TMI Blog2017 (9) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... ble attempt is made to contend that the said amount which was advanced to Neelkanth Mansion Private Limited was in the nature of loan and advances and hence Section 54F(3) is not applicable is a self destructible contention and is not acceptable. The assessee had in AY 2002-03 claimed exemption of ₹ 1,03,44,000/- u/s 54F on account of investments made in the booking of flats bearing No. 1301, 1302, 1401 and 1402 at Dhawalgiri Building from Neelkanth Mansion Private Limited and claimed exemption u/s 54F of the Act of ₹ 1,03,44,000/- for AY 2002-03 which was allowed by Revenue and now to contend that the said exemption was falsely and incorrectly claimed by filing incorrect return of income and fraud was perpetuated on Revenue by the assessee cannot be accepted. The assessee cannot be allowed to blow hot and cold. It is well settled that mere reflection in the account books of certain amounts in a particular manner is not decisive of the character of income of the assessee which is to be brought to tax in accordance with the provisions and mandate of the 1961 Act. Thus, mere reflection of the amount as loans and advances in the books will not change the character of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny assessment originally framed by the Revenue u/s 143(3) and return of income was processed u/s 143(1). The assessee derived income from salary, share of profit from partnership firm, derivative income, capital gain, interest income and dividend income. Pursuant to search u/s 132(1) on 17-01-2008, notice u/s 153A(a) of the Act was issued by the AO to the assessee on 5th September, 2008 which was served and in response thereof assessee filed return of income u/s 153A(a) for A.Y. 2005-06 on 10th October, 2008, declaring total income of ₹ 15,90,638/. The assessee during the course of assessment proceedings u/s 143(3) r.w.s. 153A, submitted letter dated 03-12-2009 which was filed on 11-12-2009, explaining as under :- Please refer to your notice u/s 142(1) dated 27-11-09 received by me on 1-12-09 . As Requested by you, please find enclosed herewith the following details and particulars. *** *** e) Bank book in respect of all bank accounts held by me with complete narration of every debit and credit in the said bank book is enclosed herewith. Bank pass book/ statement is produced herewith for your verification. *** g) Deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g herewith voluntarily revised return of income u/s.153A and I request you to consider the same at the time of completion of the assessment. In view of my voluntarily revising the return of income consequent upon the genuine mistake of not considering the provisions of section 54F(3) and there being no intention of making any wrong claim in the return of income, I most earnestly request you not to initiate any penalty proceedings in relation to the said revised return. I shall be grateful to you for granting my legitimate request. The AO, thereafter, framed assessment u/s 143(3) r.w.s. 153A vide assessment orders dated 24-12-2009 assessing income of the assessee at ₹ 1,20,08,286/- which was returned income as per revised return of income filed by the assessee on 22-12-2009. In the opinion of the AO, the assessee had furnished inaccurate particulars of income and concealed the income in the original return of income filed u/s 139(1) as also in the return of income filed u/s 153A(a), the A.O. initiated penalty proceedings u/s 271(1)(c) separately for furnishing of inaccurate particulars of income and concealing of the income . The penalty proceedings were initiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the pre requisite is that, the admitted tax is paid before filing of appeal. Here, in the instant case, the appellant has failed to pay the taxes and, therefore, the appeal does not qualify to be admitted. Accordingly, I dismiss the appeal. The A.O. observed in penalty proceedings u/s 271(1)(c) that the assessee had filed return of income u/s 139(1) of the Act on 25.08.2005 declaring total income of ₹ 15,90,638/- for the A.Y. 2005-06 . The search and seizure action against the assessee was carried out by Revenue u/s 132(1) on 17-01-2008. Subsequently in response to notice dated 05-09-2008 u/s.153A of the Act issued by the AO, the assessee filed its return of income on 10-10-2008 admitting total income of ₹ 15,90,638/-. Thereafter, a revised return of income was filed on 22-12-2009 admitting total income of ₹ 1,20,08,286/- wherein the assessee surrendered deemed capital gain of ₹ 1,03,44,000/- u/s 54F(3) of the 1961 Act with respect to flat cancelled in FY 2004-05 which was earlier allotted in AY 2002-03 i.e. within three years of allotment. It was observed by the AO that since booking of flat was cancelled by the assessee within three years, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l asset, hence, assessee was entitled for deduction u/s 54F of the Act in assessment year 2002-03. There was a condition that the new asset could not be transferred within a period of three years from the date of purchase in financial year 2001-02 which condition could not be complied with as the said allotment was cancelled in AY 2005-06. The assessee submitted that he should have declared the deemed capital gain u/s 54F(3) of the Act in A.Y. 2005-06. It was submitted that the assessee, on realizing the genuine mistake in not returning the deemed capital gain u/s 54F(3) of the Act, voluntarily filed the revised return of income returning the deemed capital gain u/s 54F(3) of the Act which was brought to the notice of the A.O., vide letter dated 22.12.2009. Thus, the assessee submitted that the conduct and the intention of the assessee was bonafide and proper explanation was given by the assessee before the A.O. . In support of his contention, the assessee relied upon the relevant provisions of section 139(5) of the Act. The assessee also relied upon various case laws wherein it is held that no penalty is exigible if an assessee had committed default under a bonafide belief whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pts towards booking of flat bearing No. 1301, 1302, 1401 and 1402 at Dhawalgiri Building from Neelkanth Mansion Private Limited and claimed