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The Dy. Commissioner of Income Tax, Central Circle – 1, Nashik Versus Shri Nandlal S. Bothra

Penalty under section 271(1)(c) - Held that:- The perusal of order levying penalty under section 271(1)(c) of the Act reflects the Assessing Officer held the assessee to have defaulted in concealing particulars of income and also furnishing inaccurate particulars of income. Under the provisions of section 271(1)(c) of the Act, it is provided that a person is liable for levy of penalty where he has concealed the particulars of his income or furnished inaccurate particulars of income; either of tw .....

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upheld in law. - Decided in favour of assessee. - ITA No.1672/PN/2013 - Dated:- 30-3-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri Dheeraj Kumar Jain For The Respondent : Shri Pramod Kumar Shingte ORDER PER SUSHMA CHOWLA, JM: This appeal filed by the Revenue is against the order of CIT(A)-I, Nashik, dated 21.06.2013 relating to assessment year 2007-08 against deletion of penalty levied under section 271(1)(c) of the Income-tax Act, 1961 (in short the Act .....

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t. 2. Under the facts and circumstances of the case the CIT(A) erred in not appreciating the fact that the additional income was declared by the assessee by filing return of income u/s.153A and same was filed consequent to the search operation. During the course of search operation a cash of ₹ 15 lac were seized from the locker maintained by the assessee with SBI, Vaijapur and ₹ 37.97 lac from locker maintained by the assessee with PNB, Vaijapur and 1.49 lac from the residence of the .....

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During the penalty proceeding assessee could not produce any evidence of sources of such cash. 3. Under the facts and circumstances of the case the CIT (A) erred in not appreciating the fact that the assessee was aware of such cash kept in the various locker and in the residential premises of the assessee and also the sources of such cash. However, during the course of penalty proceeding assessee could not explain the sources of such cash. Therefore, Assessee has deliberately and intentionally c .....

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e u/s 139(1) of the I T, Act 1961 within the specified time. 6. On the facts and in the circumstances of the case, the appellant may craves leaves to add, amend or alter any grounds of appeal. 3. This appeal filed by the Revenue is against the order of CIT(A) in deleting penalty levied under section 271(1)(c) of the Act. 4. Briefly, in the facts of the case, the assessee was an individual carrying on the business of fertilizer and was also earning income from salary, rent, medical consultancy, i .....

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t of his personal savings but finally declared additional income of ₹ 42 lakhs from the business of commission from farmers for getting agricultural produce sold in the market. The assessee included the said sum of ₹ 42 lakhs in the return of income filed. For the year under consideration, the assessee had furnished original return of income declaring total income of ₹ 42,74,721/- and agricultural income of ₹ 3,26,000/- on 04.12.2007. The assessee since had included the s .....

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earch and seizure operation and after the due date for furnishing the return of income under section 139(1) of the Act and since the additional income of ₹ 42 lakhs was offered as a result of search and seizure operation, case of assessee was held to be covered under Explanation 5 to section 271(1)(c) of the Act. The Assessing Officer was of the view that the benefit of Explanation 5 to section 271(1)(c) of the Act could not be given to the assessee as the income declared in the return of .....

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nd it could not be said to be a case of voluntary disclosure. In view thereof, the Assessing Officer held the assessee to have without reasonable cause concealed the particulars of income of ₹ 42 lakhs and furnished inaccurate particulars of such income and hence, was liable to penalty under section 271(1)(c) of the Act at ₹ 13,03,990/-. 5. The CIT(A) in the first round vide order dated 16.11.2009 cancelled penalty imposed by the Assessing Officer on the basis of decision of Hon ble .....

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ion of seized material relevant to the income on which impugned penalty was imposed, as directed by the Tribunal in assessee s case, the CIT(A) observed that there was no incriminating documents seized / found as a result of search action that could co-relate the impugned income on which penalty under section 271(1)(c) of the Act was imposed. The CIT(A) was of the view that the case of assessee was covered by both the clauses i.e. (1) and (2) of Explanation 5 to section 271(1)(c) of the Act and .....

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not be said the said condition is not fulfilled by the assessee. As regards the second limb of the said clause (1) to Explanation 5, the CIT(A) observed that there was no procedure laid down in the Act to disclose the income to Chief Commissioner or Commissioner as far as the assessee was concerned. He thus, held that the said requirement was applicable only to abnormal transactions, therefore, the assessee was held to be eligible for immunity from levy of penalty for concealment. 6. As regards .....

