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2015 (12) TMI 1118 - ITAT KOLKATA

2015 (12) TMI 1118 - ITAT KOLKATA - TMI - Penalty u/s 271(1)(c ) - income offered after the search but in the return filed u/s 153A / 153C - Held that:- The assessee has cumulatively satisfied all the conditions stipulated in Clause 2 of Explanation 5 to Section 271(1)( c) of the Act and hence entitled for immunity from levy of penalty for all the assessment years under appeal.

The assessee had made voluntary disclosure during the course of search assessment proceedings after filing t .....

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:- 16-12-2015 - Shri N.V. Vasudevan, Judicial MemberAnd Shri M. Balaganesh, Accountant Member For the Appellant/Department: Shri S.Dutta, JCIT, ld.Sr.DR For the Respondent/Assessee : S/Shri A.K Tibrewal, Shri A.K Tulsiyan, FCAs Amit Agarwal, Advocate, ld.ARs Date of Pronouncement: 16 -12-2015 ORDER Shri M. Balaganesh, AM These appeals arise out of different orders passed by the Learned CIT(A), Central-III/II, Kolkata in Appeal Nos. 180 to 184/CC-I/CIT(A)/C-III/08-09 dated 26.05.2010 for the Asst .....

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f Penalty passed by the Learned AO u/s 271(1)(c ) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The only issue involved in all these appeals is that whether the assessee is entitled for immunity from levy of penalty on account of Explanation 5 to Section 271(1)(c ) of the Act in respect of income offered after the search but in the return filed u/s 153A / 153C of the Act. Since identical issue is involved in all the appeals, they are taken up together and disposed off by .....

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case does not come under the purview of the exceptions provided therein. 2. On the facts and circumstances of the cae the Ld. CIT(A) , Central-III, Kolkata has erred in law as well as facts in allowing assessee s rectification application moved u/s 154 of the I.T. Act, 1961 by rectifying his predecessor s order dated 27.08.2009 without any reasonable ground, because there is no mistake apparent from record in that order. 3. The appellant craves leave to add/or amend any grounds of appeal. The sa .....

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eciating that the said immunity is available only for the years for which due date of return u/s 139(1) of the Act has not expired on the date of search, which was not satisfied in this case. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the provisions of Sec. 271(1)(c ) , Explanation 5(2) will apply to the A.Y. 2002-03 , the due date of return for which had expired long before the date of search i.e 25.4.2007, which is contrary to the provis .....

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lter any of the ground (s) of appeal and / or adduce additional evidence at the time of hearing of the case. The same grounds are raised for the Asst Years 2003-04 to 2006-07 by the revenue except with change in figure of Penalty levied. 3.3. Shri Sajjan Kumar Patwari (HUF) - Asst Year 2004-05 1. That in the facts and circumstances of the case and in law the Ld. CIT(A) has erred in cancelling the penalty of ₹ 1,56,852/- for A.Y. 2004-05, ₹ 9,93,633/- for A.Y. 2005-06 and ₹ 24,2 .....

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n not following the decision of Ld. ITAT in the case of ACIT, CC-I(3) vs Kirit Dayabhai Patel reported in 121 ITD 159(AHD) (TM ) , wherein it was held that the assessee was not entitled to immunity from penalty where additional income was declared in return filed in response to notice u/s 153A of the Act which did not fall under category of return mentioned in Explanation 5(2) to sec. 271(1)(c ). 3. That the appeal for the A.Y 2004-05 is being filed inspite of tax effect being less than ₹ .....

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vied. 4. Facts in the case of Shri Sheo Kumar Kajaria The brief facts of this issue is that a search and seizure operation was conducted on 23.8.2006 u/s 132 of the Act in the Builder 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 income and accordingly the assessee gave disclosure statement u/s 132(4) of the Act offering substantial income as below:- Assessment Year Disclosure amo .....

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2005-06 Income admitted u/s 139(1) 7,17,758 8,14,514 Disclosure made u/s. 132(4) 77,39,135 1,23,02,449 Income disclosed u/s. 153A 77,39,135 1,23,02,449 Additional income offered during asst proceedings 0 0 Income assessed u/s. 153A 84,57,672 1,31,16,963 4.2. The Learned AO levied penalty in respect of income returned and assessed u/s 153A of the Act on the ground that but for the search, the assessee would not have come forward for disclosure of the undisclosed income. On first appeal, the Lear .....

