TMI Blog2015 (12) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... of capital gains account with bank not having been made by the assessee, tantamount to furnishing of inaccurate particulars of income and justifiably, penalty under section 271(1)(c) of the Act is leviable on such furnishing of inaccurate particulars of income. The learned Authorized Representative for the assessee in a written Note had furnished the break-up of income on which penalty was levied. We uphold the order of CIT(A) in confirming the levy of penalty on the above said two accounts. - Decided against assessee - ITA No.1562/PN/2013 - - - Dated:- 30-10-2015 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri Dharmesh Shah For The Respondent : Shri B.C. Malakar ORDER PER SUSHMA CHOWLA, JM: This appeal filed by the assessee is against the order of CIT(A)-I, Pune, dated 28.05.2013 relating to assessment year 2009-10 against penalty levied under section 274 r.w.s. 271(1)(c) of the Act of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has raised the following grounds of appeal:- 1. The Learned Commissioner of Income-tax (Appeals) has erred in law and in facts in passing order u/s. 250 of the Act dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the capital gains computed by the assessee at ₹ 2,41,17,168/-. The assessee claimed exemption under section 54 of the Act against purchase of Mega Polis property at ₹ 38,40,098/-. The Assessing Officer in the assessment proceedings initiated pursuant to issue of notice under section 153A of the Act and the return filed by the assessee in response thereto, issued the relevant notices under section 143(2)/142(1) of the Act. The Assessing Officer noted that the assessee had not declared the sale consideration of ₹ 2,55,00,000/- in her original return of income and subsequently after the search, had declared total amount of capital gains and hence, had concealed the particulars of income. Consequently, penalty proceedings under section 271(1)(c) of the Act were initiated against the assessee. Another aspect of sale of the property noted by the Assessing Officer was the alleged claim of sale of fittings and fixtures at the said bungalow for ₹ 10,00,000/-. The said amount was received by the assessee along with her sister in equal share, which was not offered to tax. The claim of the assessee before the authorities below was that the said furniture and fixtu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of Delhi. Till that date she did not file her revised return. vi) When the search was carried out on 09-12-2009 and when the cash was found in her possession then only she admitted true facts of the sold property. If search would not have taken place, she would not have offered this cash as an additional income. vii) The revised return is filed only after search action i.e. on 13-09-2010. Since the cash was found and seized the assessee had no option but to offer the amount for taxation. She filed her return accordingly. 6. The contention of the assessee that she had suo motu filed return of income and offered the said income at first available opportunity of hearing was held to be untrue and since the assessee had concealed her income from capital gains and only after search, she had filed her revised return, the assessee was held to be liable for the levy of penalty under section 271(1)(c) of the Act. Similarly, in respect of the amount received against fittings and fixtures, the Assessing Officer held that the same was not exempted from tax and the assessee had concealed her income in this regard also and was liable to levy of penalty under section 271(1)(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the computation of income and even tax was duly paid on the same. As per the assessee, since the income was offered in the return of income, the same could not be considered as concealed income in view of immunity provided in Explanation 5 to section 271(1)(c) of the Act. The second plea raised by the assessee was that in the original return of income, the assessee had claimed excess deduction of ₹ 1,17,89,143/- comprising of re-investment in new residential properties for ₹ 63,89,143/- and investment in capital gains of ₹ 54,00,000/-. However, while filing the return in response to notice under section 153A of the Act, the assessee claims that it was advised that the claim in respect of two residential properties was a wrong claim and the exemption was available only in respect of investment in one residential property. Accordingly, the assessee had suo motu reduced the said claim to ₹ 38,40,098/-, resulting in enhancement of income to the extent of ₹ 39,49,045/-. The assessee claimed that she was under bonafide belief that the same was allowable under the Act as also under the advice of Tax consultant. 8. The CIT(A) dismissed the first content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, by not revealing the unrecorded part of sale consideration of her ancestral property and also to have furnished inaccurate particulars of income by claiming incorrect, illogical and untenable exemptions under the Act. The CIT(A) held that the only claim which is held to be bonafide is the claim of exemption of ₹ 5,00,000/- in respect of fittings and fixtures, which were items of personal effects and were not taxable under section 224(2) of the Act. The CIT(A) upheld the levy of penalty by the Assessing Officer under section 271(1)(c) of the Act @ 100%. However, the Assessing Officer was directed to re-compute the penalty by granting the benefit of ₹ 5,00,000/-, which was held to be beyond the scope of concealed income. 9. The assessee is in appeal against the order of CIT(A). 10. The learned Authorized Representative for the assessee pointed out that the penalty under section 271(1)(c) of the Act was levied upon the assessee on two accounts i.e. unaccounted sale proceeds and also on account of withdrawal of exemption claimed under section 54 of the Act. After taking us through the facts of the case and the original computation of income placed at page 1 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresentative for the Revenue pointed out that para 3.2 of the assessment order reveals the satisfaction recorded by the Assessing Officer i.e. after elaborate discussion of the issue, where the assessee was found carrying cash and searched on the assessee only on the interception at airport itself, cash was found and declared by the assessee. The learned Departmental Representative for the Revenue pointed out that the Assessing Officer after discussing the facts of the case ad recorded satisfaction for initiation of penalty proceedings under section 271(1)(c) of the Act and in such facts, the argument of the assessee was not valid. He further pointed out that the search on the assessee took place on 09.12.2009. The registered sale deed was executed on 17.04.2008 and the assessee furnished original return of income on 30.07.2009 declaring income of ₹ 1,88,930/-. He further stated that when the assessee filed the return of income, she was aware