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2015 (6) TMI 285 - ITAT MUMBAI

2015 (6) TMI 285 - ITAT MUMBAI - TMI - Penalty proceedings u/s. 271(1)(c) - additional income offered by the assessee on account of certain payments of salaries to domestic servants and drivers etc. in response to the notice u/s. 153A - Held that:- For invoking the provisions of Explanation 5A for levying the penalty u/s. 271(1)(c), the primary condition is that in the course of search the assessee should be found to be the owner of any asset or any income based on any entry in any books or docu .....

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y proceedings afresh in the light of the observations made above. Decided in favour of assessee for statistical purposes - ITA Nos.5234, 5235, 5236, 5237, 5238/Mum/2012 - Dated:- 29-5-2015 - Shri B R Baskaran & Shri Amit Shukla, JJ. For the Appellant : Dr. Prayag Jha For the Respondent : Shri Akhilendra Yadav ORDER Per Amit Shukla, Judicial Member The aforesaid appeals have been filed by the assessee against the common order dated 21.06.2012 passed by the CIT(A) 41, Mumbai, in relation with .....

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on u/s. 132 of the I.T. Act. The particulars of total income returned, total income assessed, additional income offered and penalty levied u/s. 271(1)(c) for various assessment years are as under: Assessment years Total Income Returned Total Income Assessed Additional Income Penalty imposed u/s. 271(1)(c) 2003-04 3,76,18,296/- 3,76,18,296/- 3,65,112/- 1,15,010/- 2004-05 1,53,07,690/- 1,53,07,690/- 3,67,462/- 1,21,263/- 2005-06 1,52,05,551/- 1,52,05,551/- 3,80,687/- 1,28,139/- 2006-07 1,49,79,536 .....

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penses were incurred on payment of salary to drivers and domestic servants of the assessee during the assessment years 2003-04 to 2007-08. In response to notice u/s. 153A dated 09.09.2009, the assessee filed return of income on 26.10.2009 declaring total income at ₹ 3,76,18,296/- for the A.Y. 2003-04 and also for various other years in question as per the details given above. The assessment u/s. 143(3) r.w.s. 153A have been completed in all the assessment years on the returned income, vide .....

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ied upon certain decisions, including that of CIT vs. Suresh Chandra Mittal (241 ITR 124). However, the Assessing Officer rejected the assessee s contention and held that the assessee s case is covered by Explanation 5A to section 271(1)(c), as the assessee had declared additional income after the search was conducted and penalty is leviable, the return u/s. 153A was not filed within twenty days of notice. Thus, after invoking the provisions of Explanation 5A, the Assessing Officer levied penalt .....

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s paid to Domestic servants and drivers iii. The loose papers were found for part of the period of Bloc Assessment Years. However, the appellant has made voluntary disclosure in respect of Domestic Servants and Drivers for all the assessment years covered under block assessment. iv. Revised returns were filed in response to notice u/s. 153A v. Revised returns are accepted in toto vi. No questions were asked by the Authorised officer during the course of the search or thereafter in respect of pay .....

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ary to domestic servants and drivers etc. The additional income has ben offered in view of the various loose papers/documents/seized/impounded during search/ survey. Additional Income of ₹ 3,65,112/- ₹ 3,67,462/-, ₹ 3,80,687/-, ₹ 4,26,287/-, ₹ 5,75,984/- and ₹ 6,93,522/- for the AYs 2003-04 to 2008-09 respectively. After discussion, the total income of the assessee as returned in accepted. ix. However, such expenses were offered in all the years under referenc .....

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158 CTR (MP)26 (iii) Income Tax Officer vs. Fashionways (2002) 77 TTJ (Asr) 59 (iv) M/s. KGK Creations (India) P Ltd. Vs. Asstt Commissioner of Income Tax, Mumbai (ITA No. 2320/Mum/2009) (2010-TIOL- 206-ITAT-MUM) (v) Commissioner of Income Tax vs. Suresh Chand Bansal (2009) 223 CTR (Cal) 128 : (2009) 22 DTR 1. The learned CIT(A) however, confirmed the penalty on the ground that all the returns were filed by the assessee only after the search when the undisclosed income was detected and the asse .....

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isfaction with regard to concealment of income or furnishing of inaccurate particulars which are mandatory. If such conditions are not fulfilled, then under the main provisions itself, penalty cannot be invoked. He submitted that Explanation 5A cannot substitute the main section 271(1)(c). The Explanation cannot override the necessity of fulfilling the conditions set out in the substantive part of the section. In support of his contentions, he strongly relied upon the decision of the Hon ble Bom .....

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by Finance (No.2) Act 2009 and held that the Explanation 3 does not and cannot override the conditions set out in substantive part of section 147. The Explanation to a statutory provision is intended to explain its content and cannot be construed to override it or to render substance and core nugatory. The learned counsel further submitted that during the search certain loose papers were seized from the premises of M/s. Vidyut Metallic Private Limited, Thane, which pertained to certain months a .....

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ion 5A, are not satisfied because the transaction recorded do not belong to the assessee. Further he relied upon catena of decisions, which are not discussed as they are not germane to the issue involved. 5. On other hand, the learned DR strongly relied upon the order of the Assessing Officer and submitted that Explanation 5A provides deemed penalty in the cases where the assessee is found to be owner of any money, bullion, jewellery etc., or any income during the course of search. There is no e .....

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ding given in the impugned order. The penalty has been levied on account of additional income offered by the assessee on account of certain payments of salaries to domestic servants and drivers etc., based on various loose papers found and seized during the course of search carried on 24.07.2008. In response to the notice u/s. 153A, the assessee has declared additional income in various years as per the details mentioned in the foregoing paragraph. The Assessing Officer has invoked Explanation 5 .....

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ation of additional income in respect of payment of salary etc., has been made in view of certain loose papers and incriminating material found during the course of search. Thereafter, he has mentioned that penalty proceedings u/s. 271(1)(c) is being initiated. This remark of the Assessing Officer in the assessment order itself construes his satisfaction for initiating the penalty proceeding under section 271(1)(c). Sub section (1B) has been brought in statute by Finance Act 2008 with retrospect .....

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contention raised by the learned counsel that the conditions laid down in the main provisions of section 271(1)(c) has not been fulfilled. Ever otherwise also, if certain additional income is offered/declared in wake of documents/materials found/seized during the course of search and seizure, then that by itself indicates that there is a prima facie concealment of particulars of income. Explanation 5A which has been brought by the Finance Act 2009 with retrospective effect from 01.06.2007 has be .....

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e been acquired by him by utilising (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and, - (a) where the return of income for such previous year has been furnished before the said date but such income .....

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From the plain reading of the above Explanation it is amply clear that the Explanation is applicable in the cases where search u/s. 132 has been initiated after 01.06.2007 and in the course of such search, the assessee is found to be the owner of , firstly, any assets like money, bullion, jewellery or other valuable article or thing; secondly, any income based on any entry in books of account or other documents or other transactions; and if the assessee claims that such asset or income have bee .....

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d inaccurate particulars of such income. Thus, there is no exception provided in the said Explanation for getting any immunity unlike in Explanation 5 which was applicable in the cases of search prior to 01.06.2007. The crucial condition for invoking of Explanation 5A is that, the assessee should be found to be the owner of various kinds of assets or income in the course of search and such assets or income has not been declared in the return of income prior to the date of search. Here in this ca .....

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