TMI Blog2014 (5) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... iaries and documents were seized - Explanation 5A to Section 271(1)(c) clearly covers the situation - the income declared by the assessee in his return of income furnished after the date of search was solely on the basis of cash found during the search and entries in documents and diaries seized - There is no cogent explanation as to why these incomes were not disclosed earlier in the respective assessment year - assessee is clearly liable for levy of penalty u/s. 271(1)(c) of the Act – the order of the CIT(A) is upheld – Decided against Assessee. - I.T.A. Nos. 5190, 5191, 5192 & 5193/Del/2013 - - - Dated:- 25-4-2014 - Shri R. P. Tolani And Shri Shamim Yahya,JJ. For the Petitioner : Sh. K. P. Garg, CA For the Respondent : Sh. Ramesh Chander, CIT(DR) ORDER Per Shamim Yahya: AM These appeals by the assessee are directed against the respective orders of the Ld. CIT(A) confirming the levy of penalty u/s. 271(1)(c) for the asstt. Year 2003-04 to 2006-07. Since the issues are common and connected and the appeals were heard together, these are being consolidated and disposed off by this common order for the sake of convenience. 2. The assessee in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09 Rs. 24,10,000/- 2009-10 Rs. 6,20,000/- Total Rs. 80,81,000/- The difference (Rs. 82,22,450 Rs. 80,81,000) i.e. Rs. 1,41,450/- may be taken into consideration in the year of search i.e. Assessment Year 2009-10. 5.1 AO referred to the seized diaries of the assessee. He noted that assessee has surrendered the following entries which show income not disclosed to tax. Table-B Assessment year Income as emerging on account of pages 60/61/62/63/64/70 Income as emerging on account of pages 28/29/30/31/32/33 2003-04 8,14,000/- 2004-05 3,00,000/- 25,40,000/- 2005-06 57,000/- 2006-07 17,200/- 2007-08 16,15,300/- 2008-09 24,05,100/- 2009-10 6,20,300/- Total 50,14,900/- 33,54,000 Rs. 50,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be related to the income returned or assessed for the assessment year mentioned above. The assessment order also speaks nothing about it. The assessee honored the surrender by revising the returns of his income to the extent of the amount of surrender. His returned income has been accepted in this case as there was nothing to be added. It would not have been possible for the department to assess the so-called undisclosed income without the assessee's co-operation. That no penalty is leviable when unproved income is offered for taxation to purchase peace. We rely upon the following judgments in this regard a) SIR SHADI LAL SUGAR GENERAL MILLS LIMITED Vs. COMMISIONER OF INCOME TAX DELHI, 168 ITR 705 (S C) b) SUDERSHAN SILK SAREES vs. CIT, DELHI (2008) 169 TAXMAN 321 (SC) c) COMMISIONER OF INCOME TAX Vs. SURESH CHAND BANSAL, 223 CTR (CAL) 128 d) COMMISIONER OF INCOME TAX Vs. RAJEEV GARG, 313 ITR 256 (P H) e) COMMISIONER OF INCOME TAX Vs. SURESH CHAND MITTAL, 251 ITR 9 (S.C) 5.3 The AO did not accept the above contention of the assessee. AO referred to the explanation 5(a) appended below to section 271(1)(c). AO observed that Explanation 5A app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had not declared the actual income in its regular return of income u/s 139(1) of the Income Tax Act, 1961 filed on 11.10.2004. The income declared in the original return was only Rs. 6,99,400/- as against the return of Rs. 32,39,400/- filed on 1.8.2010 in response to notice u/s 153A. This was finally assessed at Rs. 35,27,300/- on 30.12.2010 after making an addition of Rs. 28,27,900/- on account of difference in the surrender made and the. amount deduced from the seized documents. Penalty was levied at the minimum rate. On a perusal of the impugned order it is observed that the assessee had surrendered Rs. 82,22,450/- u/s 132(4) on account of cash found in lockers and unexplained entries in diaries and as per break up, the disclosure [Table-A of the order] for the instant year is Rs.25,40,000/-. Furthermore, additional income emerging from scrutiny of explanation of assessee of the pages of the seized diary [reference Table-B of order as well as para 10 of the assessment order] amounted to Rs. 3,00,000/- for the year. Thus it is evident that an amount of RS.28,40,000/- partly disclosed and also added by the AO arose from assessee's own admission when confronted wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee for the asstt. year 2004-05. Thus, we find that all along during the course of search as well as during the course of assessment proceedings, the assessee has not disputed the veracity of the seized documents and has accepted that he has not disclosed income to the extent as mentioned above. In the penalty proceedings the assessee gave a total different story. He claimed that the notings in the diaries and loose documents were dumb documents. He claimed that he was a Textile Chemist and has been working in the field for the past 25 years. He claimed that the notings were meant for all possible ways to reduce the cost of production. These notings were figures for his personal record so as to study these points and find out the way. That there was a new technology updations and cost of each process has to be known to him. Now we find that there is no basis regarding the aforesaid claim of the assessee. Entries in the diaries and loose documents found during the course of search were discussed in the course of assessment. The assessee was duly confronted and assessee has accepted that these were undisclosed income. Now the assessee s claim that these were his jotting regarding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished before the said date but such income has not been declared therein; or (b) The due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of 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. 8. Now the income declared by the assessee in his return of income furnished after the date of search was solely on the basis of cash found during the search and entries in documents and diaries seized. There is no cogent explanation as to why these incomes were not disclosed earlier in the respective assessment year. Hence, assessee is clearly liable for levy of penalty u/s. 271(1)(c) of the I.T. Act. 9. The case laws referred by the Ld. Counsel of the assessee are not applicable to the facts of the case. In the case of Mumbai Tribunal decision in Marathon Nextgen Reality Textile Ltd. vs. DCIT, the addition of income on the basis of f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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