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TMI Blog2019 (11) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 65.50 lakhs against the tax payable on the undisclosed income. This finding of fact by the ld. CIT(A) has been not challenged before us, which finding thus crystallizes and becomes final. We therefore hold that the ld. DR s contention that assessee made the plea of adjustment of seized cash against tax on undisclosed income much after the completion of assessment is per-se wrong. CIT(A) has rightly held that the assessee did not commit the default of non-payment of tax before filing of return and therefore penalty could not be levied at 30% of the undisclosed income. And moreover, the department having taken the amount of ₹ 65.50 lakhs in their custody, cannot take unjust enrichment of it, when on one hand the department says it is assessees undisclosed income and then, not doing what he [assessee] directs to do with his money and thereafter finding fault with him and penalizing him for their [revenue] own omission cannot be accepted. We accordingly uphold the ld. CIT(A) s order restricting the penalty levied at 10% of the undisclosed income in the facts circumstances of the case. So, we confirm the action of Ld CIT(A) and dismiss the Ground Nos. 1and 2 of the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to the benefit of Section 271AAB(1)(a) of the Act giving his wrong finding that all the conditions prescribed therein were satisfied by the assessee and directed to wrongly restrict the penalty at 10% of undisclosed income of the assessee. 3. The AO levied the penalty at 30% of the undisclosed income u/s. 271 AAB(1) (c) of the Income-tax Act, 1961, [hereinafter, the Act in short] by observing as under:- 5. In this case, the assessee has made disclosure during the statement recorded under Oath u/s 132(4) of the Income Tax Act 1961. The assessee has included the above income of ₹ 3.64 crores in his return of income but did not make the full payment of tax and interest before the due date of filing return. In his submission the assessee has also categorically stated that the tax on disclosed income has been paid before filing of the return. But in the Act in Section 271AAB it is clearly written that TAX AND INTEREST has to be deposited before the filing of return. As per the computation filed by the assessee, it is seen that after allowing credit of TDS, the assess vas required to deposit ₹ 1,24,35,550/- and statutory interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unearthed by virtue of the Search and Seizure operation and on seizure of the of tax sought to be evaded is calculated as under u/s. 271AAB(1) ( c): Amount of undisclosed income 3,64,00,000/- Tax @ 30% 1,09,20,000/- Surcharge @ 10% 10,92,000/- Education Cess @ 3% 3,60,360/- Total 1,23,72,360/- Hence, an amount of ₹ 1,23,72,360/- is imposed u/s. 271AAB(1)( c ) of the Income Tax Act, 1961. 4. Aggrieved, the assessee preferred an appeal before the ld. CIT(A), who was pleased to restrict the penalty @ 10% of the undisclosed income by observing as under:- I have considered the findings of the AO in the penalty order and perused the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gave credit only in respect of self-assessment tax of ₹ 65,67,890/-. In AO's opinion to avail the benefit of clause (a) it was necessary for the assessee to discharge the entire tax liability of ₹ 1,23,72,560/- on or before completion of assessment under Section 143(3) and since the assessee had failed to discharge such tax liability and there was a shortfall of ₹ 58,04,670 1-, he held that the assessee was not entitled to avail the benefit of clause (a) of Section 271AAB. The AO particularly noted that the request for adjustment of seized cash was made by the assessee subsequent to passing of the order u/s 143(3) and therefore even though the AO ultimately accepted the assessee's plea for adjustment of seized cash against the tax liability for assessment year 2015-16, he declined to give benefit of such set off for the purpose of applying clause (a) of Section 271AAB. therefore find that the AO levied the penalty and therefore even though the AO ultimately accepted the assessee's plea for adjustment of seized cash against the tax liability for assessment year 2015- 16, he declined to give benefit of such set off for the purpose of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 271AAB of the Act In view of the foregoing facts therefore, I have no hesitation in holding that the assessee was entitled to the benefit of Section 271AAB(a) A .l Act since all the conditions prescribed therein were satisfied b) the assessee. Accordingly the AO is directed to restrict the penalty ii. respect of undisclosed income of ₹ 3,64,00,000/- to Rs,36,40,000/- [ 3,64,00,000 x 10%]. Ground Nos. 4 to 6 are therefore part1y allowed. 5. Aggrieved, the Revenue is before us. At the time of hearing, the ld. DR relying on the CBDT Circular No. 20/2017 contented that the ld. CIT(A) erroneously directed the AO to treat the seized cash during search as advance tax and thereby concluding that the tax and interest payable on the undisclosed income was fully discharged by the assessee prior to filing of the return. He submitted that as per Explanation (2) to Section 132B, the ld. CIT(A) could not have held the seized cash to be in the nature of advance tax and in that view of the matter the interest u/s 234B was rightly levied by the AO which was not paid by the assessee prior to filing his return. Consequently therefore the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) Credit for cash seized on 20.3.2015 ₹ 65,50,000/- iii) Self Assessment Tax ₹ 65,67,890/- TOTAL ₹ 2,36,96,375/- 8. The AO while passing the order u/s 143(3) of the Act did not give credit for cash of ₹ 65,50,000/- seized on 20-03-2015 thereby raised demand of ₹ 75,00,362/- which included interest u/s 234B and 234C of the Act. Subsequent to passing of the order u/s 143(3) of the Act on 31-03-2016, the AO passed an order u/s 154 of the Act dated 11-01-2017, wherein he accepted the assessee s plea for adjustment of seized cash against the tax liability for A.Y 2015-16. In this order however, the AO retained the interest levied u/s 234C and 234B treating the payment of ₹ 65,50,000/- as if being made on 11.01.2017. Being aggrieved by AO s order u/s 154 of the Act retaining interest charged up to the date of order u/s 154 of the Act, an appeal was filed before the ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his statement dated 05-05- 2015 as also at the time of filing of the return had made requests in writing for adjustment of seized cash. For deciding the date of payment , it is wholly immaterial whether or not such payment is regarded as advance tax . However, the material fact is that the Department itself treated the seized cash to be the payment made towards discharge of assessee s tax liability. In the foregoing circumstances the only conclusion which one may draw is that the date of cash seizure was the date of tax payment and therefore no interest u/s 234B could be levied once the date of payment is held to be 20.03.2015. We also note from the Grounds raised before us by the Revenue s appeal that the Revenue per se has not objected to the ld. CIT(A) specific finding of fact that the assessee in his statement u/s. 132(4) dt. 05-05-2015 had requested the AO to adjust the seized amount of ₹ 65.50 lakhs against the tax payable on the undisclosed income. This finding of fact by the ld. CIT(A) has been not challenged before us, which finding thus crystallizes and becomes final. We therefore hold that the ld. DR s contention that assessee made the plea of adjustment of seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty. The ld. AR argued that in the adversarial appellate proceedings which are prevalent in India, the appeal before the Tribunal arises from the order of the ld. CIT(A). The Revenue therefore can raise only such grounds of appeal which arise or emanate from the orders of the authorities below. The Revenue is not permitted to justify its action with reference to entirely new grounds which were never made out by the AO at the stage of passing of the order of assessment or penalty. He further submitted that the penalty proceedings being quasi criminal in nature, it is necessary to restrict the scope of penalty to the reasons for which the penalty was levied and the Tribunal cannot expand the scope of appeal and permit the Revenue to justify the penalty on the grounds for which penalty was never levied by the AO in the first instance. 12. Having considered the rival submissions, we find merit in the Ld. AR s submissions. We have already extracted the AO s order levying penalty at Para 3- above, from which it is apparent that nowhere the AO justified levy of penalty on the ground that the assessee had not substantiated the manner of earning of undisclosed income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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