TMI Blog2015 (12) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction. Beside there should be any evidence found during the course of search. Thus in my considered view impugned penalties cannot be sustained under explanation 5A to section 271(1)(c). While interpreting proviso to sec. 153A, various judicial forums have held that additions in respect of finalized assessments cannot be made unless incriminating material is discovered during the course of search proceedings. In these circumstances impugned assessments for AY 2003-04, AY 2005- 06 being unabated, no additions could have been made in the absence of any incriminating material. Besides for AY 2006-07 also small penalty for house renovation expenses can be sustained on merits as no incriminating material, evidence or nature of renovation is ever inquired. Assessee’s affidavit also remains uncontroverted on record. Thus impugned penalties confirmed by the ld. CIT(A) u/s 271(1)(c) are deleted. - Decided in favour of assessee. - ITA No. 1013, 1014 & 1015/JP/2013 - - - Dated:- 4-12-2015 - SHRI R.P. TOLANI, JUDICIAL MEMBER For the Petitioner : Shri Vijay Goyal, CA Shri Mridul Goyal, Advocate For the Respondent : Shri Raj Mehra, JCIT-. DR ORDER PER R.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected it while passing the order u/s 271(1)(c). Even during the course of appellate proceedings the AR has not adduced any evidence to support the averments made in this affidavit and therefore this affidavit is held to be unreliable evidence. iii) The submission of the appellant that the surrender made voluntarily is also not supported by facts. The excerpts of the relevant portion of the statement of the appellant taken on 27.08.2008, u/s 132(4) is reproduced hereunder for ready reference: On perusal of the statements it is seen that the appellant had fabricated seals of different business concerns. These were used to generate bogus bills and the sundry creditors for such bogus purchases could not be verified by him. It was on the basis of these documents that he admitted to having earned unaccounted income from the business concern M/s Mittal Company and in response to question 12 he has admitted that he had spent this amount on the marriage of his sons and purchase of the jewellery which was also found during the course of search and the quantity and value of which was listed as per Panchanam prepared. Thus it cannot be said that there was o incriminating ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd AY 2006-07 were framed u/s 153A by Ld. AO vide his orders dated 31.05.2010 accepting the amounts of income returned in respective years and made no other addition. b) Ld. AO thereafter initiated penalty proceedings u/s 271(1)(c) of Income Tax Act qua the suo motu further income declared in the returns filed u/s 153A as mentioned above. Assessee filed detailed explanation contending that the penalty was not leviable on merits as well under law. Qua these items of income neither ant incriminating material was found during search, nor any statement was record and no amount was offered. There was no justification of penalty in a case assessee suo motu offered further income to avoid any complications. The explanation did not find favor with ld. AO who imposed the impugned penalty in respective years as mentioned in above table. Aggrieved from the Assessment order of the ld AO the assessee filed appeal before the Ld CIT(A). The ld CIT(A) upheld the findings of AO and confirmed the levy of penalty. 2.4 Aggrieved from the orders of ld CIT(A), assessee is in appeals before. 2.5 Ld. Counsel contends that during the course of search the department has not found any incriminating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous years can only be imposed where the assessee is: - (i) found to be owner of any money, bullion, jewellery or other valuable article or thing found acquired by utilizing the income of previous year (ii) or any income based on any entry in any books of account or other documents or transactions entries in which represents to income of the assessee for any previous year. It is not dispute that qua the above items assessee was not found to be owner of any documents/books of accounts found by the search party indicating that the assessee made unexplained expenditure in the marriage of these two sons or renovation in house. The lower authorities have not shown any nexus with the income surrendered in the returns filed u/s 153A with the entry in any books or other documents. The additional income offered in the returns filed u/s 153A was purely on the basis of disclosure made in search statement, therefore deeming provisions of Explanation 5A to section 271(1)(c) are not at all attracted in assessee s case, consequently impugned penalty can not be imposed under these facts case of the assessee. Since the penalty under explanation 5A to section 271(1)(c) is dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties not to extract such statements and declaration without incriminating material. The addition for the balance amount ₹ 19,15,303/- also stands deleted by ITAT which clearly implies that the additions ultimately returned were not based on any incriminating material and offered by assessee to ward off the rigor created by search actions and consequent proceedings. Imposition of further penalty is highly unjustified in these facts and circumstances. Penalty proceedings are distinct and separate and even the legality of addition made can be challenged in penalty proceedings. It is not disputed that no material whatsoever found during the course of search. Original assessments for AY 2003-04, AY 2005-06 had become final by the time search on 27/08/2008 was carried out. In these circumstances the assessments remaining unabated no penalty qua these items can be imposed. Further reliance is placed:- (i) Sudarshan Silks and Sarees v. CIT (2008) 300 ITR 205 (SC). On a Search conducted in the premises of the assessee, apart from cash and jewellery, incriminating documents evidencing concealment of income were unearthed. It was found that the assessee was maintaining double ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he finding of the Tribunal was perverse, in the sense that it was such as could not reasonably have been arrived at on the material placed before the Tribunal. In the absence of such a question the High Court had to accept the finding of fact arrived at by the Tribunal and then proceed to decide the question of law referred. In this case the question of law referred to the High Court was whether the Tribunal was right in upholding the findings of the Commissioner (Appeals) in cancelling the penalty levied under section 271(1)(C). The question as to the perversity of the findings recorded by the Tribunal was neither raised nor referred to the High Court. The Tribunal is the final court of fact. The decision of the Tribunal on the facts can be gone into by the High Court in the reference jurisdiction only if a question has been referred to it whether the finding arrived at by the Tribunal on the facts was perverse in the sense that no reasonable person could have taken such a view. The ld. AR of the assessee submitted that assessment proceedings and penalty proceedings are two separate proceedings. The additions made during assessment proceedings or additional disclosures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmed by the ld. CIT(A) u/s 271(1)(c) may be deleted. 2.6 Ld. DR relied on the orders of authorities below. It is not disputed that no incriminating material was found during the search and declared income stands deleted by ITAT and the additions in question were declared in the return by the assessee. Ld. DR further contends that explanation 5A to section 271(1)(c) is applicable inasmuch as sub clause ii thereof refers to word transaction and the impugned addition impliedly mean to be the transactions of the assessee. It is contended that penalties have been rightly imposed. 2.7 I have heard the rival contentions and perused the material available on record. The relevant facts have been narrated above in details. In my considered view assessee s case is not fit for imposition of impugned penalties as: (i) It is trite law that penalties should not be imposed unless the case falls under the four corners of law mandating the penalty. Thus such laws are to be strictly implemented. Adverting to explanation 5A to section 271(1)(c) if explicitly refers to Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is fou ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
