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TMI Blog2019 (10) TMI 1240X X X X Extracts X X X X X X X X Extracts X X X X ..... section 132 of the Act. There cannot be any penalty under explanation 5A to section 271(1)(C) of the Act until and unless it supported on the basis of incriminating document. It is also pertinent to note that the additional was also not disclosed in the statement furnished under section 132(4) of the Act, A query was raised to the Ld. DR whether the income disclosed by the assessee in pursuance to the search was based on the incriminating document, but he failed to bring any material on record. Therefore, in the absence of any documentary evidence, we infer that the assessee additional income offered to tax even without admitting the same in the statement furnished under section 132(4) of the Act cannot be subject to the penalty under explanation 5A to section 271(1)(C) of the Act. Accordingly, we hold that there cannot be any penalty under section 271(1)(C) - Decided in favour of assessee Penalty u/s 271 AAB - HELD THAT:- There was no documentary evidence found by the search team suggesting that there was any undisclosed income of the assessee. As such the income disclosed by the assessee was voluntarily without having found any document in the course of search. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ABOVE. 3. The solitary grievance of the assessee is that the learned CIT(A) erred in confirming the order of the AO by sustaining the penalty of 1,49,450/- as per the explanation 5A of section 271(1)(c) the of the Act. 4. The facts in brief are that the assessee in the present case is an individual and proprietor of M/s Rishi Anand Sales. There was a search and seizure operation under section 132 of the Act in the Dhanjimama Group of cases dated 3rd July 2012. The assessee being the part of the group was also covered under such search and seizure operation carried out dated 3rd July 2012. The assessee accordingly filed his return of income in response to the notice under section 153A of the Act declaring income of ₹ 7,15,520.00 inclusive of the additional income of ₹ 4,99,836/- only. The assessment was framed by the AO under section 153A/143(3) of the Act dated 24th February 2015 at the income declared in the return of income. However, the AO initiated the penalty proceedings under section 271(1) read with section 274 of the Act on account of the additional income offered in the return filed under section 153A of the Act. 5. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of- (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and,- (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, 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 purposes of imposition of a penalty under clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound during the course of search, therefore, Explanation 5A to section 271(1)(c) is not applicable. Accordingly, the penalty was to be deleted. From the above order, it is clear that there cannot be any penalty under explanation 5A to section 271(1) of the Act until and unless it supported on the basis of incriminating document. It is also pertinent to note that the additional was also not disclosed in the statement furnished under section 132(4) of the Act, 12. At the time of the hearing, a query was raised to the Ld. DR whether the income disclosed by the assessee in pursuance to the search was based on the incriminating document, but he failed to bring any material on record. Therefore, in the absence of any documentary evidence, we infer that the assessee additional income offered to tax even without admitting the same in the statement furnished under section 132(4) of the Act cannot be subject to the penalty under explanation 5A to section 271(1) of the Act. Accordingly, we hold that there cannot be any penalty under section 271(1) of the Act in the given facts and circumstances. Hence the ground of appeal of the assessee is allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ], the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,- XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (c) undisclosed income means- (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the 54[Principal Chief Commissioner or] Chief Commissioner or 54[Principal Commissioner or] Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e during the search/ assessment proceedings. Though a loose sheet of page No.107 of Annexure A/GS/MA/1 was found that does not indicate any suppression of income but it is only projection of profit statement. The amount of ₹ 3571/- mentioned in the projections refers to cost and profit which is approximate sale price but not the cost as stated by the AO in the penalty order. The cost of construction in the projections projected at ₹ 2177/- which is in synch with the statement given by the assessee. The AO was happy with the disclosure given by the assessee and did not verify the factual position with the books of accounts and projections and bring the evidence to unearth the undisclosed income. Neither the A.O. nor the investigation wing linked the cost of profit or cost of asset to the entries in the books of accounts or to the sales conducted by the assessee to the sale deeds. Therefore, we are unable to accept the contention of the revenue that the loose sheet found during the course of search indicates any undisclosed income or asset or inflation of expenditure. The Hon'ble ITAT Delhi Bench in the case of Ajay Sharma v. Dy. CIT [2013] 30 taxmann.com 109 held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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