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2015 (12) TMI 1114 - ITAT KOLKATA

2015 (12) TMI 1114 - ITAT KOLKATA - TMI - Penalty on account of Explanation 5 to Section 271(1)(c ) - income offered after the search but in the return filed u/s 153A of the Act - Held that:- The CIT(A) rightly held that it is not relevant whether any return of income was filed by the assessee prior to the date of search and whether any income was undisclosed in that return of income. In view of specific provision of Section 153A of the I.T.Act, the return of income filed in response to notice u .....

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the conditions which are required for claiming immunity from payment of penalty under section 271(1)(c )of the Act. The provsion does not specify any time limit during which the aforesaid amount i.e the amount of penalty with interest has to be paid. Admittedly when the assessee herein have paid the entire amount with interest, the Assessing Officer ought to have granted them immunity available under Section 271(1)(c ) of the Income Tax Act.

For the foregoing reaons, the present appea .....

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ant Member For the Appellant Shri A.K Tibrewal, FCA, ld.AR For the Respondent: Smt. Ranu Biswas, JCIT, ld.DR ORDER SHRI M.BALAGANESH, AM : These appeals arise out of the common order passed by the Learned CIT(A) in Appeal Nos. 123 to 127/CC-XXIV/CIT(A)/C-III/08-09 for the Asst Years 2001-02 to 2005-06 dated 16.7.2009 and in Appeal Nos. 123 to 125/CC-XXIV/CIT(A)/C-III/08- 09 for the Asst Years 2001-02 to 2003-04 dated 29.4.2010 u/s 154/250 of the Act against the order of penalty passed by the Lea .....

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search but in the return filed u/s 153A of the Act. Since identical issue is involved in all the appeals, they are taken up together and disposed off by this common order for the sake of convenience. 4. The brief facts of this issue is that a search and seizure operation was conducted on 27.7.2006 u/s 132 of the Act in the Thacker group of cases. The assessee is one of the individuals belonging to this group. In the course of search, the assessee was found to be in possession of undisclosed inc .....

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1. The details of income declared in the return filed u/s 139(1) of the Act for each assessment year , income offered in disclosure statement u/s 132(4) of the Act for each assessment year pursuant to the search , income declared in the return filed u/s 153A of the Act for each assessment year , additional income offered during the course of assessment proceedings and assessed income thereon are tabulated as below:- ASSESSMENT YEARS Particulars 2001-02 2002-03 2003-04 2004-05 2005-06 Income admi .....

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evied penalty u/s 271(1)(c ) of the Act for the Asst Years 2002-03 to 2005-06 on the ground that but for the search, the assessee would not have come forward with the disclosure of undisclosed income and additional incomes offered for the Asst Years 2001-02 & 2002-03 during the course of assessment proceedings. 6. On first appeal, the Learned CITA deleted the penalty for the assessment years 2004-05 & 2005-06 stating that the assessee had satisfied all the conditions stipulated in clause .....

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amp; 2005-06. 6.1. In respect of Asst Years 2001-02 to 2003-04, the Learned CIT(A) initially held that the assessee had not paid the taxes due thereon in respect of income returned u/s 153A of the Act and additional disclosures made during the course of assessment proceedings. Accordingly, he held that the assesse had not cumulatively satisfied the conditions stipulated in Clause 2 of Explanation 5 to Section 271(1)( c) of the Act and hence is not entitled for immunity from levy of penalty. Agai .....

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after obtaining confirmation from the Learned AO with regard to the payment of taxes thereon, sough to rectify the appellate order passed by his predecessor on 16.7.2009 and gave a finding that the assessee had indeed paid all the taxes and had cumulatively satisfied the conditions stipulated in Clause 2 of Explanation 5 to Section 271(1)( c) of the Act and hence is entitled for immunity from levy of penalty. Against this order, the revenue had preferred appeals before us for the Asst Years 200 .....

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h year. All these appeals are taken up together for the sake of convenience. 7. The Learned DR argued that but for the search, the assessee would not have come forward to disclose these undisclosed incomes and hence assessee has concealed the particulars of income and argued that penalty is leviable in terms of Explanation 5 to Section 271(1)(c ) of the Act. He further argued that, even assuming without conceding, immunity is available for the assessee in terms of Clause 2 of Explanation 5 to Se .....

