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Sh. Parveen Garg Versus ACIT

2015 (9) TMI 1445 - ITAT CHANDIGARH

Levy of penalty under section 271(1)(c) - return has not been filed by the assessee within the due date of filing of the return i.e. 31.7.2008 - Held that:- In the case of the assessee, search had taken place on 15.7.2008. The due date of filing of the return for assessment year under appeal i.e. 2008-09 had not expired on the date of the search as the due date of filing of the return of income under section 139(1) was 30.9.2008. Thus, in the present case, the deeming provisions of Explanation 5 .....

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at due to the bonafide error, surrendered income was no included in the return filed under section 139(1) or 139(4) of the Act because as per the advice, the surrendered income was to be declared in the return to be filed under section 153A of the Act. The Assessing Officer levied the penalty under deeming provisions of Explanation 5 A to section 271(1)(c) of the Act, which in our view, is not applicable to the facts and circumstances of the case. - Decided in favour of assessee - ITA No. 350/Ch .....

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brief facts of the case are that the assessee derives income from House Property and share in the Partnership Firm. A search under section 132(1) of the Act was conducted on 15.07.2008 at the residences and office of the individual and group concerns of M/s B.R.S Institute of Medical Sciences group of cases. In response to notice under section 153A of the Act, the assessee filed his return of income on 22.02.2010 declaring income of ₹ 67,68,610/- and the case of the assessee was assessed .....

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₹ 22,42,867/- was imposed by the Assessing Officer vide his impugned order dated 28.06.2011. 3. Before the learned CIT (Appeals), the assessee was aggrieved that the penalty of ₹ 22,42,867/- was imposed by not considering the fact that being a partner in an audit firm and also in a non-audit Firm, the assessee can file its return of income only after finalization of the Income Tax Return of the Firms. Moreover, the case of the assessee has been assessed at returned income and under s .....

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he is covered by the deeming provisions of Explanation 5A to the section 271 (l)(c). 6. It is submitted that as stated above the assessee is partner in two Firms namely Shiva Industries and Krishan Lai Parveen Kumar. The books of accounts of the Firm Shiva Industries are audited and thus the due date of return filing of the Assessee cannot be said to be 31st July and it is 30th September. The Explanation 5A to section 271(l)(c) of the Act is only applicable where the due date for filing the retu .....

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return have been prescribed in section 139 of the Act which is as follows: 139. [(1) Every persons,- (a) being a company [or a firm]; or (b) being a person other than a company [or a firm], if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during .....

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ccounts are required to be audited under this Act or under any other law for the time being in force, the [30th day of September] of the assessment year; Thus, it is very much clear from the explanation 2 to section 139 of the Act that the due date for the partners of a firm whose accounts are required to be audited under this Act is 30th September. 8. The very basis for the levy of penalty u/sec 271(l)(c) is not correct as the only point on the basis of which the Assessing Officer has levied th .....

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planation 5A to section 271(l)(c) are not applicable, it is further submitted that even otherwise the income was assessed at the income returned in response to notice u/sec 153A of the Act and as such there cannot be any levy of penalty when the returned income is as such accepted during the course of assessment proceedings. Since there is complete detachment of 153A proceedings from regular assessment proceedings u/s 143 or 147 and hence concealment of income is to be determined with reference .....

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as reported in 335 ITR 259 while deciding the issue levy of penalty u/s 271(l)(c) in paragraph 15 & 16 has held as under: 15. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particulars of income by the assessee has to be in the income tax return filed by it. There is sufficient indication of this Court in the judgment in the case of Commissioner of Income Tax, Delhi-I Vs Mohan Das Hassa Nand 141 ITR 203 and in Reliance Petro products Put. Ltd (su .....

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esently, we are not concerned with the assessment of income, but the moot question is to whether this would attract penalty upon the assessee under provisions of section 271(l)(c) of the Act. Obviously, no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said survey. However, there cannot be any penalty on surmises, on conjec .....

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ench in the case of Prem Arora vs. DCIT in ITA no. 4702 of 2010 vide order dated 09.03.2012 wherein the Judgment of the Hon'ble High Court has been relied upon and relief has been allowed to the assessee. c) Reliance in this regard is also placed on the latest Judgment of the Hon'ble Tribunal , Delhi Bench in the case of Suman Raheja vs DCIT in ITA no. 4411 & 4412 of 2011 vide order dated 25.05.2012 wherein the Judgment of the Hon'ble High Court (supra) as well the Judgment in th .....

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ce to the return of income to be filed in response to notice u/s 153A of the Act. Once returned income filed u/s 153A is accepted by the assessing officer it can neither be a case of concealment of income nor furnishing of inaccurate of particulars of such income. Hence, the assessee's case is squarely covered by the decision of Hon'ble Delhi high Court in the case SAS Pharmaceuticals (supra). Hence, penalty u/s 271(l)(c) is not exigible. In view of the above submissions, it is humbly re .....

