TMI Blog2013 (9) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... Member and N.K. Saini, Accountant Member Shailendra Bardia for the Appellant Deepak Sehgal for the Respondent ORDER N.K. Saini, Accountant Member:- 1. This is an appeal filed by the assessee against the order dt. 2nd Jan., 2013 passed by the learned CIT(A) Central, Jaipur, Rajasthan. The only grievance of the assessee in this appeal relates to the confirmation of penalty levied by the AO under s. 271(1)(c) of the IT Act, 1961 (hereinafter referred to as Act , for short) for a sum of ₹ 7,26,159. 2. Facts of the case in brief are that assessee originally filed his return of income declaring an income of ₹ 4,95,479 on 21st Oct., 2005 under s. 139(1) of the Act. Subsequently, a search operation was conducted on 18th Jan., 2007 at the premises of Shri Dinesh Parmar at B-45, Shastri Nagar, Jodhpur. During search operation, incriminating books of accounts/documents relating to the assessee were found and seized. The AO accordingly, issued notice under s. 153A of the Act on 7th Sept., 2007 and in response to such notice, the assessee filed the return of income declaring total income of ₹ 26,15,654 on 11th March, 2008. The assessment under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits of Expln. 5 to s. 271(1)(c) of IT Act, 1961. The copy of the said letter is enclosed. The assessee having been assessed on the returned income there is no justification of levy of penalty even in view of the abovesaid letter. 6. In this regard, the assessee relies on the following decisions:- (i) Gulabrai V. Gandhi vs. Asstt. CIT (2003) 79 TTJ (Mumbai) 493 (ii) CIT vs. Kanhaiyalal (2008) 299 ITR 19 (Raj); (iii) CIT vs. E.V. Balashanmugham (2006) 286 ITR 626 (Mad); (iv) CIT vs. S.D.V. Chanda (2004) 266 ITR 175 (Mad); (v) Asstt. CIT vs. Modem Lai Gaggar (2007) 291 ITR 465 (Raj). 7. The assessee may also very humbly submit that the decision of the Hon'ble Rajasthan High Court referred (supra) is fully binding despite the alleged information of filling of SLP against the same. The Hon'ble Supreme Court has clarified the doctrine of merger in its decision in Kunhayammed and Ors. vs. State of Kerala and Anr. (2000) 245 ITR 360 (SC):- It was held that In spite of a petition for special leave to appeal having been filed, the judgment, decree or order against which leave to appeal has been sought for, continues to be final, effective and binding as betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a letter with the ADI, Investigation, Jodhpur on 22nd Jan., 2007 stating that he was prepared to pay tax on legitimate and correct amount of income as may be mutually determined on agreed basis. He also stated that the said letter be treated as statement under s. 132(4) thereby entitling the assessee to the benefits of Expln. 5 to s. 271(1)(c) of Act. 3.2 The learned Dy. CIT has erred in not granting immunity from penalty under s. 271(1)(c) available to the assessee in terms of cl. (i) of Expln. 5 to s. 271(1)(c) of the Act which provides that an assessee shall not be deemed to have concealed the particulars of his income or furnishing inaccurate particulars of such income if he, in the course of the search, makes a statement under sub-s. (4) of s. 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 disclosed so far in his return of income to be furnished before the expiry of time specified in sub-s. (1) of s. 139 and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is squarely covered by the land mark judgment of the Supreme Court in CJT us. Swesh Chandra Mittal (2001) 252 ITR 9 (SC), wherein it was held that where the assessee filed revised returns showing higher income after search and notice for reopening of assessment, to purchase peace and avoid litigation and Department simply rested its conclusion on the act of voluntary surrender done by the assessee in good faith, High Court was justified in holding that no penally could be levied. 4.3 The case of the assessee is also covered by the judgment of the Madhya Pradesh High Court in CJT us. Shyamlal M. Soni (2005) 144 Taxman 666 (MP), in which it has been held penalty under s. 271(1)(c) could not be levied in the case, where the income returned in the revised return was accepted and assessed in the hands of the assessee though the revised returns were filed after search. 