New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (5) TMI 330 - ITAT PUNE

2016 (5) TMI 330 - ITAT PUNE - TMI - Levy of penalty under section 271(1)(c) - additional income offered in response to notice issued under section 153A - Held that:- Assessee had offered additional income as its income while filing return of income in response to notice issued under section 153A of the Act. The additional income worked out in the hands of assessee was on the basis of seized documents found / impounded during the course of search and seizure proceedings. Even in the cases where .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of documents found during the course of search. The assessee is also liable for levy of penalty on such addition in his hands. Accordingly, we reverse the order of CIT(A) and confirm the order of Assessing Officer in levying penalty under section 271(1)(c) - Decided against assessee - ITA No.1042/PN/2012 - Dated:- 23-3-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri Dheeraj Kumar Jain For The Respondent : Shri Nikhil Pathak ORDER PER SUSHMA CHOWLA, JM: This .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to offer any explanation regarding the difference in income returned vide return filed U/s 139 and 153A at ₹ 2,59,174/- and ₹ 45,17,2301-. 2. On the facts and in the circumstances of the case the learned CIT(A) erred in not appreciating that the additional income of ₹ 42,50,054/- was offered only in the return filed U/s 153A on specific issues such as unexplained investment in stock and other assets etc for which the assessee did not offer any explanation. 3. On the facts and i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r the said additional income in the return filed under section 139. 5. On the facts and in the circumstances of the case the learned CIT(A) erred in ignoring the decision of jurisdictional Tribunal in the group cases of Thakkar and Kalantri group in appeal Nos.911 to 930/PN/2009 and 1006 to 1008/PN/2009 dated 10-02-2010 which was a direct decision. 6. On the facts and in the circumstances of the case the learned CIT(A) erred in holding that the assessee disclosed additional incomes only to buy p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ting to assessment year 2009-10, order dated 30.10.2015. 4. The issue arising in the present appeal is in relation to levy of penalty under section 271(1)(c) of the Act read with Explanation 5A. 5. Briefly, in the facts of the present case, the assessee was an individual and was a medical practitioner. Search and seizure operation was taken against the assessee on 16.01.2009. During the course of search proceedings, certain documents were found, as per which there were various expenditures not r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

incriminating documents found and seized, addition on account of professional receipts to the extent of ₹ 42,58,054/- was made in the hands of assessee. Further, addition was made on account of deposits in savings bank account No.100230 in the name of assessee s wife totaling ₹ 56,583/-. During the course of penalty proceedings initiated under section 271(1)(c) of the Act, the claim of the assessee was that it had made true disclosure of its income by way of offering additional incom .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

penalty levied under section 271(1)(c) of the Act holding that Explanation 5A to section 271(1)(c) of the Act was not applicable to this case. 7. The Revenue is in appeal against the order of CIT(A). 8. After hearing both the learned Authorized Representatives and as fairly conceded by the learned Authorized Representative for the assessee, the issue arising in the present appeal is covered against the assessee by the order of Tribunal in Mrs. Sarita Kaur Manjeet Singh Chopra Vs. ITO (supra). T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the record. Search and seizure action was carried out against the assessee on 09.12.2009. While travelling from Pune to Delhi by air, the assessee was found to be in possession of cash of ₹ 1,60,76,800/-. The assessee was searched by the Investigation Wing under section 132 of the Act on 09.12.2009 and residence was also searched and cash of ₹ 1.60 crores was seized during the search proceedings. In the course of recording of statement during the search proceedings, the assessee admi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee offered 50% of the Agreement value i.e. ₹ 85 lakhs and 100% of the cash element i.e. ₹ 1.70 crores in her hand and computed the income from capital gains and declared total income of ₹ 2,04,91,850/- on 13.09.2010. Against the income from capital gains computed at ₹ 2,41,17,168/-, the assessee also claimed exemption under section 54 of the Act at ₹ 38,40,098/-, on account of investment in Mega Polis property. The Assessing Officer while completing assessment .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aspect of sale of property, wherein the assessee had claimed that it had sold fittings and fixtures of the said bungalow for ₹ 10 lakhs. However, in the absence of list of furniture or personal effects sold, the Assessing Officer was of the view that the fittings and fixtures attached to the property were inextricably linked to the building and consideration received thereon, was to be treated as capital gains. The Assessing Officer also initiated penalty proceedings under section 271(1)( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of penalty. The assessee is in appeal against the order of CIT(A) in confirming the levy of penalty under section 271(1)(c) of the Act. 14. The first aspect of the issue raised by the assessee before us is that where no satisfaction has been recorded by the Assessing Officer, since in the hands of assessee, there was no addition whatsoever, as the income offered by the assessee was accepted in toto, no penalty under section 271(1)(c) of the Act could be levied. From the perusal of assessment ord .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ived by the assessee. The Assessing Officer further considered that the assessee had offered the cheque amount and cash amount aggregating to ₹ 2.55 crores for taxation under the head long term capital gains . The Assessing Officer further observed that since the assessee had not declared this amount of capital gains in her original return and subsequently, after search has declared the total amount of capital gains and thus, concealed the particulars of income and consequently, penalty pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

income, can the assessee be held to have concealed its income vis-à-vis original return of income filed by the assessee. Section 271(1) of the Act makes provision for levying penalties on assessee in different eventualities, one such eventuality is for concealment of income or furnishing of inaccurate particulars of income. Only on fulfillment of the conditions stipulated in section 271(1)(c) of the Act, there arises a question of exercising power under the said provision to impose penal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ection 132 of the Act before first day of June, 2007, Explanation 5 was introduced by the Finance Act, 2007 with retrospective effect from 01.04.2003. Under the said section, where the assessee was found to be owner of any money, bullion, jewellery or other valuable articles or things and the assessee claims that such assets have been acquired by him by utilizing, wholly or in part his income, for any previous year, which had ended before the date of search, but the return of income for such yea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