of the sale consideration and not only there was concealment on the part of assessee but also wrong declaration made by the assessee. The learned Departmental Representative for the Revenue further stressed that even if the assessment w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmitted that she had sold her ancestral property at Delhi for ₹ 3.40 crores, for which the Agreement was made for ₹ 1.70 crores and the balance amount was received in cash. The claim of the assessee was that though she had 50% share in the impugned property and the balance 50% share was owned by her sister Mrs. Tripta Kaur, but she had received the entire cash consideration and the cheque consideration was divided 50 : 50. In response to notice issued under section 153A of the Act, the assessee offered 50% of the Agreement value i.e. ₹ 85 lakhs and 100% of the cash element i.e. ₹ 1.70 crores in her hand and computed the income from capital gains and declared total income of ₹ 2,04,91,850/- on 13.09.2010. Against the income from capital gains computed at ₹ 2,41,17,168/-, the assessee also claimed exemption under section 54 of the Act at ₹ 38,40,098/-, on account of investment in Mega Polis property. The Assessing Officer while completing assessment, noted that the assessee had not declared the sale consideration of ₹ 2.55 crores in the original return of income filed and subsequently after the search, the declaration was made on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cheque amount and cash amount aggregating to ₹ 2.55 crores for taxation under the head long term capital gains . The Assessing Officer further observed that since the assessee had not declared this amount of capital gains in her original return and subsequently, after search has declared the total amount of capital gains and thus, concealed the particulars of income and consequently, penalty proceedings under section 271(1)(c) of the Act were initiated separately by the Assessing Officer. The above said finding of the Assessing Officer is the deemed satisfaction recorded by the Assessing Officer before initiating penalty proceedings under section 271(1)(c) of the Act and in view thereof, we find no merit in the plea of the assessee in this regard. 15. Now, coming to the issue that where the assessee had offered the income in the return of income filed after surrendering the additional income, can the assessee be held to have concealed its income vis- -vis original return of income filed by the assessee. Section 271(1) of the Act makes provision for levying penalties on assessee in different eventualities, one such eventuality is for concealment of income or furnishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on such person. 16. However, for searches initiated under section 132 of the Act on or after first day of June, 2007, another Explanation 5A was applicable, which was introduced by the Finance Act, 2007 w.e.f. 01.06.2007 . The original Explanation 5A provided that where in the course of search, the assessee was found to be the owner of any money, bullion, jewellery, valuable articles or things and the assessee claims that such asset had been acquired by him by utilizing wholly or in part his income for any previous year or any income is based on any entry in books of account or other documents or transactions and he claims that the same represents his income for any previous year, then where the period has ended before the date of search and the due date for filing the return of income for such year has expired and the assessee has not filed the return of income, then notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall for the purpose of imposition of penalty under section 271(1)(c) of the Act, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of income. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... things from the possession of the assessee during the course of search conducted on or after first day of June, 2007. Further, where any income is based on any entry in any books of account or other documents or transactions and he claims that all the above said represents his income for any previous year, then the Explanation lays down to that extent, the person would be deemed to have concealed his particulars of income or furnished inaccurate particulars of income. 18. Now, coming to the main provisions which constitute two portions i.e. what is concealment and quantum of penalty to be levied. The question is quantum of income on which penalty is to be levied. The said issue was before the Pune Bench of Tribunal in ACIT Vs. Mulay Construction P. Ltd. Ors. in ITA Nos.116 to 119/PN/2012 Ors. and it was held as under:- 16. The next limb of argument of the Ld. counsel is that Explanation 5A(ii) contemplates income and not the expenditure . In this case, it is undisputed fact that the assessee came forward and declared income which was pertaining to the amount covered by the unrecorded expenditure but the fact remains that the assessee did not declare any expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed u/s. 68, 69, 69A, 69B, 69C 69D. 18. It is necessary to refer to Explanation 5A which reads as under: Explanation 5A Where, in the course of a search initiated under section 132 on or before the 1st day of June 2007, the assessee is found to be the owner of (i) Any money, bullion, jeweler or other valuable article or thing (hereinafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilizing (wholly or in part) his income for any previous year; or (ii) Any other 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 has not been declared therein or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return then, notwithstanding that such income is declared by him in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely what is taxed under Sec. 69 C of the Act is not the expenditure but it is basically the undisclosed income which has been applied for incurring the unrecorded expenditure. In our view, there is no merit in the argument of the Ld. Counsel that the assessee has only declared the amount expenditure. We therefore, hold that to the extent of the income offered by the assessee pertaining to the expenditure in the returns filed in response to notice u/s 153A, Explanation-5A is applicable and as there is a legal presumption against the assessee in respect of the said income detected during the course of search and seizure operation, the assessee case is squarely covered by Explanation- 5(ii) as the assessee himself has admitted the said undisclosed income. 19. Applying the said proposition to the facts of the present case, we hold that the income offered by the assessee pertaining to the cash seized from the assessee and the declaration of the assessee that the said cash relates to the unaccounted cash received vide the sale transaction entered into by the assessee, which in turn, was declared by the assessee in the return of income filed pursuant to issue of notice under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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