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2016 (8) TMI 355 - ITAT JAIPUR

2016 (8) TMI 355 - ITAT JAIPUR - TMI - Penalty u/s 271(1)(c) - assessment u/s 153A r.w.s. 153B/143(3) - surrender of income by assessee - Held that:- It is undisputed fact that the assessee in his return of income has declared undisclosed income as was declared during the course of search under section 132(4) of the Act. As per Explanation-5 to section 271(1)(c) of the Act, immunity is provided to the assessee against levying of penalty subject to fulfillment of certain conditions. One of the co .....

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larly, the amount of ₹ 13,00,000/- out of pocket diary expenses which was part of the total surrender of ₹ 1.40 crores made in the course of statement under section 132(4) was also declared in the year under appeal. Hence the total surrender in the year in hands of the appellant, amounted to ₹ 91,50,000/- which was accepted by the AO in the order passed under section 153A/143(3) of the Act. This fact is not controverted by the revenue by placing any other material on record. - .....

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in law the ld. CIT (A) has erred in deleting the penalty of ₹ 30,53,113/- levied u/s 271(1)(c) of the I.T. Act. 2. Briefly stated the facts of the case are that the assessment under section 153A read with section 153B/143(3) of the I.T. Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 24.12.2009. While framing the assessment, the AO also initiated penalty proceedings under section 271(1)(c) of the Act on the undisclosed income declared under section 132(4) of the .....

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penalty. 3. Now the revenue is in appeal before us. 4. The ld. D/R argued that the ld. CIT (A) was not justified in deleting the penalty. He submitted that although the assessee had offered undisclosed income for taxation in his return of income, however, no tax was deposited on this income. The AO observed that the income was declared in the return of income but not at the time of search. 4.1. On the contrary, ld. Counsel for the assessee has supported the order of ld. CIT (A) and submitted tha .....

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the appellant, in response to question no. 14 had stated that he was surrendering approx. ₹ 84 lakhs as bogus share capital receipts in respect of two companies. Finally, while filing the return, an amount of ₹ 78,50,000/- was declared in the year under consideration. Similarly, the mount of ₹ 13,00,000/- out of pocket diary expenses which was part of the total surrender of ₹ 1.40 crores made in the course of statement u/s 132(4) was also declared in this year. The total .....

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ould be ₹ 91,50,000/-. 6.2. It is further noted that depositing the tax before filing the IT return was not a condition precedent for availing immunity under Explanation 5 to sec. 271(1)(c), where the search was initiated before 01.06.2007. It has been so held by the Apex Court in the case of Gebi Lal (348 ITR 361). It was also held by the Gujarat High Court that for the purposes of Explanation 5 to sec. 271(1)(c), it is sufficient if the disclosure is made during search and tax is paid be .....

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far as the penalty levied on the remaining amount is concerned, it is seen that this is with reference to disallowance of expenses amounting to ₹ 1,35,150/- on account of interest paid as the appellant failed to establish nexus between this expenditure and the income under the head income from other sources. The CIT (A) reduced this disallowance to ₹ 1,07,000/-. Thus, this disallowance has been made only on the basis of estimation. There are no facts to show that there was an element .....

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mmunity is provided to the assessee against levying of penalty subject to fulfillment of certain conditions. One of the conditions is that the undisclosed income is required to be incorporated into the return of income to be furnished before expiry of time specified in section 139(1) of the Act and also specify in the statement, manner in which such income has been derived and pay the tax together with interest, if any, in respect of such undisclosed income. We find that ld. CIT (A) has given a .....

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r section 153A/143(3) of the Act. This fact is not controverted by the revenue by placing any other material on record. The ld. CIT (A) has relied upon the judgment of the Hon ble Supreme Court rendered in the case of ACIT vs. Gebi Lal Kanhaiya Lal (supra) wherein the Hon ble Apex Court has held as under :- To answer the above question, it would be worthwhile to reproduce Explanation 5 read with clause (2) of section 271(1)(c), which is quoted hereinbelow : Explanation 5. - Where in the course o .....

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ed before the said date, such income has not been declared therein ; or (b) For any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, unles .....

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derived and pays the tax, together with interest, if any, in respect of such income. Explanation 5 is a deeming provision. It provides that where, in the course of search under section 132, the assessee is found to be the owner of unaccounted assets and the assessee claims that such assets have been acquired by him by utilizing wholly or partly, his income for any previous year which has ended before the date of search or which is to end on or after the date of search, then, in such a situation, .....

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ted above. Three conditions have got to be satisfied by the assessee for claiming immunity from payment of penalty under clause (2) of Explanation 5 to section 271(1)(c). the first condition was that the assessee must make a statement under section 132(4) in the course of search stating that the unaccounted assets and incriminating documents found from his possession during the search have been acquired out of his income, which has not been disclosed in the return of income to be furnished befor .....

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