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2016 (5) TMI 281

Penalty under section 271AAA - voluntary disclosure - Held that:- The offer of undisclosed income of ₹ 2 crores was made voluntarily by the assessee without any detection by the Department and, accordingly, the argument of the learned Departmental representative that but for the search, this income would not have been offered does not hold any water and deserves to be dismissed. It is already well settled that though the income is not disclosed in the return filed under section 139(1) of t .....

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penalty. - Decided in favour of assessee - ITA No. 1082 /Kol/2013 - Dated:- 15-4-2016 - N. V. Vasudevan (Judicial Member) And M. Balaganesh (Accountant Member) For the Petitioner :Md. Ghayas Uddin Ansari For the Respondent : K. K. Chhaparia ORDER M. Balaganesh (Accountant Member) 1. This appeal of the Revenue arises out of the order of the learned Commissioner of Income-tax (Appeals), Central-I, Kolkata, in Appeal No. 348/CC-V/CIT(A)C-I/12-13 dated February 4, 2013, against the order of the lea .....

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case are that a search and seizure operation was conducted in the business premises of the assessee on 11.9.20 09. In the course of search and seizure operation in the office premises of the assessee jointly held with M/s Shree Salasar Properties & Finance Pvt Ltd and M/s Krishn a Trade & Commerce Pvt Ltd, the following books and documents were found / seized :- Annexure with Date Description Found Seized A Dt. 12-9-09 Books of a/cs SSB-1 to SSB-15 SSB-1 to SSB-15 C Dt. 12-9-09 Cash S .....

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purchase of shares for its own and also carried on the same on behalf of the clients to earn brokerage. The Learned AO found that closing balance of margin money, out of receipts from various clients as advance / deposit during the year was ₹ 1,45,5 0,000/- as on 31.3.2009 from seven clients, three of which belongs to the group. The assessee had the following income and losses during the year :- Share trading Rs. (-) 7,04,47,593/- F&O Income ₹ 1,12,23,048/- Intraday trading incom .....

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assessment year 2009-10 and ₹ 2,00,00,000 for the assessment year 2010-11 was made to avoid long drawn litigation and to buy peace as the assessee was instantly not able to produce all the relevant documentation or paper work as required by the Department. It was also pleaded that the disclosure petition also stated that the assessee has been carrying on bona fide and regular transactions. It was further pleaded that this claim about the bona fide and regular transactions also gets strengt .....

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ner in which the undisclosed income was derived by the assessee and, accordingly, held that the assessee is not entitled for immunity from levy of penalty. 6. On first appeal, the assessee argued that the contention of the learned Assessing Officer that the disclosure made under section 132(4) of the Act was not included in the return filed under section 139(1) of the Act was not only factually incorrect but also misleading. It was argued that the search got concluded on November 7, 2009, being .....

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d by the assessee and, hence, the entire addition has been accepted by the learned Assessing Officer only based on the offer made voluntarily by the assessee and not with reference to any seized materials. It was also argued by drawing attention to the disclosure petition under section 132(4) of the Act that the assessee had been carrying out regular and bona fide transactions which has not been disapproved by the learned Assessing Officer and disclosure was pertaining to the transactions whereb .....

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the assessee was not able to substantiate the manner in which the undisclosed income admitted under section 132(4) of the Act had been derived. For this proposition, reliance was placed on the decision of the co-ordinate Bench of Ahmedabad Tribunal in the case of Deputy CIT v. Sulchanadevi A. Agarwal (ITA No. 1052/Ahd/2012, dated July 20, 2012). The learned Commissioner of Income-tax (Appeals) based on the aforesaid submissions duly appreciated the contentions of the assessee and deleted the pe .....

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proceedings under section 271AAA of the Act for the assessment year 2010-11, being the year of search, for the additional disclosure made under section 132(4) of the Act in the sum of ₹ 2 crores, in view of the fact that the same was offered in the return filed under section 139(1) of the Act. In this regard, it is pertinent to note that the assessee had time to file its return under section 139(1) of the Act and, hence, the assessee true to his disclosure petition thought it fit to offer .....