5.1 There was no concealment at all in the present case. That the assessee has already disclosed long term capital gain of ₹ 6,26,359 in his original return of income. Moreover, in the return filed under s. 153A he has declared short-term capital gain of ₹ 8,46,534. The difference of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Cal) wherein it was held that:- The offer of the appellant was accepted in as much as no detailed discussion of the seized documents is found in the assessment orders. The offer was made to avoid litigation and the offer is an estimate of income that might not have been taxed. The offer of additional income and its acceptance in all the assessment year is a rough estimate. No attempt is made even to find out the locus of the earning and the person who concealed such earning. There was offer of additional income and it was held to be a good offer. It was accepted in its entirety. All these together present the factual context which must be considered before taking a decision about whether the appellant should be held guilty of concealment of the income offered in each of the assessment years under consideration. If a penalty is not automatic, the relevance of such circumstances has to be taken into account. In my opinion, while the offer is in consequence of search action, the assessment order in accepting the offer of the appellant also admitted that the income that might properly be assessed in the cases of different persons or may also be properly explained with sufficient ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing about the merit or otherwise and basis of the additional income offered. We accordingly direct the to delete the penalties for each of the years, subject-matter of' this common order.' In the present case, the learned Asstt. CIT has accepted the additional income as declared by the assessee in the return under s. 153A. There was no incriminating document or material which warranted the said declaration by the assessee. The levy of the penalty is therefore not justified both on facts and in law. 4. The facts of the decision of Madras High Court in M. Shohul Hameed' Batcha vs. ITO (2007) 292 ITR 585 (Mad) are totally different from the present case. In this case there is additional income because of spreading the surrender and also bonafide mistake as to applicability of the legal provisions which was not the position in the said decision. The said decision is therefore not applicable. The levy of penalty by the learned Asstt. CIT relying on the said decision is therefore not correct. In view of above submission the assessee prays that the penalty as levied may please be deleted and the appeal of the assessee may please be allowed. 6. Learned CIT(A) afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legitimate and correct amount of income as may be mutually determined on agreed basis and the said letter be treated as statement under s. 132(4) of the Act for the benefit of Expln. 5 to s. 271(1)(c) of the Act. Learned CIT(A) was of the view that in the said letter dt. 24th Jan., 2007, there was no reference of seized assets and similarly there was no specific quantification of undisclosed income as to how the income had been earned and that too letter had been filed subsequent to search after drawing of last Panchanama. Therefore, the finding of that such letter could not be treated as the statement under s. 132(4) of the Act cannot be faulted. Learned CIT(A), accordingly, confirmed the penalty levied by the AO. Now, the assessee is in appeal. 8. Learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that in this case, the income assessed by the AO was the same as was disclosed by the assessee in his return filed under s. 153A of the Act. Therefore, penalty under s. 271(1)(c) of the Act was not leviable. 9. In his rival submissions, learned Departmental Representative although supported the orders passed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 153B (sic-153A) r/w s. 143(3) of the Act. There is no observation of the AO that the amounts, on which penalty under s. 271(1)(c) of the Act was levied were not disclosed in the return filed by the assessee under s. 153A of the Act. The AO simply stated that the assessee had not disclosed those income in the original return of income. The assessment in this case was framed on 11th Nov., 2008 and before completion of the said assessment, the assessee vide letter dt. 22nd Jan., 2007 i.e. just after the search operation on 18th Jan., 2007 stated that he was prepared to pay tax on legitimate and correct amount of income as may be mutually determined on agreed basis. The assessee also stated that the said letter be treated as statement under s. 132(4) of the Act, thereby entitling the assessee to the benefits of Expln. 5 to s. 271(1)(c) of the Act. The AO nowhere stated that the contents of the said letter were wrong and not accepted. In other words, he had not stated anything to disprove the contents of the said letter in the assessment order dt. 11th Nov., 2008. Moreover, whatever was offered by the assessee in his return of income has been accepted by the AO while framing as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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