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Act and hence is accordingly eligble for immunity from levy of penalty thereon. In support of his arguments, he relied on various case laws that were filed in the paper book by him. He also argued that the provisions of Clause 2 of Explanation 5 to section 271(1)(c ) is applicable for all the assessment years prior to the year of search. He also argued that even the additional disclosure of ₹ 2,50,000/- and ₹ 4,72,603/- for the Asst Years 2001-02 & 2002-03 respectively were made .....

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9 of 2010 dated 11.1.2013. He further argued that the expression to be furnished before the expiry of time specified in subsection (1) of section 139 used in Clause 2 of Explanation 5 to section 271(1)(c ) of the Act might create some difficulty for claiming immunity and he argued that this very question has been answered in favour of the assessee by the Jurisdictional Calcutta High Court in the case of CIT vs Brijendra Gupta in ITA No. 330 of 2009 dated 8.6.2015 and took us to the relevant oper .....

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on the impugned issue. 8.1. At the outset, we find that the appeals filed by the assessee for the Asst Years 2001-02 ; 2002-03 & 2003-04 in ITA Nos. 1786 to 1788/2009 are liable to be dismissed as infructuous in view of the fact that the assessee had obtained the required relief before the Learned CIT(A) in the order passed by him u/s 154 of the Act. These appeals were preferred by the assessee prior to the date of passing of order u/s 154 of the Act by the Learned CIT(A). Hence the appeals .....

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s have been acquired by him by utilising (wholly or in part) his income- (a) for any previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date or, where such return has been furnished before the said date, such income has not been declared therein; or (b) for any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income fu .....

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oks of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the [Principal Chief Commissioner or] Chief Commissioner of [ Principal Commissioner or] Commissioner] before the said date; or (2) he, in the course of the search, makes a statement under subsection (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been di .....

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on 10.8.2007, returns were filed on 28.11.2007 and the assessment of the cases were completed on 1.7.2008. At the time of filing of the disclosure statement, as well as in course of the assessment proceedings, detailed cash flow charts and explanations were filed substantiating the disclosure made pursuant to search. The Assessing Officer did not independently work out the quantum of undisclosed income which was different from or in excess of what was promised in the statement given u/s 132(4) .....

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ame. In this regard, it is relevant to place reliance on the decision of coordinate bench decision of this tribunal in the case of DCIT vs Shayam Sunder Beriwal (Kolkata Tribunal) in ITA Nos. 1061 , 1062 & 1063 / Kol / 2008 dated 31.10.2008 for the Asst Years 2003-04 , 2004-05 & 2005-06 , wherein it was held that :- In the present case, this is also not a case of Revenue that the higher income declared by the assessee during the course of re-assessment proceedings only after being apprai .....

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e various legal pronouncement the same cannot be termed to be concealment and is beyond the scope of penalty under section 271(1)(c ) and , therefore, in these circumstances, in our considered opinion, the Learned CITA wsa justified in deleting the addition in case of all the above four years and we, therefore, do not find any reason to interfere with the order of Ld. CIT(A) and uphold the same and reject the grounds raised by the Revenue in case of all the four years. 8.4.1. It will be relevant .....

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iginal return of income filed under section 139 cannot be considered - Held, Yes - Whether concealment of income has to be seen with reference to additional income brought to tax over and above income returned by assessee in response to notice issued under section 153A and, therefore, once returned income under section 153A is accepted by Assessing Officer, it can neither be a case of concealment of income nor furnishing of inaccurate particulars of such income - Held, yes - Search was conducted .....

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throughout period covered by search assessments - Held, yes [ in favour of assessee] 8.4.2. We find that this decision of Delhi Tribunal has been followed by this Tribunal in the case of DCWT vs Vivek Kr. Kathotia in WTA Nos. 02 to 08 / Kol / 2013 dated 15.5.2015, wherein it was held that :- That the concept of a voluntary return of income may be important in penalty proceedings initiated in the normal assessment proceedings u/s 143(3) or 147 of the Act but not u/s 153A of the Act. When accepte .....

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facts of the case the decision in the case of Prem Arora vs DCIT (24 taxmann.com 260) (Delhi Tribunal) is squarely applicable in the present case, since in the present case the assessee has disclosed gold and diamond in the statement recorded u/s 132(4) of the Act during the search operation itself, in the wealth tax return the Tribunal has approved the findings in quantum with regard to the genuineness of the declaration of gold and diamonds. Accordingly the assessee is not liable to have pena .....