course of search makes a statement under section 132(4) of the Act that the said money, bullion, jewellery, valuable articles or things, has been acquired by him out of his income, which has not been so far disclosed, but specifies the manner in which the said income has been derived and pays the taxes together with interest. Under Explanation 5, an exemption was provided to the person who was searched and was found in possession of money, bullion, jewellery, valuable articles or things, then in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

found to be the owner of any money, bullion, jewellery, valuable articles or things and the assessee claims that such asset had been acquired by him by utilizing wholly or in part his income for any previous year or any income is based on any entry in books of account or other documents or transactions and he claims that the same represents his income for any previous year, then where the period has ended before the date of search and the due date for filing the return of income for such year h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

amendment that where the return of income for such previous year had been furnished before the date of search, but such income had not been declared therein or where the due date of filing the return of income for other previous year has expired, but the assessee had not filed the return of income, then notwithstanding the fact that the said income is declared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed the particulars of his inc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m by utilizing wholly or in part his income, for any previous year on any income based on any entries in books of account, or other documents or transactions and he claims that such entries in the books of account or other documents or transactions represent his income for any previous year, then in cases where the return of income for such previous year had been furnished by the assessee prior to the date of search, but the said income had not been declared in the said return of income or the d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ions of the Explanation 5A to section 271(1)(c) of the Act, it is noted that the person is deemed to have concealed particulars of his income or furnished inaccurate particulars of such income, which is equivalent to the value of money, bullion, jewellery, valuable articles or things from the possession of the assessee during the course of search conducted on or after first day of June, 2007. Further, where any income is based on any entry in any books of account or other documents or transactio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

al in ACIT Vs. Mulay Construction P. Ltd. & Ors. in ITA Nos.116 to 119/PN/2012 & Ors. and it was held as under:- 16. The next limb of argument of the Ld. counsel is that Explanation 5A(ii) contemplates income and not the expenditure . In this case, it is undisputed fact that the assessee came forward and declared income which was pertaining to the amount covered by the unrecorded expenditure but the fact remains that the assessee did not declare any expenditure but it is only the income. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he expression 'income' does not lose its natural connotation. Indeed, it is repeatedly said that it is difficult to define the expression 'income' in precise terms. Anything which can properly be described as income is taxable under the Act unless, of course, it is exempted under one or the other provision of the Act. It is from the said angle that we have to examine whether the amount paid by Ballarpur by way of tax on the salary amount received by the assessee can be treated as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

himself He could not have received the salary which he did but for the said payment of tax. The obligation placed upon Ballarpur by virtue of Section 195 of the Income Tax Act cannot also be ignored in this context. It would be unrealistic to say that the said payment had no integral connection with the salary received by the assessee. We are, therefore, of the opinion that the High Court and the authorities under the Act were right in holding that the said tax amount is liable to be included i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e of a search initiated under section 132 on or before the 1st day of June 2007, the assessee is found to be the owner of (i) Any money, bullion, jeweler or other valuable article or thing (hereinafter 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 other income based on any entry in any books of account or other documents or transactions and he claims that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, he deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. 19. So far as the present assessee is concerned, clause (ii) to Explanation 5A is applicable. Admittedly, the expenditure which was not recorded has been found by way of entries in the seized documents. While .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aised an important legal question whether the income declared by the assessee which is pertaining to the unrecorded expenditure can said to be the income which is contemplated in Explanation 5A(ii)? The answer to this question is in sec. 69-C which reads as under:- Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the [Assessin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

which was found recorded by any entry in the document seized or otherwise was not covered. It is pertinent to note that sec. 69C provides that if any unrecorded expenditure is found and the assessee fails to explain the source of the said expenditure or explanation of the assessee is not satisfactory, then to the extent of the amount covered by such expenditure is treated as income. Ultimately what is taxed under Sec. 69 C of the Act is not the expenditure but it is basically the undisclosed inc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

search and seizure operation, the assessee case is squarely covered by Explanation- 5(ii) as the assessee himself has admitted the said undisclosed income. 19. Applying the said proposition to the facts of the present case, we hold that the income offered by the assessee pertaining to the cash seized from the assessee and the declaration of the assessee that the said cash relates to the unaccounted cash received vide the sale transaction entered into by the assessee, which in turn, was declared .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rsuant to notice issued under section 153A of the Act. The learned Authorized Representative for the assessee on the other hand has placed reliance on the ratio laid down in DCIT Vs. Purti Sakhar Karkhana (supra), which is a decision of Nagpur Bench of Tribunal and Hyderabad Bench of Tribunal in Shri PV Ramana Reddy Vs. ITO (supra). In view of binding precedent of Pune Bench on the said issue, we find no merit in the reliances placed upon by the learned Authorized Representative for the assessee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was made to the decision of CIT Vs. Continental Warehousing Corporation (NHAVA Sheva) Ltd. & Anr. (supra), where the Hon ble Bombay High Court has deliberated upon the scope of 153A provisions and has no relevance to the issue before us. 20. Another aspect of the issue of levy of penalty us 271(1)(c) of the Act is the wrong claim of deduction made by the assessee under section 54 and 54F of the Act. The CIT(A) vide para 3.10 to 3.11 has deliberated upon the factual aspects of the issue, whi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version