TMI Blog2013 (7) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... taraman And K. B. K. Vasuki,JJ. For the Appellants : Mr. Arvind P. Datar Senior Counsel for Mr. J. Naresh Kumar For the Respondent : Mr. Swaminathan Standing Counsel for Income Tax Dept JUDGMENT (The Judgment of the Court was made by Chitra Venkataraman, J.) The following substantial questions of law are raised by the assessee in the present Tax Case Appeal preferred as against the order of the Income Tax Appellate Tribunal, Chennai 'D' Bench dated 02.06.2011 passed in ITA.No.2142/Mds/2010 for the assessment year 2005-06. "1. Whether on the facts and in the circumstances of the case the Income-tax Appellate Tribunal was right in law in confirming penalty levied by the assessing officer under Section 271(1)(c) of the Income Tax Act, 1961 ? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the penalty levied by the assessing officer under Section 271(1)(c) of the Income Tax Act, 1961, even though the Commissioner of Income Tax (Appeals) deleted the penalty since the assessee has not concealed any income nor filed any inaccurate particulars of income ? 3. Whether Explanation 5 below t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer, however, pointed out that till the date of search i.e., on 26.10.2005, there was no return of income for the assessment year 2005-06. In the circumstances, penalty proceedings under Section 271(1)(c) of the Act was initiated. 4. The Deputy Commissioner of Income Tax initiated proceedings under Section 271(1)(c) of the Act and viewed that even though the due date for filing of the return fell on 31.10.2005, as on the date of search, i.e., on 26.10.2005, there was no obligation to file the return and there was no search in the assessee's premises; the assessee, formed as a firm on 16.12.2003, was dissolved on 31.03.2005 under the deed of dissolution dated 17.02.2006. On the date of search, though no books of accounts pertaining to the firm were found, only during the course of post search investigation, books of accounts were filed before the DDIT(Inv.). Thus, by inference, the Deputy Commissioner held that the assessee had come forward with books of account and filed the return of income on 30.08.2006, consequent on the search only. Thus, the Deputy Commissioner invoked Section 271(1)(c) proceedings holding that there was concealment of income and levy of penalty is warran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as the Revenue was concerned, it was enough to show that the assessee had concealed income; mere payment of tax, that too after search, would not exonerate the applicability of the penal provisions. The Tribunal further viewed that even though the return was accepted, yet, the penalty proceedings and assessment proceedings being different, penalty was leviable. Thus, the Revenue's appeal was allowed. Aggrieved by this, the present Tax Case Appeal has been filed by the assessee. 7. Learned Senior counsel appearing for the assessee submitted that when the Revenue had accepted the returned income holding that the transactions were reflected in the books of accounts and that the search was only in the partner's premises and there was no allegation that the assessee had not maintained the books of accounts even on the date of search, penalty in this case could not be levied invoking Section 271(1)(c) of the Act. He further submitted that even to apply Explanation 5 to Section 271(1)(c) of the Act, there were no materials seized during search that the assessee was in possession of any cash or any other materials to hold that there was deemed concealment in this case. Thus, with no co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o furnish returns, comply with notices, concealment of income, etc. Explanation 5 - Where in the course of a search initiated under Section 132 before the 1st day of June, 2007, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income, - (a) for any previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date or, where such return has been furnished before the said date, such income has not been declared therein ; or (b) for any previous year which is to end on or after the date of the search, then notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income unless - (1) such income is, or the transactions resu ..... 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