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2013 (6) TMI 725 - AT - Income TaxPenalty u/s. 271(1)(c) - different between the income declared in the original return of income and the income declared in the return of income filed in response to notice issue u/s. 153A - Held that:- We reject the argument of the Ld. Counsel that the issue arising in this appeal is clearly covered by the decision of Smt. Pramila Ashtekar and others (2012 (9) TMI 956 - ITAT PUNE ) to the extent of the income declared in the return filed in response to notice u/s 153A of the Act. Whether Explanation 5A(ii) contemplates “income” and not the “expenditure”? - whether the income declared by the assessee which is pertaining to the unrecorded expenditure can said to be the income which is contemplated in Explanation 5A(ii)? - Held that:- We hold that to the extent of the income offered by the assessee pertaining to the expenditure in the returns filed in response to notice u/s 153A, Explanation-5A is applicable and as there is a legal presumption against the assessee in respect of the said income detected during the course of search and seizure operation, the assessee case is squarely covered by Explanation- 5(ii) as the assessee himself has admitted the said undisclosed income. What is taxed u/s. 269C is the amount covered by the unrecorded expenditure and ultimately it is nothing but income applied. Admittedly, unrecorded income was also found, so in our opinion, to the extent of the quantum of unrecorded income relating to these four assessment years the assessee has source to incur the unrecorded expenditure and hence, without making any classification of unaccounted expenditure found during the course of search.We, therefore, direct the Assessing Officer to work out the penalty on the net of the unrecorded expenditure (Unrecorded Expenditure – Unrecorded Income) as shown above for all the assessment years.
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