TMI Blog2015 (10) TMI 2247X X X X Extracts X X X X X X X X Extracts X X X X ..... d hence the penalty was not leviable. Since we have deleted the penalty on merits, we do not find it necessary to adjudicate these legal issues. We set aside the orders passed by Ld CIT(A) and direct the assessing officer to delete the penalty levied u/s 271(1)(c) of the Act for the years under consideration. - Decided in favour of assessee. - I.T.A. No. 5724,5727 and 5729/Mum/2012 - - - Dated:- 23-9-2015 - Shri B. R. Baskaran, AM And Amarjit Singh, JM For the Appellant : Shri Rajeev Khandelwal For the Respondent : Shri Sujit Bangar ORDER Per B. R. Baskaran: The assessee has filed these appeals challenging the orders passed by Ld CIT(A)-36, Mumbai confirming the penalty levied by the AO u/s 271(1)(c) of the Act for assessment years 2007-08 to 2009-10. 2. The assessee is a partnership firm and is engaged in the business of trading and exporting of cut and polished diamonds. The revenue carried out search and seizure operations u/s 132 of the Act in the business premises of the assessee. During the course of search, certain incriminating documents were seized from the office and also from the residential premises of one of the employees named Shri Ronak K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing officer has levied penalty for all the three years without considering the conditional surrender made by the assessee. He further submitted that the assessing officer did not refer to any of the seized documents in the penalty order, to corroborate the additional income surrendered by the assessee and hence it was not conclusively proved that the seized documents did reveal undisclosed income of the assessee. Accordingly he submitted that the tax authorities are not justified in invoking Explanation 5A to sec. 271 of the Act. He further submitted that the voluntary offer made by the assessee would not automatically lead to levy of penalty u/s 271(1)(c) of the Act. He further submitted that the additional income admitted by the assessee in the return of income filed u/s 153A of the Act has since been accepted by the assessing officer and hence these are not the cases where there is variation of income between the returned income and assessed income. He further submitted that the partner of the assessee firm has admitted aggregate amount of ₹ 12.00 crores in the hands of various persons for various years. However, the assessing officer has levied penalty in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dencing payment of salary and loans in cash to the employees and the same has been confirmed by the concerned employee and also by the partner of the assessee firm. Further the additional income of ₹ 12.00 crores was offered only upon examining those documents only. Accordingly the ld D.R said that the ld A.R was not correct in contending that the additional incomes offered by the assessee were not corroborated. He further submitted that the assessee cannot escape from the addition on the reasoning that the revenue did not take any action in the hands of concerned employees. He further submitted that the assessing officer has initiated penalty proceedings under both the limbs of sec. 271(1)(c), but finally imposed penalty for concealment of particulars of income only. Accordingly he submitted that the Ld CIT(A) was justified in confirming the penalty imposed by the AO. 7. We heard the parties and perused the record. We notice that the partner of the assessee firm has agreed to offer a sum of ₹ 12.00 crores in the hands of various assessees of the group. The Ld A.R has furnished a letter, wherein he has stated that the revenue has not levied penalty in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence to the information, facts and materials in the hands of the authority imposing penalty at the time the order was passed. In the instant case, the assessing officer did not refer to any of the documents or materials found during the course of search from which the impugned undisclosed income was found out. Hence, in our view, the tax authorities could not have placed reliance on Explanation 5A to sec. 271 of the Act without making specific reference to the documents, which revealed about concealment of income, i.e., the conditions prescribed in the Explanation 5A has not been satisfied in the instant cases. On the contrary, we have noticed that the partner of the assessee has made a lump sum disclosure of ₹ 12.00 crores, that too in the hands of various assessee, which goes against the finding of the tax authorities that there were specific documents evidencing undisclosed income. The following reply given by the partner of the assessee firm further vindicates this point:- I have gone through the statement of Shri Ronak Kirit Kumar Shah, manager of Sejal Exports and statements of all the employees recorded at Fatima Manzil office of Sejal Exports. Further I have gon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussions made in the assessment order can be taken as guidance. In the instant cases, the assessing officer has imposed penalty without establishing that there was concealment of income. Accordingly, we are of the view that the basic condition for imposing penalty was not satisfied and hence the impugned penalty levied for the years under consideration is liable to be set aside. 11. The Ld A.R also urged a legal issue that the assessing officer has not specified the limb under which the penalty proceedings were initiated. We also notice that, in the penalty notice issued by the AO, one of the limbs has not been struck off. However, in the assessment order, the assessing officer has clearly stated that the penalty proceedings are initiated for concealment of income. Hence, the legal issue urged by the assessee becomes debatable. The ld A.R also contended that there is no variation between the returned income and assessed income and hence the penalty was not leviable. Since we have deleted the penalty on merits, we do not find it necessary to adjudicate these legal issues. 12. In view of the foregoing discussions, we set aside the orders passed by Ld CIT(A) and direct the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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