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quare, Kolkata 700 069 Respected Sir, Re : Disclosure consequent to search and seizure operations carried out by the Income-tax Department on our premises on September 11, 2009/12th September, 2009 We are members of National Stock Exchange-Capital Market, F &O and Currency Derivatives, Mumbai Stock Exchange-Capital Market, F&O and Currency Derivatives, NSDL, MCX-Currency Derivatives, Calcutta Stock Exchange-Capital Market. We have done transactions on behalf of various clients and on our .....

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ice premises at 4A, Clive Row, Suit No. 411, 301A, 301B, 301C Kolkata 700 001. Based on various seized documents, we hereby offer a sum of ₹ 7,00,00,000 as our income for the financial year 2009-10 up to the period of search. Reference may be made to seized document, SSB/6, pages 1 to 25 and 35-36. The aforesaid income have been deployed in the working capital of the company including securities and margin money with stock exchanges. We shall file return accordingly in accordance with law .....

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Salasar Stock Broking Ltd. for the assessment year 2009-10 in the return filed under section 153A of the Act and paid taxes thereon. In the disclosure petition itself, we find that the assessee had clearly demonstrated the inability to substantiate the manner of deriving the undisclosed income in the case of M/s. Salasar Stock Broking Ltd. We find that the offer of ₹ 2 crores has been made voluntarily by the assessee in the disclosure petition under section 132(4) followed by filing of th .....

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e asses see had not offered the said income in the return filed under section 139(1) of the Act thereby levy of penalty is in order is to be accepted, then it would make the immunity provisions contemplated under section 271AAA(2) of the Act redundant. The Legislature in its wisdom had given a thoughtful consideration on the facts and circumstances under which the assessee would not be invited with the levy of penalty pursuant to the search subject to fulfilment of certain conditions stipulated .....

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er suppressed by the assessee for the assessment year 1987-88 was found to be to the tune of ₹ 44,07,783. These have been discussed in detail in the order of assessment. The Assessing Officer estimated that the sales of the assessee were ₹ 50,000 per day, whereas the accounted sales were not found even 50 per cent. of the total sales. Apart from this, it was found that certain purchases were also not being accounted for. Similarly certain payments made were not being accounted for. A .....

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vy maximum penalty under section 271(1)(c). While levying the penalty, the Assessing Officer repelled the contention of the appellant that a promise had been made not to levy the penalty, as there was no evidence to this effect on record. It was also held that the appellant was not entitled to the immunity given under section 132(4) read with section 271(1)(c) of the Act." The learned Commissioner of Income-tax (Appeals) deleted the levy of penalty under section 271(1)(c) of the Act. On sec .....

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tments including unexplained stock was found at the time of search. Ultimately, almost the same amount of income was offered by the assessee over a number of years. As the tax rates over the entire period was more or less the same, the tax effect, either from the point of view of the Department, or the assessee would have more or less the same, had the entire undisclosed assets been subjected to tax in the year of search or the entire income was spread over a number of years as has been done in .....

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sclosed in the revised returns. The revised returns should, therefore, be considered as having been filed in good faith. So far as assessment of the undisclosed income is concerned, such revised returns would be sufficient evidence for that purpose. However, for levying penalty, some further and stronger evidences were surely required. In the cases relied upon by the learned Departmental representative, the search itself discovered the undisclosed income. In the instant cases, the search merely .....

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the earlier years, no penalty can actually be levied by the Department." These findings have been finally approved by the hon'ble Supreme Court by observing as under (page 213) : "Accordingly, the orders under appeal are set aside and that of the Commissioner of Income-tax (Appeals) and the Tribunal restored. It is held that in the facts and circumstances of the case, penalty under section 271(1)(c) was not exigible. The appeals are accepted with costs." 8.3. We find that the .....

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cer in so far as the tax and interest has been recovered. Penalty has been levied after the tax has been recovered therefore answers the queries raised by the learned Departmental representative for that the said provisions become redundant was not the intention of the legislation. The manner, during the search operation, is noted by the search party which the Assessing Officer has acceded to. Therefore, following the decisions as relied upon by the learned counsel for the assessee, wherein the .....

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the Income-tax Act, 1961-Penalty-Where search has been initiated-Assessment year 2009-10-Whether where during course of search assessee admitted undisclosed income, paid tax together with interest, filed return showing said income as business income and Assessing Officer had accepted same, it could not be said that assessee had not specified manner or could not substantiate manner in which income was derived-Held, yes- Whether, therefore, penalty under section 271AAA was not leviable as assessee .....

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