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2017 (1) TMI 1659 - AT - Income TaxReopening of assessment - unaccounted cash found during the course of search action under section 132 conducted at the premises of the assessee - assessee has not maintained any books of accounts and the books of accounts were prepared only after completion of the search and seizure action - HELD THAT:- Rejection of claim of the assessee regarding the source of cash which was found during the course of search action was that the assessee did not maintain any books of account and it has prepared the books of accounts only after the search action was over. According to the Department, the preparation of books of account was only after thought and no credits should be given to such books of accounts. Though it was found that the assessee did not maintain any books of account at the time of search action, if the assessee is able to explain the source of credit and prepared the true accounts of the assessee with supporting materials that its’ accumulated cash were from known sources of income then it has to be considered. AO was not justified in rejecting the claim of the assessee in-toto without examining each and every entries made in the books of account whether the entries were made with supporting materials or not - remit the matter back to the AO to examine the books of accounts properly and it is needless to so that the assessee shall explain each and every entries made in the books of accounts with regard to the cash amount of ₹.1.65 crores seized on the day of search and if the assessee is able to explain the same with supporting documents, AO shall consider the same in accordance with law after allowing sufficient opportunities of being heard to the assessee. With the above observations, we remit the matter to the file of the Assessing Officer for fresh consideration. Penalty levied u/s 271(1)(c) - additional income so disclosed in the statement of income recorded under section 132(4) which was later on declared in the return of income provided by the assessee - HELD THAT:- We are of the opinion that though the assessee has admitted during the course of search and disclosed in the return filed in response to notice u/s 153C by offering additional income is clearly liable to levy of penalty under section 271(1)(c). Accordingly, the order passed by the CIT(A) on this issue is reversed and that of the AO is restored. Penalty u/s 271(1)(c) - HELD THAT:- Addition was made on estimated basis without bringing on record any material to show that there was any undisclosed income. The assessee has furnished agricultural income. In order to apply the provisions of section 271(1)(c) of the Act, there has to be concealment of particulars of income or furnishing of inaccurate particulars of income. In the recent judgement of the Hon’ble Supreme Court in the case of CIT v. Reliance Petro Products Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] - we are of the opinion that this is not a fit case to levy of penalty on treating the agricultural income declared by the assessee as income from other sources. Accordingly, the penalty levied under section 271(1)(c) of the Act is deleted for all the assessment years.
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