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TMI Blog2020 (9) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... of income which is an admitted position but question is whether such short term capital gain on sale of immovable property was found during the course of search and obviously the answer to that is not in affirmative. None of the conditions specified in Explanation 5A to Section 271(1)( c) of the Act are attracted and therefore, levy of penalty is hereby directed to be deleted. Thus the appeal of the assessee is allowed. - ITA No.200/JP/2020 - - - Dated:- 1-9-2020 - Shri Ramesh C Sharma, AM And Shri Sandeep Gosain, JM For the Assessee : Shri P.C. Parwal, CA For the Revenue : Smt. Runi Paul , DCIT DR ORDER PER SANDEEP GOSAIN, J.M. The present appeal has been filed by the assessee against the order of ld.CIT (A), Kota dated 19.08.2019 for the Assessment Year 2013-14 passed under section 271(1)(c) of the Income Tax Act, 1961 on the grounds mentioned hereinbelow. 1. Under the facts and circumstances of the case, the penalty order passed by invoking Explanation 5A to Section 271(1)( c) is illegal and bad in law. 2. The ld. CIT(A) has erred on facts and in law in confirming the levy of penalty of ₹ 6,18,983/-u/s 271(1)(c) of the I.T. Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 48,76,360/-. Thereafter a search took place on Shubham Group on 03.03.2016 of which assessee is a part. In response to notice u/s 153A again a return was filed on 27.09.2016 declaring the same income of ₹ 48,76,360/-. 2. In course of assessment proceedings u/s 153A, assessee while preparing the statement of affairs noticed that there is a short term capital gain of ₹ 20,03,183/- on sale of an immovable property which has been left to be included in income by oversight. Accordingly, he filed the revised computation declaring total income of ₹ 68,79,540/- including the said capital gain after payment of tax thereon on 04.11.2017. AO framed the assessment on 20.12.2017 by including the said short term capital gain as undisclosed income. On such amount penalty u/s 271(1)(c) is initiated for concealment of income. 3. On the said amount AO imposed the penalty by referring to Explanation 5 to section 271(1)(c) at ₹ 6,18,983/-. 4. The Ld. CIT(A) confirmed the levy of penalty. Submission:- 1. From the facts stated above it can be noted that only dispute in the present case is levy of penalty on the alleged undisclosed short term capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring search, no penalty can be levied under this explanation. Para 9 of the order is reproduced as under:- 9. It is a settled legal proposition that penal provisions must be strictly construed and only on satisfaction of conditions specified therein, the penalty can be levied. In the instant case, the assessee has not been found to be recipient of salary income during the course of search. The assessee is an individual deriving salary and interest income and not required to maintain books of accounts. There is nothing on record that any documents/material/information was found during the course of search which remotely indicate that the assessee is recipient of salary income. It is only during the course of proceedings u/s 153A that the Assessing officer noticed that the assessee is in receipt of salary income and which has not been disclosed by the assessee in his return and the same was accordingly brought to tax. The dispute is not that the salary income was not offered to tax by assessee in his return of income which is an admitted position but the question is whether such salary income has been found during the course of search and the answer to that in not in affirmative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain of ₹ 20,03,183/- on sale of immovable property which was left to be included in the income by oversight . Accordingly, as per assessee, he filed the revised computation declaring total income of ₹ 68,79,540/-including the said short term capital gain after payment of tax thereon on 4-11-2017. The AO framed the order of assessment by including the said short term capital gain as undisclosed income and imposed the penalty by referring to Explanation 5A to Section 271(1)( c) of the Act . 2.8 It is an admitted fact that in search no incriminating material indicating any undisclosed income for the year under consideration was found. The completed assessment can only be inferred by the AO while making assessment u/s 153A of the Act only on the basis of incriminating documents found during the course of search. Although, present controversy before us is with regard to legality of imposition of penalty upon the assessee u/s 271(1)(c ) of the Act by attracting the provisions to Explanation 5A of the Act. The ld.AR had relied on several judgements which are duly mentioned in the written submissions filed by him. 2.9 We have gone through the judgements/ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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