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sure u/s 132(4) of the Act had been sought to be revised by the assessee by making further disclosures of income during the course of assessment proceedings. We place reliance on the Third Member decision of the coordinate bench of Delhi Tribunal in the case of Addl CIT vs Prem Chand Garg reported in (2009) 31 SOT 97 (Delhi) (TM ) dated 11.5.2009, wherein it was held that :- 19. The fact , whether there is concealment of income or whether inaccurate particulars thereof have been furnished is ess .....

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or the particulars of income shown inaccurately in the return but assessee on realization of mistake, omission or misdeed rectifies that and correct himself and cleans his breast, can he still be accused of concealment though in the return there has been the omission? By the time the Assessing Officer takes up the issue and comes across the information in his possession, if the assessee makes up the deficiency and offers the income or furnishes accurate particulars he, in our opinion, cannot be .....

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w that it is in the course of any proceedings under the Act, assessment proceedings in this case, that the Assessing Officer is to be satisfied that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income . It is thus to be judged at this stage and if at this stage he has declared the correct income and / or furnished accurate particulars of his income then there is no scope, in our opinion, to arrive at the satisfaction by the Assessing Office .....

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gifts, if any, the assessee offered the amounts received as alleged gifts as his income and before it could be detection by the Assessing Officer. There was thus no concealment of the particulars of his income nor there remained furnishing of any inaccurate particulars of his income. It vanished before it could be detected. 21. The correct and accurate disclosure may be by filing the revised return or by furnishing the particulars of such income before the detection by the Assessing Officer. The .....

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ticulars of income unless and until there is some evidence to show exist or some circumstances found from which it can be gathered that the omission was attributable to an intention or a desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon. Apart from the surrender there was nothing more on record to hold the assessee guilty of offering the said amount on detection of the concealment. Even in assessment order there is nothing of that sort. .....

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r consideration ? If yes, please furnish details. 23. On a perusal of the questionnaire, it is evident is general in nature without specifying the names of the donor or any other such details on the basis which it could be presumed that the Assessing Officer had information to call for specific information. The query Had you taken / given any loan / gift during the financial year under consideration ? itself suggests that the revenue was not sure enough whether any gift was there. Mere asking of .....

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the assessee came forward and paid the tax thereon by adding the same in the returned income, it has to be taken as a voluntary offer to tax. On the face of the evidence in the shape of confirmation letters, bank accounts, passport etc., in the hands of the assessee, it might be valid gift that would have convinced a reasonably minded person, specially a person exercising a judicial function. The accepted position of law is that merely because an assessee had agreed to the assessment that cannot .....

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oyal in G.A.No. 2347 of 2010 in ITAT No. 181 of 2010 dated 11.8.2010 while adjudicating the impugned issue. Now let us examine how the aforesaid case law fits into the facts of the assessee herein. In the instant case before us, the assessee made the following submission before the Learned AO at the time of assessment proceedings while offering the additional income of ₹ 2,50,000/- and ₹ 4,72,603/- for the Asst Years 2001-02 & 2002-03 respectively :- With respect to the assessmen .....

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wn into unnecessary long drawn litigations with the department and to demonstrate my cooperative attitude as well as to buy peace of mind, I am further offering to tax suo moto , the amounts of ₹ 2,50,000/- in F.Y. 2000-2001 and ₹ 4,72,603/- in F.Y. 2001-2002 as an inflow in relevant years to taxation. I am enclosing herewith the revised computations of my total income for AY 2001-2002 and AY 2002-2003. I shall make the necessary payment of tax in due course of time. I understand tha .....

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ision of original disclosure u/s 132(4) followed by filing of returns u/s 153A of the Act and it relates back to the said date. The case law relied upon hereinabove is squarely applicable to the assessee herein. 8.5. We find that the assessee had made a disclosure statement u/s 132(4) of the Act after the search offering undisclosed income, explaining the manner in which such income was derived and paid taxes thereon together with interest. We also find that the Learned CIT(A) had given a catego .....

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e understood as a return required to be furnished in response to notice u/s 153A of the Act. In this regard, we place reliance on the decision of the Jurisdictional Calcutta High Court in the case of CIT vs Brijendra Gupta in ITA No. 330 of 2009 dated 8.6.2015 , wherein the question raised before their Lordships and their decision rendered thereon is as under:- The following question of law was suggested by the revenue:- Whether on the facts and circumstances of the case, the Learned Tribunal wa .....

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e income since disclosed had not been shown. It is axiomatic that if such income had been disclosed in the returns filed under section 139, the question of undisclosed income would not have arisen. When the return had been filed but the income since discovered was not disclosed, the question of concealment naturally arises. The legislature, however, made a conscious departure by carving out an exception provided the conditions laid down in Clause (i) or Clause (ii) thereof have been complied wit .....

