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M/s. Bestech Hospitalities Pvt. Ltd. Versus ACIT, Central Circle –II, Faridabad

2017 (9) TMI 1029 - ITAT DELHI

Penalty u/s 271(1)(c) - additional income included in the return filed under section 153A - disclosure made in the statement of Sh. Dharmendra Bhandari, Director of the assessee company recorded under section 132(4) - effect of amendment in Explanation 5A to Sec 271(1)(c) - Held that:- There cannot be any dispute to the fact that once a return is filed pursuant to notice under section 153A, the same is treated as return filed under section 139 of the Act [refer clause (a) of section 153A(1)]. Fu .....

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arch and the same was also disclosed in the return filed pursuant to notice issued under section 153A, clearly goes to show the bona fides of the appellant, not warranting imposition of penalty under section 271 (l)(c) of the Act. See Alok Bhandari case [2017 (9) TMI 954 - ITAT DELHI] - Also the amendment in Explanation 5A to Sec 271(1)(c) made effective by Finance Act, 2009 with retrospective effect from 01.06.2007 cannot be made applicable to assessee’s case because both original return an .....

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order dated 09/07/2014 passed by the Commissioner of Income Tax (Appeals)- Central, Gurgaon [in short the CIT-(A) ] in relation to penalty under section 271(1)(c) of the Act for assessment year 2007-08. The grounds of appeal raised by the assessee are reproduced as under: (A) That on the facts & circumstances of the case the learned ITO & the CIT(A) erred in : 1) Imposing penalty u/s 271(l)(c) amounting to ₹ 34,000/-. 2) Levying penalty in spite of the fact that law applicable for .....

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r in question. (B) The Assessee craves leave to add, Alter or amend the grounds of appeal at & before the hearing. 2. Facts in brief of the case are that for the year under consideration the assessee filed its return of income under section 139(1) of the Income Tax Act, 1961 (in short the Act ) before the Assessing Officer declaring a total income of ₹ 1,03,53,070/-. Pursuant to the search and seizure action under section 132 of the Act in the case of the assessee on 7/02/2008, notice .....

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of the Act in view of the disclosure made in the statement of Sh. Dharmendra Bhandari, Director of the assessee company recorded under section 132(4) of the Act. The assessee contended that it has already declared the amount in the return of income and therefore it was not liable for penalty under section 271(1)(c) of the Act. The Assessing Officer, was not satisfied with the contention of the assessee and according to him in view of the amended Explanation- 5A to section 271(1)(c) of the Act, t .....

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s below and submitted that the Explanation-5A to the section 271(1)(c) of the Act has been made effective retrospectively from 01/06/2007 and therefore assessee was liable for penalty under section 271(1)(c) of the Act. 5. We have heard the rival submissions and perused the relevant material on record. We find that in the case Alok Bhandari in ITA No.5747/Del/2014 for assessment year 2006-07 following grounds was taken before the Tribunal: (A) That on the facts & circumstances of the case th .....

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ospective effect 01.06.2007. 3) Ignoring the fact that explanation 5A of Section 1271(1) was inserted by the Finance Act 2009, w.e.f. 01.06.2007 which is after the assessment year in question. 6. We find that the grounds raised in the instant case are identical to the grounds raised in the case of Alok Bhandari (supra). Even in the instant case original return of income has been filed prior to the return filed in the case of Alok Bhandari (supra). In the said case the Tribunal has quashed the pe .....

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s-a-vis return filed by the appellant, once, income itself is declared which is accepted as such under section 139 r.w.s. 153A of the Act, then, the question of there being concealment/furnishing of inaccurate particulars of income/undisclosed income, does not arise at all. In the present case, the entire undisclosed income has been offered for tax by the appellant in the return of income, which was subject matter of assessment before the Assessing Officer. The return filed by the appellant has .....

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h the first two conditions i.e. (a) and (b) of explanation 5A to Section 271(1), are satisfied since the relevant previous year had ended prior to the date of search on 7th February, 2008 and the due date expired prior to the date of search. However, the third condition, i.e., the appellant has not filed return of income for the said previous year, is not satisfied inasmuch as for the previous year relevant to the assessment year 2007-08, the appellant company has filed return of income under se .....

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ried out in the case of the appellant and its group concerns on 7th February, 2008. During the course of search statement of Sh. Dharmendra Bhandari, was recorded under section 132(4) of the Act wherein undisclosed income of ₹ 8,00,000/- was surrendered. Accordingly, based on the aforesaid disclosure made during the course of search and seizure operation, the appellant, in the return filed on 03.03.2009 pursuant to notice issued under section 153A of the Act declared income of ₹ 12,5 .....

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3A, the same is treated as return filed under section 139 of the Act [refer clause (a) of section 153A(1)]. Further, concealment/ furnishing of inaccurate particulars of income/undisclosed income, has to be necessarily seen vis-a-vis return filed by the appellant Once, income it is declared which is accepted as such under section 139 r.w.s. 153A of Act, then, the question of there being concealment/ furnishing of inaccurate particulars of income/undisclosed income, does not arise at all. In the .....

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ision in this regard. i) It has been held in the decision of the Delhi Bench of the Tribunal in the case of Prem Arora vs. DCIT in (2012) 78 DTR (Del)(Trib)91 wherein the Tribunal held that where returned income filed u/s. 153A is accepted by the assessing officer, there will be no concealment of income and consequently penalty u/s.271(l )(c) cannot be imposed. ii) In CIT vs. SAS Pharmaceuticals (2011) 3351TR 259, Hon'ble Delhi High Court held - It necessarily follows that concealment of par .....

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posed 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 only on surmises, conjectures and possibilities. Section 271(1 )(c) has to be construed strictly. Unless it is found that there is actually a concealment or non-disclosure of particulars of income, penalty cannot he imposed. There is no such co .....

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sed the penalty on the appellant on the ground that the appellant had disclosed additional income for the assessment years in question and also failed to prove the genuineness loan credits. The Tribunal deleted the penalty holding that the penalty was leviable only on the basis of the assessment proceedings. The Madras High court affirmed the order of the 'Tribunal. iv) In CIT vs Shyamlal M. Soni : 276 ITR 156, the issue before the High Court was: Whether on the facts and circumstances of th .....

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n had been accepted and assessed at the hands of the appellant although the revised returns had been fled after a search under section 132 of the Act and after a notice had been under section 148 of the Act. v) Rajiv Garg 175 Taxman 184 (P&H) in the return filed in pursuance to notice under section 148 of the Act the appellant revised its claim one instead of offering for tax the amount of capital gain, he offered the entire sale proceeds as income. Such additional income offered was assesse .....

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e of transaction, sale and purchase of shares carried out through the broker Shri S.S. Mehta enabled the Assessing Officer to hold the capital gain as bogus. The information from investigation wing that sale was bogus was not communicated to appellant when notice under s. 148 was issued. The return filed 'under section 148 was not filed after 'detection'. The return of income so filed was voluntary and had offered the additional income to buy peace of mind and to avoid litigation. In .....

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Income8 tax (Appeals), whereby the penalty imposed under section 271(l)(c) of the Act by the Assessing Officer was ordered to be deleted. 5.4 Furthermore, levy of penalty has to be as per law applicable on the date of filing of the return and admittedly on 03.03.2009 when the return of income for assessment year 2006- 07 was filed by the appellant, the unamended provisions of Explanation 5A to section 271 (1 )(c) of the Act were on the statute. The question whether there was concealment of incom .....

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