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Raghuveer Singh and Bodiga Ramdas Goud, Versus The Deputy Commissioner of Income Tax, Central Circle-7, Hyderabad

2016 (1) TMI 463 - ITAT HYDERABAD

Penalty levied u/s. 271(1)(c) - Proceedings u/s. 153A/153C - Held that:- There were no incriminating material found. Particularly in the case of Shri Raghuveer Singh, as no search has occurred in his place, Explanation-5A cannot be invoked. In the case of Shri B. Ramdas Goud, even though search has occurred, nothing was found therefore, so Explanation-5A is not applicable. In both the cases, assessees’ explanation was that incomes were offered on estimation basis which were accepted by the AOs w .....

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celled. - Decided in favour of assessee. - I.T.A. No. 522/HYD/2015, I.T.A. No. 523/HYD/2015 - Dated:- 18-11-2015 - SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Assessee : Shri K.C. Devdas, AR For The Revenue : Shri B. Kurmi Naidu, DR ORDER These two appeals by respective assessees are against the orders of the Commissioner of Income Tax (Appeals)-I, Guntur, dated 18-02-2015, confirming the penalties levied u/s. 271(1)(c) of the Income Tax Act [Act] in respective assessment years. Both the asse .....

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Raghuveer Singh. After the search and seizure operations, both the assessees have declared the incomes consisting of commission, capital gains, rent, interest, salary and lease income etc., for AYs. 2002-03 to 2008-09. Consequent to the declaration given to the Dy. Director of Income Tax, Investigation, Hyderabad, assessees herein have filed returns when notices were issued u/ 153A and 153C respectively and these were accepted in the scrutiny assessment completed subsequently. For the impugned A .....

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9 under the head commission , capital gains , salary in respective assessment years. As declared before the DY. Director of Income Tax, Investigation, Hyderabad, assessee filed return for the AY. 2003-04 declaring commission income of ₹ 69,600/-, capital gains of ₹ 5,000/-, salary income of ₹ 12,000/-, total being 82,100/-. 3. While accepting the return filed in the respective assessee s cases, AO was of the view that since these assessees were not income tax assessees earlier .....

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tended that provisions of Section 271(1)(c) are not attracted as the income returned were accepted as such and there was no incriminating material found during the search. However, Ld. CIT(A) relying on the provisions of Explanation-5A of Section 271(1)(c), confirmed the penalty. 6. Before us, Ld. Counsel submitted that CIT(A) was wrong in considering that Explanation-5A is applicable. As far as the case of Shri Raghuveer Singh is concerned, he is not an assessee who has been searched. Proceedin .....

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fore, the provisions of Explanation-5A are not applicable. It was submitted that conditions u/s. 271(1)(c) were not applicable in both the cases as these proceedings u/s. 153A/153C are independent and has no relation to other assessment proceedings. Further, it was submitted that invoking Explanation-5A, there should be a finding that assessee is the owner of any money, bullion, jewellery or other article or thing or any income based on any entry in any Books of Account or other documents or tra .....

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n record do confirm this above fact. The question and answer are as under: Q.No. 3: During the search and seizure proceedings, the search team has not seized any material or Books of Account/money/bullion or any article or thing from your residence. Are you confirming the same? Ans: Yes, I am confirming that no article or thing or any Books of Account/documents/lose sheets are seized from my residence during the course of search and seizure operations. The above question and answer recorded in S .....

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pplication of that explanation to searches initiated before 01-06-2007. A new explanation 5A was introduced by Finance Act 2007, w.e.f 01-06-2007 to cover searches initiated after 01-06-2007 which read as under: Explanation 5A.- Where in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of,- (i) any money, bullion, jewellery or other valuable article or thing (hereinafter in this Explanation referred to as assets) and .....

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ed and the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c)of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. 9.1. While the new explanation does away with the exemption from penalty if the Assessee offers the payment in .....

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see is found to be the owner of- (i) any money, bullion, jewellery or other valuable article or thing (hereafter 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 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 ( .....

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the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. 10. In the Circular No 5/2010 dated 03-06-2010 issued by the CBDT explaining the provisions of the Finance Act (No.2) 2009, the amendment to explanation 5A was explained as under: 53.2 By substituting the Explanation 5A it has been clarified that the scope extends to the cases where the assessee .....

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n made shall not be considered as deemed concealment. It is only by the Amendment to explanation 5A by the Finance (No.2) Act 2009, that addition made in the course of assessment u/s 153A, will be deemed to be concealed income, even if the Assessee had filed a return of income earlier for the relevant Assessment Year. Prior to the amendment, if an assessee had already filed a return of income, the addition made in the assessment made u/s 153A cannot be deemed to be concealed income. 12. No doubt .....

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