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the legislature only for those cases where the statement as regards undisclosed income was made pertaining to a previous year for which time to file return under section 139 had not expired. But that was not the intention because the expression unless appears after Clauses (a) and (b) of Explanation which provides for imposition of penalty. Therefore, unless has to apply to the provision for imposition of penalty. Therefore, the aforesaid expression to be furnished has to be interpreted as requ .....

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of the matter, the question proposed by Revenue is answered in the affirmative and in favour of the assessee. The appeal is thus disposed of. 8.6. We hold that the immunity provided in Clause 2 of Explanation 5 to section 271(1)(c ) of the Act is available to all the assessment years prior to the year of search if the conditions stipulated thereon are satisfied. Reliance in this regard is placed on the decision of the Jurisdictional High Court in the case of CIT vs Ramesh Chand Goyal in G.A.No. .....

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hat the Explanation 5 to section 271(1)( c) protects the assessee from penalty on admitted undisclosed income under section 132(4) of the Act without appreciating that the assessee has made the disclosure in the Assessment Years 2006-07 and the immunity under Explanation 5 to Section 271(1)( c) is available for the years for which the return is yet to be furnished before the expiry of time limit under section 139(1) of the Act whereas the due date for filing of return under section 139(1) of the .....

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perusal of the records that small variation in income was due to bona fide mistakes and difficulties in working out the undisclosed income. It is further recorded that the voluntary action on the part of the assessee to settle the tax issues for peace of mind appears from the conduct of the assessee. While recording the aforesaid fact, the Learned Tribunal ultimately relied on a decision of the Tribunal rendered in the case of Additional CIT vs Prem Chand Garg. Mr. Sinha, however, is unable to s .....

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hri Samit Roy in ITA 354 of 2009 dated 3.9.2015, wherein the questions raised before their Lordships and their decision rendered thereon is as below:- (a) WHETHER on the facts and in the circumstances of the case the Income Tax Appellate Tribunal erred in law in upholding the order of Commissioner of Income Tax (Appeal) holding their amounts disclosing after search, which was not previously offered to tax is not a concealment on the part of the respondent / assessee ? (b) WHETHER on the facts an .....

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009 (Commissioner of Income Tax, Central -III, Kolkata vs Brijendra Gupta), both the questions are answered in the negative, against the revenue and in favour of the assessee. The appeal is dismissed. B) Jurisdictional High Court in the case of CIT vs Tapan Kumar Ghosh in ITA 6 of 2010 dated 3.9.2015, wherein the questions raised before their Lordships and their decision rendered thereon is as below:- Whether on the facts and in the circumstances of the case the learned Tribunal has committed er .....

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ra Gupta), in favour of the assessee, the question is answered in the negative, against the revenue and in favour of the assessee. The appeal is dismissed. C) Gujarat High Court in the case of Kirit Dahyabhai Patel vs ACIT in Tax Appeal No. 1181 of 2010 with Tax Appeal No. 1182 to 1185 of 2010 dated 3.12.2014, wherein the question raised before their Lordships and their decision rendered thereon is as below:- Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal w .....

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s erroneous. The CIT(A) rightly held that it is not relevant whether any return of income was filed by the assessee prior to the date of search and whether any income was undisclosed in that return of income. In view of specific provision of Section 153A of the I.T.Act, the return of income filed in response to notice under section 153A of the I.T.A Act is to be considered as return filed under section 139 of the Act, as the Assessing Officer has made assessment on the said return and therefore, .....

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d amount i.e the amount of penalty with interest has to be paid. Admittedly when the assessee herein have paid the entire amount with interest, the Assessing Officer ought to have granted them immunity available under Section 271(1)(c ) of the Income Tax Act. 18. For the foregoing reaons, the present appeals stand allowed. The order of the Tribunal is quashed and set aside. Consequently, the order of the CIT(A) is restored. The question of law involved in this appeals is answered in favour of th .....

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- Where the Assessing Officer had found the income to relate to different assessment years, in different volumes, as contra distinguished to the one submitted by the assessee, and had accordingly made the assessments, which assessments had become final and were not the subject matter of challenge, penalty u/s 271(1)(c ) could not be imposed by virtue of Explanation 5. F. Madras High Court in the case of CIT vs S.D.Chandru reported in (2004) 266 ITR 175 (Mad) , it was held that :- Penalty u/s 271 .....

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