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the assessee cannot be expected to file the return of income and i.e. the time of filing the return had to be considered upto 30.09.2008. It was further submitted that the amount of ₹ 65,00,000/- could not be disclosed in the original return, though included in the return filed in response to notice u/s 153A as the seized materials were not available. That assessee was also not in the correct frame of mind, and was of the view that the additional income was to be surrendered u/s 153A as p .....

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-audit Firm, the assessee can file its return of income only after finalization of the Income Tax Return of the Firms. In order to adjudicate on the issue, I shall refer to the provisions of Section 271 (1)( c) r/w Explanation 5A, which is reproduced below: 271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) If the Assessing Officer or the Commissioner of (Appeals) or the Commissioner in the course of any proceedings under this act, is satisfied that any person .....

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uch assets have been acquired by him by utilising (wholly or in part) his income for any previous year;or (ii) Any income based on any entry in any books of account or other documents or transactions and he claims that such entry represents his income (wholly in part) for any previous year, which has ended before the date of search and,- (a) Where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) The due date .....

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s conducted on 15.7.2008. The due dates for filing of the return for AY 2008-09 under consideration as per section 139(1) in respect of an Assessee who is partner in a firm whose accounts are subject to audit is 30th September of the Assessment Year. In other words, assuming the contention of the assessee is correct that the partnership firm is subject to audit for which a copy of Deed dated 1.4.2005 was furnished, the assessee was therefore required to furnish his return by 30.9.2008. Return wa .....

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in the return filed u/s 139 have not been elucidated by the assessee, excepting stating that the assessee was not in possession of seized materials, and had relied on his counsel. Hence it is apparent that had it not been for the search operation and questions raised during recording of the statement, there would have been no disclosure of additional income by the assessee. Hence I am of the opinion that the assessee has not sufficiently covered himself with the immunity conferred u/s 271 (1) (c .....

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ooks of account, for which penalty was initiated. Further Explanation 5-A to section 271(1)(c) of the Act is not applicable in the case of the assessee as the due date of return in the case of the assessee was 30.9.2008, which has not expired on the date of search on 15.7.2008. The assessee has filed the return of income on 31.3.2009. The assessee is a partner in two firms and accounts are audited. Therefore, the due date in the case of the assessee for filing of the return was 30.9.2008, which .....

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turn filed under section 153A of the Act. The assessee is not a technical person and it was advised that the surrendered amount has to be shown in the return filed in response to section 153A of the Act. The error committed by the assessee was bonafide and inadvertent and, therefore, penalty is not leviable. 8. On the other hand, the learned D.R for the Revenue relied upon the orders of the authorities below. 9. We have considered the rival submissions and perused the material available on recor .....

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be 31.7.2008 and it would be 30.9.2008. This fact is admitted by the learned CIT (Appeals) in his findings. It is, therefore, clear that in the present case, at the time of search on 15.7.2008, the due date of filing of the return for assessment year under appeal i.e. 2008-09 had not expired because the due date of filing of the return was 30.9.2008. The I.T.A.T., Mumbai Bench in the case of Kshiti R. Maniar (supra) considered the application of Explanation 5-A to section 271(1)(c) of the Act an .....

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ng the provisions of Explanation 5A to section 271(l)(c) (and not Explanation 5, as mentioned by the Assessing Officer). Explanation 5A, is a deeming provision where in case of search and seizure operation carried out under section 132 after 1st June 2007, the assessee is deemed to have concealed the particulars of his income or furnished inaccurate particulars of income, if he is found to be the owner of any money bullion jewellery or other valuable article or thing acquired by him utilizing hi .....

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assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and,- (a) where the return of income for such previous year has been furnished b .....

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naccurate particulars of such income." Thus, in case of search conducted on / or after 1st June 2007, penalty for concealment of income and furnishing of inaccurate particulars of income is deemed under Explanation 5A. However, two exceptions or saving clause has been provided wherein the penalty cannot be levied under this section. Firstly, the assessee has shown the assets as mentioned in clause (i) or income as mentioned in clause (ii), in the return of income furnished before the date o .....

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March 2008. Thus, in the present case, deeming provisions of Explanation 5A cannot be applied here because at the time of search, the relevant previous year for the assessment year 2007-08, the due date of filing of return of income had not expired. Whether the assessee had filed the return of income under section 139(1) or 139(4) after the date of search, will not be of much consequence because the income in question pertains to assessment year 2007-08 for which the due date had not expired at .....

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levying the penalty in cases of search after 1st June 2007, the deeming provisions of Explanation 5A can only be invoked, which clearly carves out the exception in the cases where due date of filing of the return of income had not expired at the time of search. Thus, for levy of penalty under Explanation 5A, it has to be seen whether any assets or income found on the date of search has been acquired out of the previous year and not afterwards for which penalty can be levied or initiated under o .....

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ame is deleted. 10. Considering the facts of the case in the light of the decision of I.T.A.T., Mumbai Bench in the case of Kshiti R. Maniar (supra), it is clear that in the case of the assessee, search had taken place on 15.7.2008. The due date of filing of the return for assessment year under appeal i.e. 2008-09 had not expired on the date of the search as the due date of filing of the return of income under section 139(1) was 30.9.2008. Thus, in the present case, the deeming provisions of Exp .....

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