TMI Blog2015 (5) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... s the assessee rightly contends, penalty under section 271(1)(c) can not be sustained in law. In any event, as held by the Hon’ble jurisdictional High Court above, the penalty under section 271(1)(c) of the Act can only be imposed in respect of an income over and above the income disclosed in the return filed under section 153A, and since the income in question was included in the return filed by the assessee under section 153A, the impugned penalty is unsustainable. For this reason also, the impugned penalties of ₹ 79,070/- for A.Y. 2003-04, ₹ 82,070/- for A.Y. 2004-05 and ₹ 65,025/- for the A.Y. 2005-06 are, therefore, deleted. The assessee gets the relief accordingly. - Decided in favour of assessee. - IT(SS)A Nos.467, 468 & 469/Ahd/2011. - - - Dated:- 24-4-2015 - Pramod Kumar And S.S. Godara JJ. For the Appellant : Ramesh Kumar Malpani For the Respondent : P.L. Kureel ORDER Per Pramod Kumar: 1. These three appeals, filed by the assessee, are directed against the order dated 16th August, 2010 passed by the CIT(A) in the matter of penalty under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ), for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sure made under section 132(4) read with Explanation 5 below section 271(1)(c) of the Act, and, therefore, no penalty is liveable with reference to the same, in view of said explanation 5 to the Act. 5. None of these submissions, however, impressed the Assessing Officer. The Assessing Officer rejected all these submissions and proceeded to impose penalty under section 271(1)(c). While doing so, and rejecting assessee s reliance on Explanation 5 to Section 271(1)(c), the Assessing Officer, inter alia, observed as follows :- Finally, the assessee argued the following: Moreover the amount was part of our disclosure made u/s.132(4) r.w.s. explanation 5 below Section 271(1)(c) of the Act and therefore, no penalty is liveable with reference to same in view of said explanation 5 of the Act. Rebuttal: The claims of the assessee have been examined from the perspective of concealment and have been found to be unacceptable on account of the following reasons. For proper appreciation of the contentions of assessee, the provisions of Explanation 5 to section 271(1)(c) of the Income Tax Act, 1961 as claimed relevant to the instant proceedings are laid down below :- .... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in such-section(1) of section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income .... The assessee is not eligible for the protection provided under the exception to Explanation 5 because of the reasons mentioned below : (i) Assessee has not disclosed any table income to the Chief Commissioner or Commissioner at any time; (ii) Assessee herself has made no disclosure of the asset in statement made under sub-section(4) of section 132 of the income Tax At, 1961. (iii) Nowhere in the statement has the manner of derivation of undisclosed income been specified. The assessee can not be conferred the benefit of exception to Explanation 5 s the assessee has not voluntarily disclosed the asset and the manner of earning of undisclosed income in the statement under section 132(4) of the Income Tax At, 1961 during search operations. The law requires strict interpretation in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T. Act. Hence, the penalty may be deleted. I have considered the facts and the submissions. I do not agree with the appellant s view. The Hon ble ITAT Ahmedabad bench in the case of ACIT vs. Kirit Dayabhai Patel, in ITA No.2344/Ahd/2007 for A.Y. 2002-03 and in the case of Shri Rajesh A. Patel in ITA No.2345, 2346, 2348 2389/Ahd/2007 for A.Ys. 98-99, 99-2000, 2001-02 2002-03 dated 25.06.2009 [given by Shri R V Easwar Vice President and Third Member], have considered the point of applicability of explanation 5 to section 271(1)(c) for the years earlier to the year of search. The Hon ble Member did not approve the decision of Madras High Court in the case of CIT vs. S.D.V. Chandru 266 ITR 175 and Rajasthan High Court decision in the case of CIT vs. Kanhaiyalal 299 ITR 19 and order of the Allahabad Bench of ITAT in the case of Shyam Biri Works P. Ltd. vs. ACIT 70 TTJ 880. Instead the Member have followed the decision of Bombay High Court in the case of Sheraton Apparels vs. ACT 256 ITR 20 and ITAT Ahmedabad Bench in the case of Rupesh Godhidas Patel 309 ITR (AT) 271 and held that benefit of explanation 5(2) to section 271(1)(c) is confined to the year in respect of which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve concealed the particulars of his income or furnished inaccurate particulars of such income, unless, - (1) Such income is, or the transactions resulting in such income are recorded, (i) in a case falling under clause(a), before date of the search; and (ii) in a case falling under clause(b), on or before such date; in the books of account, if any, maintained by him for any source of income of such income is otherwise disclosed to the [principal Chief Commissioner or Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner] before the said date; or (2) he in the course of the search, makes a statement under subsection (4) of section 132 that any money, bullion, jewellery or other valuable article of thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub section (1) of Section 139 and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income. 9. The High Court of Madras in the case of S.D.V. Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for availing of the immunity from penalty under Section 271(1)(C) was that the assessee should specify, in his statement under Section 132(4), the manner in which income stood derived. Admittedly, the second condition, in the present case also stood satisfied. According to the department, the assessee was not entitled to immunity under Clause (2) as he did not satisfy the condition for availing the benefit of waiver of penalty under Section 271(1)(c) as the assessee failed to file his return of income on 31st July, 1987 and pay tax thereon particularly when the assessee concealed on August 1, 1987 that there was concealment of income. The third condition under clause (2) was that the assessee had to pay the tax together with interest, if any, in respect of such undisclosed income. However, no time limit for payment of such tax stood prescribed under clause(2). The only requirement stipulated in the third condition was for the assessee to pay tax together with interest . In the present case, the third condition also stood fulfilled. The assessee has paid tax with interest upto the date of payment. The only condition which was required to be fulfilled for getting the immunity, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cify any time limit during which the aforesaid amount i.e. the amount of penalty with interest has to be paid. Admittedly when the assessees herein have paid the entire amount with interest, the Assessing Officer ought to have granted them immunity available under Section 271(1)(C ) of the Income Tax Act. 15. The decision relied upon by learned advocate for the respondent will not apply to the facts of the present case. 16. In view of the aforesaid facts of the case and also the principle laid down in the decisions relied upon by the learned senior counsel for the appellant more particularly the principle laid down in the case of Assistant Commissioner of Income Tax Vs. Gebilal Kanhailal (supra) and Commissioner of Income Tax Vs. Abdul Rashid (supra), we are of the considered opinion that the penalty under Section 271(1)(C) of the Income Tax Act cannot be levied on the income shown in the return filed under Section 153 of the I.T. Act. 17. Considering the facts and circumstances of the case and also considering the decision of the Madras High Court in the case of S.D.V. Chandru (supra), we are of the opinion that the appellant is entitled to the benefit of the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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