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he assessee was entitled to the immunity from levy of penalty under section 271(1)(c) of the Act in terms of clause (2) of Explanation 5 to section 271(1)(c) of the Act. Vide para 4.2 at page 7 of the appellate order, the CIT(A) further held that the assessee had disclosed full facts regarding income offered to tax in the return of income filed under section 153A of the Act and he had acted bonafidely and cooperated in the assessment and also penalty proceedings. In the absence of any material o .....

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d that the assessee had failed to file return of income within due date, wherein the due date was 30.09.2007 and return of income including the additional income was filed on 04.12.2007. Our attention was drawn to the order of Assessing Officer both for the assessment and penalty under section 271(1)(c) of the Act. 9. The learned Authorized Representative for the assessee on the other hand, pointed out that in the first statement made by the assessee on 23.11.2006, there was declaration of ͅ .....

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rn of income admittedly, was filed two months late with a request for adjustment of cash seized against the taxes due. Our attention was drawn to the computation of income filed, which are placed at pages 18 and 19 of the Paper Book. The learned Authorized Representative for the assessee pointed out that the ratio laid down by the Hon ble Gujarat High Court in CIT Vs. Mahendra C. Shah (supra) was squarely applicable. Our attention was further drawn to the assessment order, wherein the Assessing .....

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6 of the order levying penalty under section 271(1)(c) of the Act, the learned Authorized Representative for the assessee pointed out that no specific default has been pointed out by the Assessing Officer that whether it was case of concealment of income or furnishing of inaccurate particulars of income. It was further pointed out that even in the notice issued for levy of penalty and the order levying penalty, there is no specific default mentioned whether it is the case of concealment or furni .....

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pers Pvt. Ltd. Vs. ACIT in ITA No.6772/M/2013 , relating to assessment year 2009-10, order dated 11.09.2015 and Kolkata Bench of Tribunal in Suvaprasanna Bhatacharya Vs. ACIT in ITA No.1303/Kol/2010 , relating to assessment year 2006-07, order dated 06.11.2015. The learned Authorized Representative for the assessee stressed that where penalty proceedings were not initiated validly and no specific charge was made, so the entire penalty proceedings were vitiated. The second proposition raised by t .....

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lanation 5 to section 271(1)(c) of the Act. 10. We have heard the rival contentions and perused the record. The issue arising in the present appeal is whether the assessee is exigible to levy of penalty under section 271(1)(c) of the Act. The first proposition raised by the assessee is that penalty proceedings have not been validly initiated in the hands of assessee i.e. there is no specific charge as to whether penalty under section 271(1)(c) of the Act is leviable on concealment of income or f .....

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ncealment has observed that he was satisfied that the assessee has without reasonable cause concealed the particulars of income of ₹ 42 lakhs and furnished inaccurate particulars of such income and is therefore, liable to penalty and hence, penalty of ₹ 13,03,990/-. While initiating penalty proceedings under section 271(1)(c) of the Act, the Assessing Officer in the assessment order had observed that additional income of ₹ 42 lakhs was not shown in the original return filed und .....

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. Thereafter, the assessee filed his return of income showing total income of ₹ 42,74,721/- on 04.12.2007 which consisted of house property income, business income, other sources including additional income of ₹ 42 lakhs aggregating to ₹ 46,00,721/- and after claiming deduction, balance income was declared. The assessee admittedly, had filed return of income for the year under consideration belatedly on 04.12.2007 and also filed the same in response to notice issued under sect .....

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circumstances of the case as discussed above, I am satisfied that the assessee has without reasonable cause concealed the particulars of income of Rs.42,00,000/- and furnished inaccurate particulars of such income and is therefore liable to penalty. Accordingly, the assessee is directed to pay a sum of ₹ 13,03,990/- by way of penalty which is the minimum leviable as calculated below: WORKING OF PENALTY U/S. 271(1(C) Tax on assessed income of ₹ 46,00,721/- inclusive of Agricultural i .....

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rticulars of income and also furnishing inaccurate particulars of income. Under the provisions of section 271(1)(c) of the Act, it is provided that a person is liable for levy of penalty where he has concealed the particulars of his income or furnished inaccurate particulars of income; either of two conditions have to be satisfied before penalty for concealment can be levied. The Courts have time and again held that the Assessing Officer has to be specific in reasons levying penalty for concealm .....

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Officer has observed that the penalty is levied for furnishing of inaccurate particulars of income and concealing income. The relevant extract of para 7 of the order reads as under: 7. I am satisfied that the assessee has without any reasonable cause, furnished an inaccurate particulars of income and thereby concealed his income to the extent of ………………………. Furnishing of inaccurate particulars of income and concealing of income are t .....

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