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2016 (8) TMI 357 - ITAT MUMBAI

2016 (8) TMI 357 - ITAT MUMBAI - TMI - Penalty u/s.271(1)(c) - assessment u/s 153A - income surrendered during the course of search - Held that:- Categorical finding has been recorded by CIT(A) to the effect that assessee has fulfilled all the conditions stipulated in Explanation 5 to Section 271(1)(c) for availing immunity for levy of penalty. The assessee has also paid taxes on this income before filing of return. The detailed finding recorded by CIT(A) and the conclusion drawn by him is suppo .....

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out as it should be on the photocopies obtained due to the fact that the impugned figures were written in pencil on which transparent cello tape was fixed so that the figures written in pencil cannot be tampered in the original documents those were seized. This fact of poor photocopying of the pencil written portion of the documents and therefore poor and illegible copied matter was not properly appreciated by the Ld. Assessing Officer and he levied penalty on the difference of ₹ 73,96,50 .....

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ccounted cash payment which was recorded to the tune of ₹ 41,43,263/- out of which assessee has surrendered only ₹ 15,50,000/-. The assessee has explained that it was due to mistake of Accountant as the entry was not properly appreciated by the lower authorities and they have also levied penalty with respect to these difference. In the interest of justice and fairplay we restore the penalty levied with reference to addition of ₹ 73,96,500/- and ₹ 25,93,263/- back to the f .....

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imposition of penalty u/s.271(1)(c) of the I.T.Act. 2. Rival contentions have been heard and record perused. In this case the penalty was imposed by the AO with regard to the amounts surrendered during the course of search as well as additions made during the course of assessment. Facts in brief are that the assessee firm is engaged in the business of developing, building and construction activities. During the course of search action u/s.132 in Summer Group of cases including the assessee s off .....

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ents. However, during the course of assessment it was found that the unrecorded payment as per these pages was ₹ 1,25,50,500/- and not ₹ 51,54,000/- as stated by the assessee. Therefore, the difference of ₹ 73,96,500/- (Rs.1,25,50,500 - ₹ 51,54,000) was added to the total income of the assessee as income from other sources and penalty was imposed with respect to the same. 3. Further during the course of search action u/s.132 of the Income Tax Act, 1961, in the assessee s .....

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the course of assessment it was found that the total of undisclosed income from these pages was ₹ 41,43,263/-. Therefore, the difference of ₹ 25,93,263/- (Rs.41,43,263 - ₹ 15,50,000/-) was added to the total income of the assessee as income from other sources. Penalty was levied by AO u/s.271(1)(c) of the I.T.Act in respect of the amount surrendered in the course of search as well as on the amount of additions made during the proceeding u/s.143(3) r.w.s.147 of I.T.Act. 4. By th .....

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atement u/s. 132(4) of the Income Tax Act on 07.11.2006 that all the assets as stated had been acquired out of the income which had not been disclosed so far in the return of income to be furnished before the expiry of time specified in section 139(1). He has further made declaration in the statement u/s.132(4) that the said income is derived from business activity from the real and construction carried out by it. Necessary taxes along with interest have already been paid by the appellant firm o .....

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The Assessing Officer in his assessment order has admitted the fact that the appellant has filed its return of income in response to notice u/s. 153A showing income of ₹ 67,04,500/- but he has imposed the penalty on the disclosed income also on the ground that this income has not been disclosed by the assessee in the original return of income filed on 31.10.2004 prior to search and seizure operation. 1.24 The appellant has relied on the decision of Hon'ble Madras High Court in the case .....

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ot make any such distinction. It refers to the statement given by the assessee at the time of the search under section 132(4) with regard to the assets found at the time of search being the statement to the effect that such assets have been acquired out of his undisclosed income and the specification by the assessee in such statement with regard to the manner in which such income had been derived; and the subsequent payment by the assessee of the tax on such undisclosed income together with inte .....

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e specified in section 139(1) are only a reiteration of the legal requirement regarding the time within which returns should normally be' filed. In cases where the assessee had not disclosed his income in the returns filed for the previous year which have ended prior to the date of the search and, in the statement given under section 132(4), the assessee admits the receipt of undisclosed income for those years and also specifies the manner in which such income had been derived, and thereafte .....

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Explanation, have to be read in line therewith, and, therefore, if the disclosure of the asset has been made, then the assessee cannot be prohibited from showing that the income related to anyone or more of the previous years before the date of the search, at the pain of the immunity conferred by sub-clause (2) of Explanation 5 being taken away. They have also held at page 29 of the said ITR as follows:- "Examining the present case from that stand point it is clear, that the assessing auth .....

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conferred by sub-clause (2) of Explanation 5, consequent upon the assessee giving statement under section 132(4), was at all taken away, or even watered down. 1.26 The appellant has further invited my attention towards 'the decision of Delhi High Court in the case of CIT Vs. Chabra Emporium 264 ITR 249 in which the court has held that surrender of ₹ 8,00,000/- was made on the date of the search action and such surrender fell within the immunity of Explanation 5 of section 271(1)(c) alt .....

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)(c) of the Income Tax Act as the appellant has disclosed his additional income during search and seizure operation under section 132(4) and paid taxes thereon. Thus the appellant fulfilled the condition of exception of Explanation 5 of Section 271(1)(c) of the income tax act. 1.28 In view of the above fact, it is clear that the appellant fulfilled the conditions stipulated in Explanation 5 to Section 271(1)(c) for availing immunity for levy of penalty. Therefore,' the. Assessing Officer is .....

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alty. The assessee has also paid taxes on this income before filing of return. The detailed finding recorded by CIT(A) and the conclusion drawn by him is supported by the decision of Hon ble Madras High Court in the case of SDV Chandru 266 ITR 175, Rajasthan High Court in the case of Kanhaiyalal, 299 ITR 19 and Delhi High Court in the case of Chabra Emporium 264 ITR 249. Accordingly we do not find any reason to interfere in the order of CIT(A) deleting the penalty levied with respect to income s .....

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