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2017 (11) TMI 1195 - AT - Income TaxPenalty under section 271(1)(c) - voluntary disclosure in good faith to buy piece and avoid litigation - Held that:- In the instant case, in the course of search which has been initiated under section 132 on September 30, 2010 the assessee has admitted and offered to tax ₹ 25,00,000 for the financial year 2009-10. The said admission is based on the seized document identified as AS-1 page 5 found in the course of search conducted against Shri D. D. Modi on August 24, 2009 wherein "25,000 Govind Ji Lashkari" was noted. Therefore, the assessee is found to be the owner of income of ₹ 25 lakhs based on the said entry in the documents so seized and he claims that such entry represents his income for the financial year 2009-10. Further, the financial year 2009-10 has ended on March 31, 2010 much before the date of search which happened on September 30, 2010. In the return of income furnished under section 139(1) on July 31, 2010 for the such financial year 2009-10, such income has not been disclosed. Such income has been disclosed subsequently in the revised return filed under section 139(5) on December 27, 2010 and thereafter, in the return filed pursuance to issuance of notice under 153A on June 21, 2011. No specific arguments have been taken by the learned authorised representative to dispute the applicability of Explanation 5A in the instant case. In light of these undisputed facts, the provisions of Explanation 5A are clearly attracted in the instant case. We are unable to subscribe to the view that in the instant case since there was voluntary disclosure in good faith to buy piece and avoid litigation, the same should not be a basis for levy of penalty as subscribing to such a view would make Explanation 5A otiose which has been specifically invoked in the instant case. Whether for the purpose of imposition of penalty under section 271(1)(c) resulting as a result of search assessment made under section 153A, the original return of income filed under section 139 cannot be considered? - Held that:- The said issue is no more rest integra. Considering the non obstante clause under section 153A which excludes the application of section 139, the return filed pursuant to notice under section 153A takes the place of the original return for the purposes of all the provisions of the Act including levy of penalty under section 271(1)(c) of the Act. In the instant case, there is no dispute in this regard as the Assessing Officer has not compared the income returned under section 139(1) and income returned under section 153A. Even the learned Commissioner of Income-tax (Appeals) has accepted the same where he states that the provisions of sections 153A, 153B and 153C are a complete code for assessment wherein the search and seizure has been initiated after May 31, 2003 and complete detachment of assessment proceedings under section 143 or 147 from search proceedings under section 153A of the Act. The said contention therefore does not support the case of the assessee. In the instant case, it is no doubt true that the returned income under section 153A has been accepted (except for an amount of ₹ 1,97,178) and assessed as such by the Assessing Officer. What is how ever relevant to examine is the difference between the amount of income assessed and amount of income in respect of which particulars have been deemed to have been concealed invoking the provisions of Explanation 5A. In the instant case, the particulars which have been deemed to have been concealed amounts to ₹ 25 lakhs and on such amount, the penalty has been rightly levied by the Assessing Officer. Therefore, this contention of the learned authorised representative does not support the assessee. Coming to the levy of penalty on the addition of ₹ 1,97,178 is concerned, we find that the Assessing Officer has applied the same analogy as applied in the case of surrender of ₹ 25 lakhs and invoked Explanation 5A to levy the penalty. We are of the view that the addition is based on purely estimated basis where the Assessing Officer has worked out interest income on the said loan amount of ₹ 25 lakhs advanced to Shri D. D. Modi, and there is no material to support either the charging of interest or the rate at which such interest has been charged which has been found during the course of search. In the result, it cannot be said to be a case of concealment of income and the penalty to this extent stand deleted. - Decided partly in favour of assessee.
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