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TMI Blog2019 (4) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has declared in the return of income after search. Therefore, all the conditions as stipulated under Explanation 5A to section 271(1)(c) are satisfied in the case of the assessee and consequently the said Explanation is applicable in respect of the income which was disclosed only after search and seizure action and based on seized material. When the assessee’s case is covered by the said Explanation 5A, then the decision relied upon by the assessee will not help the case of the assessee as it is neither a case of bonafide mistake nor a case of bonafide belief but it is a continues default on the part of the assessee for not filing even return of income despite the activity in the real estate and earning the income ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars of income. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the penalty imposed u/s 271(1)(c). 3. The assessee craves its right to add, amend or alter any of the grounds on or before the hearing. 2. The assessee is an Association of Persons comprising of 5 members. The assessee is engaged in the business of real estate activities and had not filed return of income for these three assessment years under section 139(1) of the IT Act. There was a search and seizure action under section 132 of the Act on 28th April, 2011 in case of Supreme Group to whom the assessee belongs. During the search and seizure action certain incriminating docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 2006-07 1,63,770/- 2007-08 1,43,210/- 2008-09 44,810/- Total 3,51,790/- Aggrieved by the action of the AO, the assessee filed the appeal before the ld. CIT (A) and contended that due to bonafide belief, the assessee could not file any return of income as the assessee was under the impression that the income earned from the transaction of purchase and sale of land/property was used in the business itself by purchasing another property and, therefore, it was not the income liable to tax. The ld. CIT (A) did not accept the said explanation of the assessee and confirmed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in case of Price Waterhouse Coopers Pvt. Ltd. vs. CIT, 348 ITR 306 (SC) and submitted that if the assessee has committed an error due to bonafide belief then the penalty under section 271(1)(c) cannot be levied. He has also relied upon the decision in case of CIT vs. Reliance Petro Products P. Ltd., 322 ITR 158 (SC) and submitted that any claim which is not acceptable as per the provisions of the Act would not lead to concealment of income or furnishing inaccurate particulars of income. The ld. A/R has also relied upon the decision in case of Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh, 118 ITR 326 (SC) and submitted that everyone is not presumed to know the law. There is no such maxim known to the law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed income and surrendered the same to tax. Thus the question of bonafide belief or inadvertent mistake does not arise in the case of the assessee when the assessee has even not filed the return of income for any of the assessment years under consideration. Further, the explanation of the assessee being bonafide mistake or belief can be considered if there is a reasonable basis for believing that the income earned by the assessee is not liable to tax. The assessee has not explained any basis for such bonafide belief that the income earned by the assessee is not liable to tax. The only explanation of the assessee in this case is that the entire income was reinvested in making purchases in real estate. Even if that fact is accepted, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has considered this issue in para 5 of the impugned order as under :- 5. I have perused the order of AO and common submissions made by the Authorized Representative. The appellant has not filed his regular return u/s 139(1) of the Act. The appellant disclosed additional income on account of Capital Gain income which was offered in the return filed u/s 153A. The AO accepted the return filed u/s 153A and assessed at the same income. Subsequently the AO imposed penalty u/s 271(1)(c). I find that in the instant case the Explanation 5 is squarely attracted. Same is to be referred as under : [Explanation 5A. Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found ..... X X X X Extracts X X X X X X X X Extracts X X X X
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