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2015 (8) TMI 756 - ITAT PUNE

2015 (8) TMI 756 - ITAT PUNE - TMI - Penalty proceedings u/s.271AAA - delay in payment of tax - assessment proceedings after search and seizure - CIT(A) deleted penalty - Held that:- Although the assessee has not paid an amount of ₹ 40,99,998/- before filing of the return of income, however, the fact remains that the demand of ₹ 49,64,700/- raised by the AO for A.Y. 2010-11 vide order dated 29-12-2011 passed u/s.143(3) has been paid on 22-03-2012 which is much before 28-06- 2012, i.e .....

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71AAA is leviable in the instant case. Accordingly, the order of the CIT(A) is upheld and the grounds raised by the Revenue are dismissed. - Decided in favour of assessee. - CO No. 74/PN/2014, ITA No.1430/PN/2013 - Dated:- 12-8-2015 - SHRI R.K. PANDA AND SHRI VIKAS AWASTHY, JJ. For The Assessee : Shri S.N. Puranik For The Department : Shri.B.C. Malakar ORDER PER R.K. PANDA, AM : This appeal filed by the Revenue and the CO filed by the assessee are directed against the order dated 02-04-2013 of t .....

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om the premises of Shri Sanjay Kasliwal at 215-216, Apna Bazar, Jalgaon Road, Aurangabad. In response to notice u/s.142(1), the assessee filed his return of income on 27-09-2011 declaring total income at ₹ 6,84,35,910/-. During the course of assessment proceedings the AO noted that during the course of search proceedings at the office premises of Shri Jugal Kishore Tapadia and Tapadia Construction Ltd. statement of Shri Jugal Kishore Tapadia was recorded on 09-03-2010 by the ADIT (Investig .....

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7; 6,84,35,910/- which is as per the return of income. The AO subsequently initiated penalty proceedings u/s.271AAA of the I.T. Act. He noted that the assessee in his computation of income had given a note which reads as under : NOTE : During the year under consideration, the possession of basement floor & ground floor keeping some balance work of hyper market is handed over to Pusti Enterprises Pvt. Ltd., the purchaser for carrying the fit out works. The proportionate sale consideration and .....

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in his reply to such penalty notice submitted that the firm has offered profit on basement floor and ground floor of the hyper market which is being constructed by the firm at Garkheda, Aurangabad and which is agreed to be sold to Pusti Enterprises Pvt. Ltd. The income has been declared in the statement recorded u/s.132(4) of the I.T. Act by one of the partners of the firm Shri Jugal Kishore Tapadia. The firm has also paid tax on the income offered. The particulars of this disclosure are duly f .....

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sclosed income and specifies the manner in which such income has been derived; (ii) Substantiates the manner in which undisclosed income was derived; and (iii) Pays the tax, together with interest, if any, in respect of the undisclosed income. He observed that the tax payable on the returned income was ₹ 2,11,46,696/- and interest payable till filing of the return was ₹ 14,51,222/-. Therefore, the assessee should have paid ₹ 2,25,97,918/- by way of tax and interest till the dat .....

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shing of return of income. Since the assessee has not paid the total tax and interest before furnishing the return of income, therefore, the assessee, according to the AO, is not eligible for the purpose of section 271AAA(2). The AO accordingly levied penalty of ₹ 69,40,208/- being 10% of the undisclosed income of ₹ 6,94,02,079/- u/s.271AAA of the I.T. Act. 5. Before CIT(A) it was submitted that the assessee has received advance consideration by bank cheques and the sale of the prope .....

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that since the consideration has been received by bank cheques and since all the transactions have been recorded in books of accounts and the income offered to tax on proportionate basis in A.Y. 2010-11 on the basis of entries recorded in the books of account, the same cannot be considered as undisclosed income of the assessee. 6. The assessee further argued that as per provisions of section 132B, existing liability is to be adjusted against the cash seized and such advance tax liability is the .....

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en further mentioned that the legislative intent behind this provision is to ensure recovery of outstanding tax, interest etc. which may arise subsequent to assessment pursuant to search action. It was argued that even if the intention of the legislature mentioned above is considered then also the tax on income disclosed is to be regarded as fully paid on completion of the assessment. It was accordingly argued that the third condition that the assessee pays the tax together with interest, if any .....

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no penalty u/s.271AAA can be levied if the assessee has paid the tax and interest due thereon within the time limit provided in notice of demand u/s.156 and also well before the penalty proceedings were concluded. Relying on various decisions it was argued that no penalty u/s.271AAA of the I.T. Act could be levied on the assessee. 8. Based on the arguments advanced by the assessee and relying on the decision of Hon ble Supreme Court in the case of ACIT Vs. Gebilal Kanhaiyahal (HUF) reported in .....

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is in appeal before us with the following grounds : 1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty of ₹ 69,40,208/- imposed u/s 271AAAof the Act. 2) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the cash seized at the time of search should be considered as 'Advance Tax' payment, as the Explanation to Section 132B of the I.T. Act, is clarificatory in nature, a .....

