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2017 (8) TMI 365 - ITAT CHENNAILevy of penalty under section 271(1)(c) - advance from allottees received - no return of income had been filed prior to the date of search, and had been only after the issue of notice under section 153A - Held that:- The assessee having returned the additional income of ₹ 153.99 lakhs in pursuance to notice under section 153A, which it admits as having done voluntarily, how, we wonder, is it not a case squarely governed by the said Explanation 5A. The assessee in fact admits to the sum credited to the account "advance from allottees" as representing its income. The same, it needs to be appreciated, does not explain, much less satisfactorily, the nature and source of the said credit, so that section 68, deeming the same as the assessee's income for the current year, shall apply with full force. Who are the allottees ? What is their creditworthiness? Have they confirmed paying the same, representing the money paid to the sellers of land ? Why, again, if they have, is the amount not reflected as the sale proceeds of the relevant real estate/property, having been recovered from the allottees by the assessee as a part of the cost, or otherwise charged to them ? This is all the more so as the assessee has claimed and been allowed deduction (in computing its regular profit) in respect of expenditure of its business by way of on money paid to the sellers of land, as "development charges". How does it, in any case, represent a liability of the assessee? In fact, to the extent the assessee has received money, duly entered in its books of account, the same is also covered under clause (i), i.e., besides clause (ii), of Explanation 5A. The facts and circumstances of the case are squarely covered by the said provision, even as observed by the Bench during hearing, to no satisfactory answer by the learned authorised representative. The learned Commissioner of Income-tax (Appeals) has in our view completely misled himself in the matter by not considering a direct provision of law, clearly applicable in the facts and circumstances of the case. In fact, that the Assessing Officer has not referred to it is not relevant inasmuch as the provision of law (section), is to be read along with Explanation appended thereto, with there being no estoppel against law (also refer : CIT v. Durga Prasad More [1971 (8) TMI 17 - SUPREME COURT]). The scope for the non-application of the said Explanation is only where the assessee does not admit the same as its income, which then becomes a subject-matter of dispute between the assessee and the Revenue. Considered either way, irrespective of whether the assessee has filed, or not filed, the return of income on November 30, 2006. Both Explanation 5A, as well as Explanation 1 to section 271(1)(c) are, accordingly, attracted in the facts and circumstances of the case for the said sum. Disallowance under section 40(a)(ia) - Commissioner of Income-tax (Appeals) has directed deletion on the basis of the corresponding amount being not payable as at the year-end following Merilyn Shipping and Transport (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ). The plea is valid. However, we observe no explanation by the assessee to that effect ; rather, whatsoever. And, consequently, absence of any finding by any authority. The matter would accordingly have to go back to the file of the Assessing Officer to determine as a matter of fact whether the amount disallowed outstands, in whole or in part, as at the year end, so that to the extent it outstands, no penalty would be exigible. Where, and to the extent not, an absence of any explanation would justify the levy of penalty under section 271(1)(c).
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