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ore the Learned CITA in respect of mistake committed by the Learned CITA with regard to the finding that assessee had not paid the taxes on the income disclosed u/s 153A of the Act. The Learned CITA pursuant to verification of the fact of paymentof taxes by the assessee , sought to rectify his earlier order and passed an order u/s 154 read with section 250 of the Act on 26.5.2010 stating that the assessee is indeed entitled for immunity from levy of penalty and allowed the appeals of the assesse .....

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sessee HUF of which Shri Dau Dayal Kothari is the Karta pursuant to the death of Shri Gopal Das Kothari:- 1. Shri Dau Dayal Kothari 2. Shri Bithal Das Kothari 3. Shri Krishna Kumar Kothari 4. Shri Kamal Kumar Kothari 5. Shri Kishore Kumar Kothari 6. Shri Man Mohan Kothari 7. Shri Hari Mohan Kothari and, 8. Shri Keshav Kumar Kothari In the course of search, the assessee was found to be in possession of undisclosed income and accordingly the assessee gave disclosure statement u/s 132(4) of the Act .....

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e course of assessment proceedings and assessed income thereon are tabulated as below:- Particulars ASSESSMENT YEARS 2002-03 2003-04 2004-05 2005-06 2006-07 Income admitted u/s 139(1) 69778 64322 45960 74693 251961 Disclosure made u/s. 132(4) 3830222 3335678 8454040 8025307 13348039 Income disclosed u/s. 153C 3900000 3400000 8500000 8100000 13600000 Additional income offered during asst proceedings 0 0 143985 0 0 Income assessed u/s. 153C 3900000 3400000 8643985 8100000 13600000 5.2. In the cour .....

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ng that the assessee had satisfied all the conditions stipulated in clause 2 to Explanation 5 to section 271(1)(c ) of the Act and accordingly is entitled for immunity from levy of penalty as the assessee had, made disclosure statement u/s 132(4) of the Act and had disclosed the same in the return filed in response to notice u/s 153C of the Act , had specified the manner in which such undisclosed income has been earned and paid taxes due thereon. Aggrieved, the revenue has raised the similar gro .....

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ng substantial income as below:- Assessment Year Disclosure amount 2004-05 5,00,000 2005-06 29,50,171 2006-07 71,91,278 6.1. 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 153C of the Act for each assessment year , additional income offered during the course of assessment proceedings and assesse .....

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nalty in respect of income returned , additional income offered during assessment proceedings and income assessed u/s 153C of the Act on the ground that but for the search, the assessee would not have come forward for disclosure of the undisclosed income. On first appeal, the Learned CITA deleted the penalty for the assessment years 2004-05 to 2006-07 stating that the assessee had satisfied all the conditions stipulated in clause 2 to Explanation 5 to section 271(1)(c ) of the Act and accordingl .....

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ld 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 Section 271(1)(c ) of the Act, it is available only for the year of search and for the previous year for which the due date of filing the return .....

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at 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 income made by the abovementioned assesses for certain assessment years were made voluntarily before any detection by the department. He further argued that nothing in the section 271(1)(c ) order of the Learned AO suggests that the additional inco .....

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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 operative portion of the said judgement. He further argued that the impugned issue is also entirely covered by the coordinate bench decision of this tribunal in the case o .....

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ears 2001-02 to 2005-06 vide order dated 4.12.2015. The said tribunal relied on the following decisions on the impugned issue :- a) Decision of Hon ble Calcutta High Court in the case of CIT vs Amardeep Singh Dhanjal in ITA No. 39 of 2010 dated 11.1.2013. b) Decision of Hon ble Calcutta High Court in the case of CIT vs Brijendra Gupta in ITA No. 330 of 2009 dated 8.6.2015. c) Decision of Kolkata Tribunal in the case of DCIT vs Shayam Sunder Beriwal in ITA Nos. 1061, 1062 & 1063 / Kol / 2008 .....

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2010 in ITAT No. 181 of 2010 dated 11.8.2010 h) Decision of Hon ble Madras High Court in the case of CIT vs S.D.V.Chandru reported in (2004) 266 ITR 175 (Mad) i) Decision of Hon ble Calcutta High Court in the case of CIT vs Shri Samit Roy in ITA No. 354 of 2009 dated 3.9.2015. j) Decision of Hon ble Calcutta High Court in the case of CIT vs Tapan Kumar Ghosh in ITA No. 6 of 2010 dated 3.9.2015. k) Decision of Hon ble Gujarat High Court in the case of Kirit Dahyabhai Patel vs ACIT in Tax Appeal N .....

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