9911796707
TMI Blog2016 (4) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 271AAA of the I.T. Act without appreciating that the assessee did not pay tax on the revised income. 3. The brief facts of the case are that the assessee is a partnership firm, which is engaged in the business of real estate development. A search and seizure operation u/s 132 of the Income Tax Act, 1961 (hereinafter called as 'the Act') was conducted in the case on 30.1.2008. During the course of search and seizure proceedings, suppression of sales was detected and which was admitted by the assessee. While administering the oath before the investigation officer, the assessee has admitted the suppressed sales and also made disclosure of Rs. 3 crores in the statement recorded u/s 132(4) of the Act. In the original return of income filed by the assessee on 28.9.2008, it has admitted a total income of Rs. 6,92,770/-. Subsequently, the case has been centralized to Central circle and accordingly, statutory notice has been issued. In response to statutory notice, the assessee had filed revised return on 17.8.2009 admitting a total income of Rs. 4,35,64,790/- including undisclosed income of Rs. 4,28,72,020/-. The assessment was completed u/s 143(3) of the Act, on 31.12.2009 and de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s derived. The A.O. further held that on perusal of statement recorded u/s 132(4) of the Act on 2.2.2008, it is clear from the above statement that the assessee admitted undisclosed income of Rs. 3 crores, but in the statement it is not specified and substantiated the manner in which such undisclosed income was derived. The A.O. further held that though search was conducted on 30.1.2008, the assessee has not admitted the undisclosed income declared during the course of search in the regular return filed for the assessment year on 28.9.2008, which shows the assessee's intention of not to disclose the income and pay taxes. The A.O. further held that assessee admitted undisclosed income in the revised return, but not paid the taxes as per the revised return and paid taxes after the completion of assessment. Therefore, in view of the above facts and circumstances, the A.O. was of the opinion that the conditions specified under clause (i) and (ii) of sub section (2) of 271AAA of the Act and accordingly, levied 10% penalty. 6. Aggrieved by the penalty order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of section 271AAA. The CIT(A) further held that the assessee has paid the entire taxes on the undisclosed income after the completion of the assessment and before initiation of penalty proceedings u/s 271AAA of the Act. The Act does not specify any upper time limit for payment of taxes on undisclosed income and which was supported by the decision of Hon'ble Supreme Court in the case of ACIT Vs. Gebilal Kanhaialal (HUF) (2012) 348 ITR 561 (SC). Therefore, there is a merit in the contention of the assessee that clause (iii) of sub section 2 of section 271AAA of the Act is not fulfilled to levy penalty. With these observations, the CIT(A) deleted the penalty levied u/s 271AAA of the Act. Aggrieved by the CIT(A) order, the revenue is in appeal before us. 8. The ld. D.R. submitted that the order of the CIT(A) is erroneous on facts and circumstances of the case. The Ld. D.R. further submitted that the Ld. CIT(A) ought to have upheld the order of the A.O. in holding that the assessee has not explained the manner in which the undisclosed income was derived as required in sub section (2) of section 271AAA of the Act. The Ld. D.R. further submitted that the CIT(A) erred in holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it has admitted the undisclosed income at the time of search, disclosed the undisclosed income in the revised return in response to notice and also paid the taxes before initiation of penalty proceedings u/s 271AAA of the Act. Therefore, the conditions specified in sub section (2) are fulfilled and hence, no penalty can be levied u/s 271AAA of the Act. 11. The A.O. levied the penalty for the sole reason that the assessee has not explained the manner in which the undisclosed income has been derived. The A.O. further held that the assessee has not paid the taxes as per the revised return on the undisclosed income. The condition specified in clause (i),(ii) (iii) of sub section (2) are not fulfilled, therefore, it is a fit case for levy of penalty. Before we go into the merits of the case, let us understand the provisions of law as enumerated under section 271AAA of the Act. Section271AAA (1) of the Act provides for levy of penalty, where the assessing officer may, notwithstanding anything contained in any provisions of this Act, direct that, in a case, where search has been initiated on or after first day of June, 2007 (but before first day of July, 2012), the assessee shall p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entire self assessment tax admitted in the revised return before initiation of penalty proceedings u/s 271AAA of the Act. Though assessee has not paid the total taxes along with revised return of income, it has explained the reasons for non-payment of taxes before completion of assessment, however, has paid the total taxes before initiation of penalty u/s 271AAA of the Act. Therefore, in our opinion, the assessee has fulfilled the clause (iii) of sub section (2) of section 271AAA of the Act, hence, no penalty can be levied u/s 271AAA of the Act as held by the Hon'ble Supreme Court in the case of ACIT Vs. Gebilal Kanhaialal (HUF) (2012) 348 ITR 561 (SC). 12. It is pertinent to mention here the case laws relied upon by the assessee. The assessee relied upon the Hon'ble Supreme Court judgement in the case of ACIT Vs. Gebilal Kanhaialal (HUF) (2012) 348 ITR 561 (SC). The Hon'ble Supreme Court, in the above case, held that clause (2) did not prescribed any time limit within which the assessee should pay tax on income disclosed in the statement u/s 132(4) of the Act. The relevant portion has reproduced hereunder: Explanation 5 is a deeming pro-vision which provides where, in course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the original return filed by the assessee, wherein originally the income admitted in the course of search was not returned by it But the fact is that the assessee had filed a revised return before completing the assessment. When that is the case, the first return filed by the assessee is a non est. The only valid return is the revised return filed by the assessee. In that return, the amount admitted by the assessee at the time of search was offered for taxation. The assessee has paid the tax; he has paid the interest. He has not preferred any quantum appeal. He has also explained about the business and stated that the jewellery was acquired over a period of time. When all the pieces are put together, the CIT(A) was justified in holding that there was no ground to levy penalty in the present case under sec.271AAA. Accordingly, the order passed by the CIT(A) was upheld. 14. The assessee relied upon ITAT, Kolkata 'A' Bench decision in the case of DCIT Vs. Pioneer Marbles & Interiors Pvt. Ltd. (2012) 144 TTJ 663. The coordinate bench of this Tribunal, while deleting the penalty u/s 271AAA of the Act, held that no time limit is set out for payment of taxes for availing the immunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose, before concluding the assessment proceedings -CIT vs Mahendra C. Shah (2008) 215 CTR (Guj) 493 (2008) 3 DTR (Guj) 1 :(2008) 299 ITR 305 (Guj) applied."
15. Considering the facts and circumstances of the case, we are of the opinion that the conditions specified in clause (i), (ii) & (iii) of sub section (2) of section 271AAA of the Act are satisfied. Therefore, no penalty can be levied under sec. 271AAA(1) of the Act. The CIT(A) after considering the relevant details, deleted the penalty levied by the A,O. We do not see any error or infirmity in the order passed by the CIT(A). Hence, we inclined to uphold the order passed by the CIT(A) and direct the A.O. to delete the penalty levied u/s 271AAA(1) of the Act.
16. In the result, the appeal filed by the revenue is dismissed.
17. The cross objection filed by the assessee is supporting the order of the CIT(A). Therefore, for the reasons recorded in the preceding paragraphs, we dismiss the cross objection filed by the assessee.
18. In the result, the appeal filed by the revenue and the cross objection filed by the assessee are dismissed.
The above order was pronounced in the open court on 18th Mar'16. X X X X Extracts X X X X X X X X Extracts X X X X
|