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case and in law, the Ld. CIT(A) has erred in not considering the provisions of Section 140A(3), which compels the payment of tax and interest, before filing of return of income. 5) The appellant craves leave to add, alter, modify, delete, and amend any of the grounds, as per the circumstances of the case. 6) The appellant prays leave to adduce such further evidence to substantiate its case, as the occasion may demand. 10. The Ld. Departmental Representative strongly challenged the order of the C .....

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in which such undisclosed income was derived. Since in the instant case the assessee has not paid the taxes due together with interest in respect of such undisclosed income, therefore, he is not entitled to the immunity granted in section 271AAA. He submitted that various case laws relied on by the assessee before the CIT(A) are not applicable to the facts of the present case. He accordingly submitted that the order of the CIT(A) be reversed and that of the AO be restored. 11. The Ld. Counsel f .....

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which was passed on 28-06-2013. Referring to pages 17 to 23 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the letter addressed to the ADIT on 16-09-2010 and 22-06-2010 requesting adjustment of seized cash against the tax payable in respect of the firm. He submitted that the department has neither adjusted the cash seized nor communicated refusal for adjustment of such cash against the tax payable by the firm. Referring to the provisions of section 271AAA .....

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ction 140A(3) he submitted that as per the said provision w.e.f,. 01-04-1980 if any assessee fails to pay the whole or any part of such tax or interest or both in accordance with the provisions of sub-section (1) he shall without prejudice to any other consequences which he may incur be deemed to be an assessee in default in respect of the tax or interest or both remaining unpaid and all the provisions of this Act shall apply accordingly. Referring to proviso to sub-section (2) to section 158BFA .....

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x has to be paid. He accordingly submitted that since the assessee has paid the tax due after completion of the assessment and before the penalty order was passed, therefore, the order of the CIT(A) is in accordance with the law and therefore the same should be upheld and the grounds raised by the Revenue should be dismissed. In his alternate contention he submitted that the penalty, if any is leviable, has to be restricted to 10% of the unpaid tax. 12. We have considered the rival arguments mad .....

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aforesaid income of ₹ 6,94,02,079/-. Although the tax payable and interest payable on such income comes to ₹ 2,25,97,918 (tax ₹ 2,11,46,696/- + interest ₹ 14,51,222/-) we find the assessee had paid an amount of ₹ 1,84,97,920/- only till completion of assessment. Thus, the assessee has paid less by ₹ 40,99,998/- for which the AO held that the assessee had not paid tax due together with interest, if any, in respect of the undisclosed income and therefore penalt .....

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u/s.271AAA. Since there is no time limit prescribed for payment of tax u/s.271AAA and since the assessee has paid the entire tax along with interest due before passing of the penalty order, therefore, no penalty u/s.271AAA is leviable on the assessee. 14. We find an identical issue had come up before the Kolkata Bench of the Tribunal in the case of DCIT Vs. Pioneer Marbles and Interiors Pvt. Ltd. reported in 144 TTJ 663. In that case, the assessee company was subject to search and seizure opera .....

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inadvertent mistake but the assessee had paid overall shortfall within permissible time, i.e. upon receiving the notice of demand u/s.156. The AO rejected the contention of the assessee and levied penalty u/s.271AAA. The CIT(A) cancelled such penalty holding that due taxes along with interest was paid before the penalty proceedings were concluded. On further appeal by the Revenue the Tribunal dismissed the appeal filed by the Revenue and upheld the order of the CIT(A) by observing as under : 6. .....

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tion to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) Nothing contained in sub-section (1) shall apply if the assessee,- (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together wit .....

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represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of s .....

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e under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted. 7. We find that under the scheme of Section 271 AAA, there is a complete paradigm shift so far as penalty in respect of unaccounted income unearthed as a result of search operation carried out on or after 1s t June 2007 is concerned. Unlike in the case of penalty un .....

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in a statement under section 132(4), admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income. While payment of taxes, along with interest, by the assessee is one of the conditions precedent for availing the immunity under section 271AAA(2), there is no time limit set out for such payments by t .....

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2). 8. While dealing with Explanation 5 to Section 271(1)(c), which is broadly on the same lines, Hon ble Gujarat High Court, in the case of CIT Vs Mahendra C Shah (299 ITR 305) has observed that, ……there is no prescription about the point of time when the tax had to be paid qua the amount of income declared in the statement under section 132(4) of the Act . We must, however, point out that even after making these specific observations Their Lordships had to treat the conclusion of .....

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rtaken by the Assessing Officer because the opening portion of section 271(1) of the Act requires the Assessing Officer to record satisfaction in the course of such proceedings, and the satisfaction has to be as regards the concealment of particulars of income or furnishing inaccurate particulars of income. Section 271 AAA, as the statute unambiguously provides, does not require any subjective satisfaction of the Assessing Officer to be arrived at during the assessment proceedings, and, therefor .....

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