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TMI Blog2017 (1) TMI 1659X X X X Extracts X X X X X X X X Extracts X X X X ..... search action, if the assessee is able to explain the source of credit and prepared the true accounts of the assessee with supporting materials that its accumulated cash were from known sources of income then it has to be considered. AO was not justified in rejecting the claim of the assessee in-toto without examining each and every entries made in the books of account whether the entries were made with supporting materials or not - remit the matter back to the AO to examine the books of accounts properly and it is needless to so that the assessee shall explain each and every entries made in the books of accounts with regard to the cash amount of .1.65 crores seized on the day of search and if the assessee is able to explain the same with supporting documents, AO shall consider the same in accordance with law after allowing sufficient opportunities of being heard to the assessee. With the above observations, we remit the matter to the file of the Assessing Officer for fresh consideration. Penalty levied u/s 271(1)(c) - additional income so disclosed in the statement of income recorded under section 132(4) which was later on declared in the return of income provided by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , where, he has deleted certain additions. After this, the Assessing Officer reopened the assessment by issuing notice under section 148 of the Act for bringing the amount of ₹.1.65 crores unaccounted cash found during the course of search action under section 132 of the Act conducted at the premises of the assessee. Accordingly, the assessment was reopened and addition of ₹.1.65 crores was made. The assessee challenged this addition before the ld. CIT(A) and the ld. CIT(A) observed that the assessee has not properly explained the amount of ₹.1.65 crores found and seized in the course of search action. The assessee admitted at the time of search action that the assessee has not maintained any books of accounts and the books of accounts were prepared only after completion of the search and seizure action. Being so, the books of accounts cannot be considered as true and correct to accept the same since the assessee has not filed any supporting material or evidence brought on record explaining the cash found during the course of search, the addition was sustained by the ld. CIT(A). The assessee is in appeal before the Tribunal. 3. We have heard both sides, perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the persons and also in their business premises on 16.05.2007. Consequently, notice under section 153C of the Act was issued to the assessee. In response to the notice, the assessee filed returns of income on 13.08.2009 declaring income as follows: A.Y. Income returned by the assessee Agricultural income declared by the assessee Income computed by the Assessing Officer 2002-03 NIL ₹.54.95 lakhs ₹.54,95,000/- 2003-04 ₹.1,16,419/- ₹.87.15 lakhs ₹.93,03,149/- 2004-05 ₹.68,93,960/- ₹.36.05 lakhs ₹.1,26,93,187/- 2005-06 ₹.1,98,93,840/- ₹.40.95 lakhs ₹.3,08,85,386/- 2006-07 ₹.3,10,91,760/- ₹.43.05 lakhs ₹.3,88,74,925/- 2007-08 ₹.80,49,150/- ₹.47.25 lakhs ₹.9,01,09,981/- 2008-09 ₹.1,64,60,480/- NIL ₹.9,10,44,388/- 5.1 On appeal, the ld. CIT(A) gave partial relief to the assessee. Therefore, the assessee as well as Revenue are in appeals before the Tribunal. The Tribunal vide order in I.T.A. Nos. 1745 to 1751/Mds/2010 and Cross Objections by the assessee in C.O. Nos. 138 to 144/Mds/2010 dated 29.04.2011 dismissed the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already expired, then the immunity is not available. According to him, if the due date of filing of return of income for these assessment years lapses under section 139(1) and the return of income was filed within the specified time in response to notice under section 153A/153C of the Act, then the assessee is liable for penalty under section 271(1)(c) of the Act on the undisclosed income of the assessee if the return not filed in response to notice under section 153C of the Act. 5.3 On the other hand, the ld. AR submitted that the assessee has already declared additional income in the statement recorded under section 132(4) of the Act and such income has been duly returned in the return filed under section 153C of the Act, which have been accepted by the Department and therefore, the Assessing Officer was not justified in levying such penalty. Further, he submitted that in such situation, the immunity provided by clause (2) to Explanation 5 of section 271(1)(c) of the Act would be applicable and penalty under section 271(1)(c) of the Act could not be levied. For this purpose, he relied on the following judgements: ACIT v. Gebilal Kanhaialal HUF [2012] 348 ITR 561 (SC) CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the [Chief Commissioner or Commissioner] before the said date ; or (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.] 5.5 The highlighted portion clearly shows that if income has not been declared before the expiry of time under sub-sec.(1) of sec. 139, then immunity is not available. This aspect has been considered in the case of ACIT vs. Kirit Dahyabhai Patel [2009] 121 ITD 159 (Ahd)(TM) vide para 7.1 which is as under: 7.1 In the case under consideration, the AO levied the penalty under s. 271(1)(c) of the Act for concealment of income. The CIT(A) cance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on or after the date of search. The above clearly shows that if history of Explanation 5 is traced, then it becomes clear that for what purpose Explanation 5 was inserted. 