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2019 (9) TMI 1235 - AT - Income TaxPenalty u/s 271(1)(c) - additional income declared in the revised return filed u/s 153C pursuant to search in connected groups cases - HELD THAT:- Application of pre-amended Explanation was limited to non-filer assessee whereas this anomaly was corrected in substituted Explanation. To elaborate, while the original Explanation 5A introduced by the Finance Act, 2007 w.e.f. 01.06.2007 held the persons guilty of concealment where the return was not filed only, the substituted Explanation 5A roped in with retrospective effect from 01.06.2007 by Finance (No.2) Act, 2009 attempted to cover both filers of return of income as well as non-filers for the purposes of penalty on undisclosed income found. Thus, when viewed the law as existing on the date of initiation of search, Explanation 5A was attracted only where the assessee failed to file return of income altogether. When seen with reference to date of search 11.02.2009 in the present case, the provisions of erstwhile Explanation 5A were not attracted to the assessee as the return of income was already filed prior to search and put on record. The application of amended provisions of Explanation 5A of Section 271(1)(c) of the Act which came into force by an amendment subsequent to search albeit with retrospective effect thus cannot be applied when seen with reference to cause of action i.e. date of search. It is to be borne in mind that Explanation 5A appended to s.271(1)(c) of the Act is a legal fiction for deeming concealment against the assessee in search cases. Both original return under u/s 139 of the Act as well as revised return under s.153C of the Act had been filed before the amended provisions were brought into force. Hence, we are of the view that shelter of substituted provisions of Explanation 5A to Section 271(1)(c) of the Act could not be taken to the instant case for fastening concealment penalty. The assessee having filed the return under s.139 of the Act prior to search as well as return under s.153C of the Act prior to substituted Explanation coming into force, would be governed by pre amended Explanation 5A and thus would escape the clutches of penalty under s.271(1)(c) of the Act due to non-fulfillment of conditions of pre amended Explanation. All of the broad contours complement the plea of assessee for deletion of penalty. The imposition of penalty with the aid of Explanation 5A to Section 271(1)(c) of the Act is thus not found to be objectively justifiable in the captioned appeals. AO is directed to cancel the penalty under s. 271(1)(c) - Decided in favour of assessee.
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