrendering the additional income, can the assessee be held to have concealed its income vis- -vis original return of income filed by the assessee. Section 271(1) of the Act makes provision for levying penalties on assessee in different eventualities, one such eventuality is for concealment of income or furnishing of inaccurate particulars of income. Only on fulfillment of the conditions stipulated in section 271(1)(c) of the Act, there arises a question of exercising power under the said provision to impose penalty. The said section lays down that where the Assessing Officer or the CIT(A) in the course of any proceedings under the Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, then he may direct that such person shall pay by way of penalty stipulated in the aforesaid provision. The Explanation/s under section 271(1)(c) of the Act set out the circumstances, which justifies the levy of penalty. For searches initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the period has ended before the date of search and the due date for filing the return of income for such year has expired and the assessee has not filed the return of income, then notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall for the purpose of imposition of penalty under section 271(1)(c) of the Act, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of income. The said Explanation 5A was substituted by the Finance (No.2) Act, 2009 with retrospective effect from 01.06.2007 with the amendment that where the return of income for such previous year had been furnished before the date of search, but such income had not been declared therein or where the due date of filing the return of income for other previous year has expired, but the assessee had not filed the return of income, then notwithstanding the fact that the said income is declared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed the particulars of his income or furnished inaccurate particulars of his income. 17. The deeming provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Pune Bench of Tribunal in ACIT Vs. Mulay Construction P. Ltd. Ors. in ITA Nos.116 to 119/PN/2012 Ors. and it was held as under:- 16. The next limb of argument of the Ld. counsel is that Explanation 5A(ii) contemplates income and not the expenditure . In this case, it is undisputed fact that the assessee came forward and declared income which was pertaining to the amount covered by the unrecorded expenditure but the fact remains that the assessee did not declare any expenditure but it is only the income. The Ld. Counsel referred to the definition of the income given in sec. 2(24) of the Act. The scope of the said definition has been explained by the Hon ble Supreme Court in the case of EMIL Webber (supra) which has been relied upon by the Ld. Counsel The relevant portion is in para no 7 which reads as under: 7. The definition of 'income' in clause (24) of Section 2 of the Act is an inclusive definition. It adds several artificial categories to the concept of income but on that account the expression 'income' does not lose its natural connotation. Indeed, it is repeatedly said that it is difficult to define the expression 'income& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the assessee has not filed the return then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, he deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. 19. So far as the present assessee is concerned, clause (ii) to Explanation 5A is applicable. Admittedly, the expenditure which was not recorded has been found by way of entries in the seized documents. While explaining the scope of Explanation 5A in the case of Chandan K. Shewani (supra) the Tribunal has held that to patch out the lacuna due to the judicial interpretation of Expl. 5 of Sec. 271(1)(c) which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) as the assessee himself has admitted the said undisclosed income. 19. Applying the said proposition to the facts of the present case, we hold that the income offered by the assessee pertaining to the cash seized from the assessee and the declaration of the assessee that the said cash relates to the unaccounted cash received vide the sale transaction entered into by the assessee, which in turn, was declared by the assessee in the return of income filed pursuant to issue of notice under section 153A of the Act, is the income detected during the course of search and seizure operation. The case of the assessee is squarely covered by the provisions of Explanation 5A to section 271(1)(c) of the Act and the assessee is exigible to levy of penalty on such income which was detected during the course of search and seizure operation, which in turn has been offered by the assessee in return of income filed pursuant to notice issued under section 153A of the Act. The learned Authorized Representative for the assessee on the other hand has placed reliance on the ratio laid down in DCIT Vs. Purti Sakhar Karkhana (supra), which is a decision of Nagpur Bench of Tribunal and Hyderabad Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rising before us is identical to the issue raised before the Tribunal in Mrs. Sarita Kaur Manjeet Singh Chopra Vs. ITO (supra). In the facts of the present case also, the assessee had offered additional income as its income while filing return of income in response to notice issued under section 153A of the Act. The additional income worked out in the hands of assessee was on the basis of seized documents found / impounded during the course of search and seizure proceedings. Even in the cases where the assessee had declared the said income in its return of income in response to notice issued under section 153A of the Act, it is income detected during the course of search and seizure operation. The case of the assessee is squarely covered under Explanation 5A to section 271(1)(c) of the Act and the assessee is liable to le vy of penalty under section 271(1)(c) of the Act. The second addition made in the hands of assessee is on account of disclosure not made by the assessee, but on the basis of documents found during the course of search. The assessee is also liable for levy of penalty on such addition in his hands. Accordingly, we reverse the order of CIT(A) and confirm the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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