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TMI Blog2018 (8) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... been there is no search, the assessee would not have disclosed the income in respect of the undisclosed income. Hence, such amounts squarely come within the purview of penalty u/s. 271(1)(c) of the Act. Levy of penalty confirmed - Decided against the assessee. - I.T.A. Nos. 368-373/Coch/2017 - - - Dated:- 2-8-2018 - S/SHRI CHANDRA POOJARI, AM And GEORGE GEORGE K., JM Revenue by : Smt. A.S. Bindhu, Sr. DR Assessee by : Shri K.K. Chandrasekharan, Adv. ORDER Per Bench These appeals filed by the Revenue are directed against the common order of the CIT(A)-IV, Kochi dated 14/06/2017 and pertain to assessment years 2005-06 to 2010-11. 2. The Revenue has raised the following grounds: 1) The CIT(A) erred in deleting penalty u/s. 271(1)(c) holding that penalty is not leviable on income voluntarily returned by the assessee. 2) The CIT(A) overlooked that the assessee did not file returns of income prior to search and the large income admitted in the returns filed u/s. 153A was entirely on account of the concealment detected during search. 3) The CIT(A) overlooked the explanation 5A explicitly allows the Assessing Officer to levy penalty in situatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19,97,776 Total 2,25,63,553 4,22,98,078 2,26,70,149 1,06,596 4. Against the penalty levied u/s. 271(1)(c) of the Act, the assessee carried the matter in appeals before the CIT(A) and the CIT(A) deleted the penalty by observing as follows: I have gone through the penalty order and submission of the appellant. The AO has levied penalty u/s. 271(1)(c) on the assessed income including the income declared in Return of Income filed in response to Notice u/s. 153A. The appellant contends that penalty u/s. 271(1)(c) is not leviable on the income declared in Return of Income filed in response to Notice u/s. 153A. This issue is now more or less settled as number of judicial pronouncements are in favour of the assessee. One such pronouncement is by Hon'ble Delhi ITAT, Bench G in ITA Nos. 4398 4399/Del./2012, dated 1.08.2015 in the case of ITO vs. Ankur Aggarwal. In this case the Hon'ble ITAT examined explanation 5 to section 271(1)(c) at length and decided that where income has been voluntarily declared in the Return of Income filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s. 132 of the Act, the assessee filed the return of income u/s. 153A of the Act and the return filed by the assessee u/s. 153A was not voluntary disclosure but was as a result of detection by the department. Therefore, filing of return of income u/s. 153A of the Act is of no consequence and the filing of return of income u/s. 153A was a veiled attempt to present a mitigating circumstance. Further, it was submitted that return filed u/s. 153A is not to be treated as revised return. That being the position, filing of return u/s. 153A and including the additional income does not constitute a mitigating circumstance and penalty has been rightly levied by the AO. She relied on the judgment of the Jurisdictional High Court in the case of P.C. Joseph Brothers vs. CIT (243 ITR 818). 6. On the other hand, the Ld. AR submitted that there is no variation between the assessed income and the returned income. As such, there cannot be any levy of penalty u/s. 271(1)(c) of the Act. He has taken the support of the following judgments: i) CIT vs. Reliance Petroproducts Pvt. Ltd. ( 189 taxman 322) (SC). ii) CIT vs. Classic Industries (393 ITR 20) (SC). iii)CIT vs. SAS Pharmaceutical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cealed 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, before the date of search; and (ii) in a case falling under clause (a), before the date of the search; and (2) he, in the course of the search, makes a statement under sub-section (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub-section (1) of section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income. 7.1 By reading Explanation 5, if the search is initiated u/s. 132 of the Act before 1st June, 2007, the immunity is available to the assessee and penalty u/s. 271(1)(c) cannot be levied. However, in the present case, the search was conducted at the business premises of the assessee on 05/08/2010. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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. 7.3 The deeming provisions of Explanation 5A under section 271(l)(c) of the Act are applicable to all the searches initiated und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation 5A to section 271(l)(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. 7.4 Since the assessee had not filed the returns of income before the expiry of the due date for filing the returns of income u/s. 139 of the Act in all the assessment years except AY 2010-11, the assessee is liable for levy of penalty u/s. 271(1)(c) of the Act. For assessment year 2010-11 as the assessee declared undisclosed income in the return of income filed u/s. 153A of the Act and not u/s. 139 of the Act. In the returns filed subsequent to the search, the assessee disclosed income to cover the source of various unaccounted money and other assets unearthed by search action. The amounts shown by the assessee were not part of his regular income and it is undisclosed income of the assessee. Had it been there is no search, the assessee would not have disclosed the income in respect of the undisclosed income. Hence, such amounts squarely come within the purview of penalty u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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