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2016 (12) TMI 752 - ITAT CHANDIGARH

2016 (12) TMI 752 - ITAT CHANDIGARH - TMI - Levy of penalty under section 271AAA - taxes due on the surrendered/undisclosed income had not been paid before the date of filing of the return of income - Held that:- For the purpose of claiming immunity from penalty there is no requirement of paying taxes on the undisclosed income before the due date of return of income under section 139(1) of the Act. Further it is not disputed that the assessee had paid taxes on the undisclosed income surrendered .....

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rein besides other pleadings made, the assessee relied upon the aforestated apex court decision in the case of Gebilal Kanhaiyalal (2012 (9) TMI 297 - SUPREME COURT) on the impugned issue, and deleted the penalty levied. Further, admittedly, no appeal has been filed by the Revenue against the said orders of the CIT(A). - Decided in favour of assessee. - ITA No. 729/Chd/2016 - Dated:- 9-11-2016 - Bhavnesh Saini, Judicial Member And Annapurna Gupta, Accountant Member N. K. Saini for the Appellant .....

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learned CIT (Appeal) has erred in law in confirming the penalty of ₹ 24,05,192/- levied u/s. 271AAA of IT Act 1961 on the ground that taxes and Interest in respect of undisclosed income were not paid in this case in due time, the third condition for non levy of penalty u/s. 271 AAA of IT Act. The view taken by learned CIT(A) is contrary to the provisions of section 271AAA(2)(iii) which do not stipulate any time frame for payment of taxes and interest thereon on undisclosed income. 3. The .....

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was one of the concerns covered under section 132 of the Act. During search operation, various documents were found and discrepancies were detected, which when confronted to Shri Taraninder Singh, Director of Manohar Singh group of cases, he voluntarily disclosed ₹ 13 crores under section 132(4) of the Act. On being asked to file break-up of the disclosure of ₹ 13 crores, assessee-wise break-up was given which showed an amount of ₹ 6.5 crores surrendered in the name of the ass .....

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r assessment year 2012-13 against the loose papers and discrepancies found during the search and total taxes due on the same amounted to ₹ 1.31 crores out of which ₹ 30 lacs had been deposited and a letter written for adjustment of cash seized amounting to ₹ 55.70 lacs during the search. The assessee stated that rest of the amount would be paid during the financial year. The Assessing Officer after considering the assessee's reply held that since only the quantum of the und .....

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cified the manner in which the income had been earned and had also paid taxes on the same. The assessee, therefore, stated that the penalty under section 271AA of the Act could not be levied. The Assessing Officer rejected the assessee's contention and stated that the assessee had only specified the quantum of undisclosed income but neither specified its basis nor substantiated the manner of earning the same. Further, the Assessing Officer held that the assessee had not paid full taxes on th .....

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om penalty including payment of all taxes due on the income surrendered. The Ld. CIT (Appeals) after going through the detailed submissions of the assessee reproduced at para 4 of his order, held that the assessee had substantiated the manner in which the undisclosed income was derived but at the same time held that since the taxes on the same had not been paid before the due date of filing of the return of income, penalty under section 271AAA of the Act was leviable. The Ld. CIT (Appeals) place .....

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71AAA of the Act. 7. Aggrieved by the same, the assessee filed the present appeal before us. The learned counsel for the assessee stated that the only reason for upholding the penalty was that the assessee had failed to pay the due taxes before filing of the return of income and in view of the fact that all taxes had been paid and the Hon'ble Supreme Court in the case of ACIT, Udaipur vs. M/s. Gebilal Kanhaiyalal HUF, through Karta, Udaipur, (2012) 348 ITR 561 (SC) has held that there is no .....

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the levy of penalty in the present case is that the taxes due on the surrendered/undisclosed income had not been paid before the date of filing of the return of income. The fact that the taxes had been paid as per the following details is not disputed:- 22.07.2013 Rs.20,20,000/- 04.10.2013 Rs.15,00,000/- 10.10.2013 Rs.15,00,000/- 13.12.2013 Rs.15,00,000/- 24.12.2013 Rs.14,47,890/- TDS deducted Rs.18,870/- Total Rs.79,86,760/- 10. Further, we find that assessment, under section 153A r.w.s. 143(3) .....

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ty from penalty, as per Explanation-5 to section 271(1)(c) of the Act, is that the assessee has to pay taxes together with interest in respect of such undisclosed income up to the date of payment and that no time limit was prescribed under the section within which the assessee ought to pay the taxes on the income disclosed in the statement under section 132(4) of the Act. In view of the same, since the assessee has paid all due taxes on the income disclosed in the statement under section 132(4) .....

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ome by holding as follows:- 8. We have heard the rival contentions and perused the orders of the authorities below as also the documents placed before us. The sole issue arising in the present appeal is whether for claiming immunity from the levy of penalty under section 271AAA, the assessee is required to pay the due taxes on the undisclosed income before the due date of filing of return of income. The Ld. CIT(A), we find relied upon the order of Punjab and Haryana High Court in the case of Ash .....

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arch, the assessee surrendered a sum of ₹ 10 lakhs as concealed income for the year in question. The date for filing of return for the assessment year in question had not yet expired. The assessee did not even file the return on or before the due date. He filed the same on 19.1.1995. What to talk of payment of tax and interest, if any, due from the undisclosed income, so surrendered by the assessee on the due date, the assessee did not even pay the amount along with the belated return file .....

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e, the assessee paid the statutory interest thereon. In our view, the concession, as provided in Explanation 5, referred to above, can be availed of only by an assessee who after surrendering the income, pays the tax immediately and not belatedly. [para 2]" 9. It is clear from the above that the Hon'ble High Court had held that immunity from penalty is to be availed by the assessee invoking the provisions of Explanation 5 to section 271 (1)(c) of the Act, only if tax on the surrendered .....

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the assessee should pay tax on the income disclosed in the statement under section 132(4). The Hon'ble Apex court dealt with the impugned issue as follows:- 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 .....

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ned with interpretation of clause (2) of Explanation 5, which has been quoted 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, .....

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d condition, in the present case also stood satisfied. According to the Department, the assessee was not entitled to immunity under clause (2) as he did not satisfy the third condition for availing the benefit of waiver of penalty under Section 271(1)(c) as the assessee failed to file his return of income on 31st July, 1987 and pay tax thereon particularly when the assessee conceded on August 1, 1987 that there was concealment of income. The third condition under clause (2) was that the assessee .....

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