TMI Blog2012 (8) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... penses of ₹ 4,80,000/- and fictitious gifts of ₹ 5,00,000/- over and above what was detected as a result of search. The A.O. made estimated addition of ₹ 50,000/- to undisclosed income offered by the assessee of ₹ 9,80,000/- and another sum of ₹ 50,000/- towards on-money . The A.O. initiated the penalty proceedings u/s. 271(1)(c ) and vide order dated 28.3.2008, levied the penalty of ₹ 4,50,000/- u/s. 271(1)(c ) of the Act. As observed by the A.O, the additional income on account of undisclosed cash credits and fictitious gifts to the extent of ₹ 9,80,000/- was offered in consequence to the search action only. The A.O has further observed that the assessee s case is covered by Explanation 3 to Sec. 271(1)(c ). Considering the fact that assessee filed the return of income only after the date of search, he concluded that to the extent of ₹ 15,42,140/-, the assessee has concealed the income for the A.Y. 2002-03 and he levied the penalty to the extent of ₹ 4,50,000/- for the A.Y. 2002-03. The assessee challenged the penalty order before the Ld CIT(A). The Ld CIT(A) confirmed the penalty on the following items of income : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.9,75,000/- Bank 148100 006216 ₹ 13,75,00/- Tirupati Financial Nagari ₹ 1,00,000/- Cash Balance Rs. 75,807/- Total Rs.32,00,000 4. We have heard the parties and perused the record. We first take the assessee s appeal for the A.Y. 2002-03 being ITA No. 235/PN/2010. As per the facts on record, search action u/s. 132(1) of the I.T. Act was carried out at the residential as well as business premises of the assessee on 15.6.2004. During the course of search, cash of ₹ 35,59,100/-was found. So far as A.Y. 2002-03 is concerned, in response to notice u/s. 153A of the Act, the assessee filed the return of income disclosing total income of ₹ 14,92,138/-. The A.O completed the assessment making the addition to the extent of ₹ 1,00,000/-. The total income of the assessee declared in the return was comprised of the following income - Sr.No. Particulars Amount Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as personal expenditure of his sister who is a divorcee. He submitted that except the adhoc addition of ₹ 1,00,000/- which is also otherwise deleted, the income offered as per the return was accepted. He submitted that no penalty is leviable as no money, valuable article, bullion, gold etc., is subject matter of the assessment for the A.Y. 2002- 03. He submitted that in the preceding three years, the penalty levied by the A.O was deleted which was in respect of the income voluntarily offered towards the drawings of the assessee and divorced sister. He submitted that there was incriminating material found against the assessee during the course of the search. In so far as the cash found in the course of search is concerned, same is offered in the A.Ys. 2004-05 and 2005-06. Per contra, the Ld. D.R. supported the orders of the authorities below. 7. We find that the A.O has levied the penalty for the A.Ys. 1999- 2000, 2000-01 and 2001-02. We find that in the preceding three years, the penalty levied by the A.O is deleted. The major income offered for the said years was in respect of the personal expenditure of the assessee and his divorcee sister as some entries were found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 153 a return of his income which he is required to furnish under section 139 in respect of any assessment year commencing on or after the 1st day of April, 1989, and until the expiry of the period aforesaid, no notice has been issued to him under clause (i) of subsection (1) of section 142 or section 148 and the Assessing Officer or the Commissioner (Appeals) is satisfied that in respect of such assessment year such person has taxable income, then, such personal shall, for the purposes of clause (c ) of this sub-section, be deemed to have concealed the particulars of his income in respect of such assessment year, notwithstanding that such person furnishes a return of his income at any time after the expiry of the period aforesaid in pursuance of a notice under section 148. The said Explanation presumes that there is a concealment of particulars of income or filing of the inaccurate particulars of income in the situation where the assessee did not file return of income u/s. 139 or within the time limit prescribed u/s. 153(1) of the Act but files the return of income in response to notice u/s. 148. The said Explanation is also silent in the situation if the assessee has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 5,00,000/- 3) Citi Bank A/c. 15-103636-703 ₹ 9,75,000/- 4) HDFC Bank A/c. No.148100006216 Rs.13,75,000/- 5) Tirupati Finance Nagari Society Rs.1,00,000/- 6) Cash Balance Rs.75,807/- Total ₹ 32,00,000/- So far as the deposits in the Bank A/c. are concerned, the Bank Accounts were detected in the course of search. Assessee contended that it was difficult for him to explain the deposits made in the Bank accounts. The Assessee further submitted that he offered impugned credit as living expenses of family members as income with a view to buy peace of mind but he could not prove the source of the said credit. The explanation of the assessee was turned down by both the authorities below. 12. It is worthwhile to reproduce the operative part of the reasons given by the Ld CIT(A) for confirming the penalty on the income declared towards the unexplained credit of ₹ 32,00,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult, he did not pay adequate attention to the tax matters. 5.8 Coming to the case laws relied upon by the appellant. It may be mentioned that the said decisions are distinguishable on facts of the present case. In the case of Krishnalal Shivchand Rai Vs. CIT reported in 88 ITR 293, the Hon ble Punjab High Court observed that no opportunity was afforded to the assessee for leading evidence and prove that the impugned credits were genuine and in that context, the Hon ble Punjab High Court held that the penalty levied without such opportunity was invalid. The facts in the present case are totally different in the sense that appellant himself admitted the undisclosed income / credits in the return filed in response to notice u/s 153A, consequent to the search. Therefore, it is not a mere surrender of additional income. Faced with the inevitable consequences, the appellant was forced to disclose such income which he had failed to disclose by filing the regular returns of income in the normal course. In the case of CIT Vs. SV Electricals, the issue was whether penalty was leviable when the disclosure was total and there was no deliberate intention to evade payment of taxes. In that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpreted by the different judicial pronouncement, the expression tax sought to be evaded appearing in clause (c) in Sec. 271(1) is to be understood as a difference between the income declared by the assessee in the return of income and income finally assessed. After introduction of Sec. 153A w.e.f. 1.6.2003, there is no specific penalty provision to deal with the assessment frames in consequences of search and seizure action u/s. 132 of the Act. Except ₹ 75,807/- declared by the assessee as a cash, there is no declaration based on any money, bullion, jewellery or other valuable articles or thing in the nature of assets. As discussed in the assessee s appeal for A.Y. 2002-03, Explanation 5A is applicable from 1.6.2007 and hence, in this year, we are only concerned with Explanation-5 as the date of search is prior to 1.6.2007. Except the estimated addition of ₹ 50,000/-, no addition is made by the A.O. The A.O has accepted the income declared by the assessee in the return of income filed in response to notice u/Sec. 153A and in respect of said income. Explanation-5 cannot be applied. Moreover, no other income is added which is based on any incriminating material whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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