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TMI Blog2019 (4) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the notice issued under section 153A of the Income Tax Act, 1961 ? 3. Grievance of all the appellants is that the ld.CIT(A) has erred in confirming following amounts of penalties imposed by the AO under sections 271(1)(c): Assessee Asstt.Year Amount late Pragnesh Navinbhai Patel 2009-10 Rs.10,263/- Shri Tejas V. Shah 2009-10, 2010-11 2012-13 Rs.15,450/- Rs.72,940/- Rs.2,53,390/- Shri Pravinbhai Gordhanbhai Patel 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Rs.2,080/- Rs.8,570/- Rs.61,490/- Rs.37,470/- Rs.76,330/- Rs.1,30,310/- 4. Briefly stated facts are that a search under section 132 of the Income Tax Act was carried out in the case of Tricon Group on 5.12.2012. All the appellants are covered under search action. In order to give logical end to the proceedings, notice under section 153A was served upon the assessee, and they have filed their returns of income in response to those notices. There is a variation between amount disclosed in the return filed in response to the notice under section 153A vis-à-vis the returned filed under section 139(1) of the Act. Except in the case of Pravinbhai Gordhanbhai Patel in the Asstt.Year 2007-08 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... une, 2007 but before the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, 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 val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under section 132 on or after the 1st June, 2007, the assessee is found to be owner of any money, bullion, jewellery or other valuable article or things and the assessee claims such assets have been acquired by him by utilsing the whole or partly of his income from any previous year or any income based on any entry in any books of account or other documents or transactions found during the course of search, and the assessee claims that such entry in the books of account or other documents or transactions represents his income from any previous year, which has ended before the date of search, then, notwithstanding 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 clause (c) of sub-section (1) of this Section be deemed to have been concealed particulars of income or furnished inaccurate particulars. The moot question for attracting this explanation is that in the course of search money, bullion, jewellery or income based on any entry in the books of accounts or other documents ought to have been found. In a given situation, no money or bullion or jewellery or income might have fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the assets found) in a subsequent return filed after the date of search, would it be deemed that the assesee has concealed his income. In other words, the assets seized during the search must relate to the income of the particular assessment year whose return is filed after the date of the search. Such a conclusion is only logical, considering that assessment under the Act is with respect to a particular assessment year and the penalty imposed under Section 271(1)(c) would also be for concealing income in that particular assessment year, which concealment was revealed by the discovery of certain assets in the assessee's possession during the search conducted under Section 132. Here, it would be beneficial to reproduce the dictum of the Rajasthan High Court in CIT v. Kanhaiyalal [2008] 299 ITR 19, where it held that- "We may consider the things from yet another aspect, viz., that under the set up of IT Act, in whatever eventuality the assessment may have to be made, i.e. whether a regular assessment, or assessment consequent upon escapement of income, or assessment of a block period, but in either case, the assessment has to be, with respect to the particular assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years i.e. AYs 2005-06 and 2006- 07. Unless there is a clear finding in this respect, Explanation 5 of Section 271(1)(c) cannot be of any help to the department. As rightly pointed out by the Coordinate Bench in Prem Arora (supra), the provisions of Explanation 5 cannot be invoked in assessment years 2005-06 and 2006-07 in respect of entries recorded in seized material. Thus invoking of Explanation 5 in assessment year 2005-06 & 2006-07 is based on assumptions and presumptions. It is settled law that suspicion howsoever strong, cannot take the place of evidence and hence the contention of the Revenue that assessee was in possession of cash throughout the period of assessment years under consideration has to be rejected." It is difficult to see any infirmity in the decision of the learned ITAT in the present case. Levy of penalty under Section 271(1)(c) cannot be on the basis of surmises and conjectures. Thus, Explanation 5 cannot assist the claim of the revenue in the present case for the relevant assessment years under consideration before this Court for the simple reason that for the relevant assessment years, 2005-06 & 2006-07, no material was recovered during the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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