5.6 The ld. counsel for the assessee has not disputed the position that section 271[1][c] is applicable to an assessment made under section 153A, it is not necessary for us to examine that position. The main question before us, which was debated at length, was whether the immunity granted under Explanation 5(2)to section 271(1)(c) is available to the assessee or not. The Madras High Court in S.D. V. Chandru's case ( 266 ITR175 ) has held that the words in Explanation 5(2)"....has been acquired out of his income which has not been disclosed in his return of income to be furnished before the expiry of time specified in subsection [1] of section 139" are not to be read as referring to income so far not disclosed in respect of the previous year which is to end after the date of the search and that the words which refer to the time limit under section 139(1) are "only a reiteration of the legal requirement regarding the time within which returns should be normally be filed". In this view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return filed after the search. This provision has been found to operate, even in cases where the assessee has no intention to fabricate any evidence and he includes in his return the income out of which such assets have been acquired. Hence, by the Amending Act, it has been provided that if an assessee in such cases makes a statement during the course of the search admitting that the assets found at his premises or under his control have 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 prescribed in clause (a) or (b) of section 139(1) and specifies in the statement the manner in which such income has been derived and pays the taxes that are due thereon, no penalty shall be leviable." (pages 38 & 39 of 162 ITR St.) 5.8 The above circular explaining the amendment shows that 'the benefit of immunity conferred by the Explanation 5(2), as amended by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986 with effect from 10-9-1986, is confined to the return for the year in respect of which the previous year is yet to end or even though ended, the time for filing the return u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the learned Departmental Representative that the decision of Third Member Bench in the case of Asstt. CIT vs. Kirit Dahyabhai Pate! (supra) dt. 25th June, 2009 on the issue was not brought to the notice of the Pune Bench during the course of hearing of appeals in the cases of Narayandas Muiji Thakar and Karsandas Mulji Thakkar (supra) especially when the same was in existence at that time. The Third Member Bench decision in the case of Kirit Dahyabhai Patel (supra) had an occasion to discuss the issue in detail in view of several dec1sions cited before it inducing those which have been relied upon before us by the parties. It is also admitted fact that the Third Member Bench decision on the issue in the case of Kirit Dahyabhai Pate! (supra) has been passed after the decision of Pune Bench of the Tribunal in the case of Smt. Sarla M. Ahuja & Ors. (supra), hence being a later decision it has got importance. We are thus of the view that Third Member decision comprising of 4 learned Members in the case of Kirit Dahyabhai Patel (supra) brought to our notice cannot be brushed aside only because on earlier occasion the Pune Bench of the Tribunal in cases of Narayandas Mulji ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Authorised Representative for sending a proposal by this Bench for constitution of a Special Bench to decide the issue if the present Bench would not have agreed with the latest elaborate decision of Third Member Bench of the Tribunal on the issue or the Coordinate Bench would have passed a detailed order after discussing that the learned CIT(A) had properly applied the decision of the Bench in the case of Smt. Sarla M. Ahuja (supra). But it is not the case of the assessee. The present situation has arisen only because the parties appearing in the cases of Narayandas Mulji Thakkar and Karsandas Mulji Thakkar (supra) of the group failed to bring to the notice of the Co-ordinate Bench about the existence of Third Member Bench order in the case of Asstt. CIT vs. Kirit Dahyabhai Patel (supra) which cannot be treated at par with a situation for referring the matter to a Special Bench. In fact nobody attended on the scheduled date for the assessee and appeal was decided with the minimum assistance of the learned Departmental Representative. Thus we cannot agree with the submission of the learned Authorised Representative that the matter should be referred to the Hon'ble Presi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned, this is a case where the normal assessment is made. In the case where assessment is made in consequence of the search and if the assessee himself admits and offers an undisclosed income to tax then that is covered by Explanation 5 to section 271(1)(c) of the Act and in our opinion, no further satisfaction is required to be recorded by the Assessing Officer. We, therefore, hold the assessee has himself admitted the undisclosed income to the extent of ₹ 6,20,000 in respect of the cash deposits in his two bank a/cs and offered the same and also paid the tax on it, then Explanation 5 to section 271 (1)(c) is applicable and to that extent the assessee has deemed to have concealed the particulars of his income or has filed the inaccurate particulars of income. We, therefore, reject the argument of the Ld. Counsel on the issue that 'no specific recording of the satisfaction'. 10. So far as immunity from the penalty is concerned, admittedly, the time limit for filing of the return for the assessment year 2000-01 has expired long back and hence in view of the decision in the case of Kirit Dahyabhai Patel (supra), the assessee cannot get the immunity, as contemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. [(2) If any proceeding initiated or any order of assessment or reassessment made under subsection (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. 5.12 In view of the above discussions, we are of the opinion that though the assessee has admitted during the course of search and disclosed in the return filed in response to notice under section 153C by offering additional income is clearly liable to levy of penalty under section 271(1)(c) of the Act. Accordingly, the order passed by the ld. CIT(A) on this issue is reversed and that of the Assessing Officer is restored. Accordingly, all the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee ill its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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