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TMI Blog2016 (12) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case and in law, the Learned CIT(A) erred in confirm order of the AO of levying penalty u/s 271(1)(c) of Rs. 42,07,500/-. 2. On the facts and under the circumstances of the case and in law, the Learned CIT (A) erred in confirming penalty u/s 271(1)(c) even though there was no concealment or filing of inaccurate details and nothing was found by the AO which tantamount to filing of inaccurate details/concealment of income as alleged by the AO. 3. On the facts and under the circumstances of the case and in law, the Learned CIT(A) erred in distinguishing the case laws cited by the AR. Also CIT(A) failed to appreciate that the income of Rs. 1 crores was disclosed suo motto by the appellant to buy peace of mind even-though nothing was found by search party. . . 4. On the facts and under the circumstances of the case and in law, the Learned CIT(A) erred in levy penalty u/s 271(1)(c) without appreciating the fact while completing assessment u/s 143(3) r.w.s. 153C there was no addition or disallowance. which could attract penalty u/s 271(1)(c). The AO has recorded any reason of his satisfaction while initiating penalty in his assessment Order u/s 143(3) r.w.s.153C. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peration and the additional income was only disclosed by the assessee in the return of income filed in response to the notice issued u/s 153C of the Act which was not disclosed in the return filed originally under section 139(1) of the Act. Had the assessee company and other group concerns not been subject to search/survey action, the assessee would not have disclosed additional income as the disclosure was made during the course of search action on the basis of specified facts ,information and materials. The AO further observed that the assessee could not allowed the benefit of absence of any specific discrepancy being pointed out in the assessment order as disclosure of additional income of Rs. 1.25 crores was sufficient to impose penalty which was not disclosure in the return filed u/s 139(1) of the Act and thus imposed the penalty equal to 100% of the tax sought to be evaded i.e. Rs. 42,07,500/- by invoking the Explanation 1 to section 271 of the Act vide order dated 28.3.2013 passed under section 271(1)( c) of the Act. 4. In the appeal proceedings, the ld. CIT(A) also dismissed the appeal of the assessee by holding that surrender/disclosure of income in the statement recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the assessee u/s 153C has been incorporated in the said assessment order as under : "3. In the returns of income filed u/s.153C, the assessee has incorporated disclosure made during search in the following manner: i) In return of income of AY.07-08, it has disclosed additional amount of Rs. 1,25,00,0001- voluntarily offered for tax consequent to the search. ii) In return of income of AY.08-09, it has disclosed additional amount of Rs. 6,75,00,0001- voluntarily offered for tax consequent to the search. iii) In the revised return of income of AY.08-09 filed on 06/12/2010, it has enhanced the additional income of Rs. 6,75,00,0001- to Rs. 8,75,00,0001- voluntarily offered for tax consequent to the search action. ii) Therefore, the assessee has disclosed additional income of Rs. 10,00,00,000/- in the return of income filed u/s.153C for AY.07-08 and AY.08-09 as per the disclosure made during search proceedings. While disclosing additional income in the returns u/s.153C, the assessee has claimed exemption u/s.10AA, the allowability of which is discussed subsequently." On referring to page 31 which is page 6 of the assessment order passed u/s 143(3) r.w.s. 153C of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. 7. We have carefully considered the rival submissions and records including the impugned orders of authorities below. We find that the assessee during the course of search action conducted on 22.8.2008 made disclosure of Rs. 22 crores in the group of companies, the details whereof were filed vide letter dated 23.10.2008 which is placed at pages 45 of the paper book. During the course of recording the statement u/s 132(4) of the Act on 22.7.2008 the in response to query No.28 the assessee replied that: "Ans : I have considered the discrepancies in the books of accounts, stock and claim u/s 10AA/10B of the IT Act, 1961. To compensate for the same, I hereby offer additional/undisclosed income of Rs. 22 crores for taxation. The break up of the additional/undisclosed income will be submitted by me within 7 days after consulting my Chartered Accountant and also after going through my books of account and other documents. I will also submit the details of period to which this income relates and also the heads under which the same is earned within period of 7 days."" In response to query no.30 qua payment of taxes , the assessee replied that : "I hereby confirm that the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in the letter dated 23.10.2008 as under : AY Name of companies Amount in crores Asset/source/explanation 2005-06 Su-Raj Diamond Industries Ltd. Forever Precious Jewellery & Diamonds Ltd. 2.98 Withdrawal of exemption under section 10A in respect of SEZ at Sachin, Surat. 2006-07 to 2008-09 J R Diamond P Ltd. 7.88 Withdrawal of exemption under section 10AA in respect of SEZ at Chennai 2006-07 to 2008-09 J R Diamond P Ltd. and Su-Raj Diamond Industries Ltd. 2.12 On account of variation in valuation of stock and any such discrepancies 2009-10 J R Diamond P Ltd. and Su-Raj Diamond Industries Ltd. 7.50 On account of variation in valuation of stock and any such discrepancies 2009-10 J R Diamond P Ltd. 1.40 Withdrawal of exemption under section 10AA in respect of SEZ at Chennai 2009-10 Family members 0.12 On account of diference in valuation of jewellery and wealth tax returns of family members. Total 22.00 From the above table it is clear that the assessee disclosed additional income for Rs. 7.88 corers from assessment year 2006-07 to 2008-09 towards withdrawal of exemption u/s 10AA in respect of SEZ at Chennai but while framing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be imposed by virtue of insertion of new provisions on the statute book for levy of penalty in the case of search under section 271AAA of the Act w.e.f. AY 2007-08 and therefore the penalty as imposed by the AO and confirmed by the ld.CIT(A) has to be deleted. The ld. DR heavily relied upon the orders of authorities below. 12. We find merit in the submissions of the ld.AR that in case of the assessee the search was carried out on 20.2.2008 which was after 1.6.2007 and penalty could only be imposed u/s 271AAA of the Act and not under section 271(1)(c) of the Act. The case of the assessee is supported by the decision of the Co-ordinate Bench of the Tribunal in the case of Smt.Hiral Himanshu Kanakia (supra), wherein it has been held as under : "5. We have heard both the parties and perused the material on record. The relevant A.Y. under consideration is 2008-09. It is an admitted fact that a search u/s 132 has been carried out on 19.07.2007 in Kanakia Group to which the assessee belongs. From the provisions of section 271 AAA of the Income Tax Act, it is clear that where search has been initiated under section 132 on or after 01.06.2007, penalty can be levied only under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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