2015 (12) TMI 1025 - AT - Income Tax

Penalty levied under section 274 r.w.s. 271(1)(c) - Held that - We hold that the income offered by the assessee pertaining to the cash seized from the assessee and the declaration of the assessee that the said cash relates to the unaccounted cash received vide the sale transaction entered into by the assessee which in turn was declared by the assessee in the return of income filed pursuant to issue of notice under section 153A of the Act is the income detected during the course of search and seizure operation. The case of the assessee is squarely covered by the provisions of Explanation 5A to section 271(1)(c) of the Act and the assessee is exigible to levy of penalty on such income which was detected during the course of search and seizure operation which in turn has been offered by the assessee in return of income filed pursuant to notice issued under section 153A of the Act. The assessee having made a wrong claim in the return of income i.e. by way of claim of deduction under section 54 on account of investment in two properties and in respect of capital gains account with bank not having been made by the assessee tantamount to furnishing of inaccurate particulars of income and justifiably penalty under section 271(1)(c) of the Act is leviable on such furnishing of inaccurate particulars of income. The learned Authorized Representative for the assessee in a written Note had furnished the break-up of income on which penalty was levied. We uphold the order of CIT(A) in confirming the levy of penalty on the above said two accounts. - Decided against assessee

Issues Involved:

1. Levy of penalty under section 271(1)(c) of the Income-tax Act, 1961.
2. Concealment of income and furnishing of inaccurate particulars.
3. Application of Explanation 5A to section 271(1)(c) of the Act.
4. Validity of the penalty order and the satisfaction of the Assessing Officer.

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c) of the Income-tax Act, 1961:

The appeal concerns the levy of penalty under section 271(1)(c) amounting to Rs. 47,11,104/-. The assessee was found carrying cash of Rs. 1,60,76,800/- during a search and seizure operation on 09.12.2009. The cash was claimed to be part of the sale proceeds from an ancestral property sold for Rs. 3,40,00,000/-, with only Rs. 1,70,00,000/- declared in the agreement and the balance received in cash. The assessee declared the entire cash element and her 50% share of the agreement value in her return of income filed in response to notice under section 153A, leading to a total declared income of Rs. 2,04,91,850/-. The Assessing Officer initiated penalty proceedings under section 271(1)(c) for concealment of income.

2. Concealment of Income and Furnishing of Inaccurate Particulars:

The Assessing Officer noted that the assessee had not declared the full sale consideration in her original return and had only disclosed the same after the search. The penalty was levied on the grounds that the assessee had concealed particulars of income and furnished inaccurate particulars by not declaring the cash component of the sale and claiming excessive exemptions under section 54. The CIT(A) upheld the penalty, noting that the assessee's actions indicated concealment of income and furnishing of inaccurate particulars.

3. Application of Explanation 5A to Section 271(1)(c) of the Act:

Explanation 5A to section 271(1)(c) applies to searches initiated on or after 01.06.2007. It deems the assessee to have concealed income if, during a search, the assessee is found in possession of money, bullion, jewellery, or other valuable articles or things not declared in the return of income filed before the search. The Tribunal held that the income offered by the assessee post-search was deemed to have been concealed as per Explanation 5A, justifying the levy of penalty.

4. Validity of the Penalty Order and the Satisfaction of the Assessing Officer:

The assessee contended that no satisfaction was recorded by the Assessing Officer for initiating penalty proceedings. However, the Tribunal found that the Assessing Officer had recorded satisfaction in the assessment order, noting that the assessee had not declared the full sale consideration in the original return and had only disclosed it post-search. This was deemed sufficient for initiating penalty proceedings under section 271(1)(c).

Conclusion:

The Tribunal upheld the levy of penalty under section 271(1)(c) on the grounds of concealment of income and furnishing of inaccurate particulars. The assessee's appeal was dismissed, and the order of the CIT(A) was confirmed. The Tribunal emphasized that the provisions of Explanation 5A to section 271(1)(c) were applicable, and the assessee's actions justified the imposition of penalty.

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