exemption u/s 54F of the Act of ₹ 1,03,44,000/-. The A.O. observed that the said amount was not reflected in the asset side of the balance sheet of the assessee either under the head fixed asset, investment or advance whereas the same was appearing as advances under narration Advances-Flat Advances-Dhawalgiri‟ of ₹ 17,50,000/-, whereas the assessee has claimed exemption of ₹ 1,03,44,000/-. It was observed by the AO that the assessee had shown under the head Loans to Companies‟ i.e. M/s Neelkanth Mansion P. Ltd. of ₹ 1,39,41,366/-. The AO observed that M/s Neelkanth Mansion P. Ltd. is a builder and developer which is a family concern of the assessee . The AO observed that the assessee is trying to give colour to this loan transaction as an exemption under section 54F in his own hands, so that the family concern M/s Neelkanth Mansion P. Ltd. would utilize interest free funds and after cancellation of booking, the said amount can be taxed. The A.O. observed that the search and seizure action u/s 132(1) led ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee sated that through oversight the assessee has not declared the deemed capital gain u/s. 54F(3) as the flat which was purchased during the assessment year 2002-03 was surrendered by the assessee within 3 years from purchase. Hence the assessee has filed revised return of income for the assessment year 2005-06 admitting thereon the deemed capital gain u/s. 54F(3). It is further stated that the assessee will pay the additional tax due thereon. It was submitted that the assessing officer had not detected the error of the deemed capital gains u/s 54F(3) not been offered for tax on 22nd December, 2009 although all the material was before him much before 22nd December, 2009 and nothing was lacking in his record to detect the deemed income. It was submitted that there is no mention in order sheet entry as to the non declaring the said deemed capital gains u/s 54F(3) and also no show cause notice was issued by the AO to the assessee for the same. It was submitted that the conduct and explanations furnished by the assessee was bona fide and that there was no detection of any concealment of income by the assessing officer. It was submitted that the assessee had filed volun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A no. 4212 4213/Del/2011 dated 28-06-2013 . The assessee contended that the above said contention is now accepted by Hon‟ble Bombay High Court in the case of CIT v Murli Agro Products Limited (2014) 49 taxmann.com 172(Bom). It was prayed that the penalty levied by the AO u/s 271(1)(c) of the 1961 Act based on deemed capital gains u/s 54F(3) which is not covered under the scope of Section 153A of the 1961 Act be deleted. The ld. CIT(A) after considering the submissions of the assessee observed that the assessee had claimed deduction u/s. 54F of the Act amounting to ₹ 1,03,44,000/- in respect of long term capital gain in A.Y. 2002-03 as he had booked a flat for this amount which was cancelled in F.Y. 2004-05 i.e. year under consideration. It was observed that the assessee has not withdrawn the claim of deduction u/s. 54F of the Act and did not offer the amount of ₹ 1,03,44,000/- for taxation in his return of income filed for the impugned AY 2005-06. This amount has been offered for taxation in the revised return of income filed on 22nd December, 2009 during the course of assessment proceedings u/s. 143(3) r.w.s. 153A of the Act. The A.O. had levied penalty u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had already expired on 31st March, 2007 i.e. one year from the end of the financial year. The learned CIT(A) observed that the notice u/s 143(2) could have been issued by the AO by 31st August, 2006 i.e. 12 months after the end of the month in which the return of income was filed, hence, the assessment stood completed and was not pending on the date of initiation of search i.e. 17-01-2008. Thus, the ld. CIT(A) concluded that the addition was made on the basis of voluntary declaration made by the assessee in the revised return of income filed on 22nd December, 2009, therefore, the imposition of penalty u/s 271(1)(c) of the Act was not justifiable and accordingly learned CIT(A) directed the A.O. to delete the same, vide appellate order dated 27-03-2014 passed by learned CIT(A). 5. Aggrieved by the appellate order dated 27-03-2014 passed by the ld. CIT(A), the Revenue is in appeal before the tribunal. 6. The ld. D.R. submitted that the assessee had filed return of income u/s 139 (1) of the Act on 25th August, 2005 declaring income at ₹ 15,90,638/-. There was a search operation conducted by Revenue u/s 132(1) on 17th January, 2008 in Patel Group of cases and assessee was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was received by the assessee on cancellation of the allotment of flats booked with Neelkanth Mansion Private Limited in AY 2002-03 including an amount of ₹ 1,0,3,44,000/- being deemed capital gains u/s 54F(3). It is submitted that only when the assessee was cornered and confronted by the A.O., the assessee had no choice but to offer deemed capital gain u/s 54F(3) as income for taxation which was done by filing revised return of income on 22-12-2009 and letter dated 22-12-2009 was filed with the AO surrendering said income. It was submitted that the booking of the flat was made in A.Y. 2002-03, which was cancelled in F.Y. 2004-05. The ld. D.R. submitted that in the quantum assessment, the assessee itself revised the return of income on 22-12-2009, the assessee filed an appeal against quantum assessment which was dismissed by learned CIT(A) as tax on admitted income was not paid by the assessee on said deemed capital gains before filing of appeal. It is submitted that sufficient opportunity was provided to the assessee from time to time but the assessee never came forward to declare the income but only at the fag end, the assessee declared the said deemed capital gain u/s 54F(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort, ld. D.R. relied upon the decision of the Hon‟ble Supreme Court in the case of Mak Data Private Limited v. CIT (2013) 358 ITR 593(SC). 7. The ld. counsel for the assessee submitted that the return of income u/s 139 of the Act was filed by the assessee on 25th August, 2005 declaring total income at ₹ 15,90,638/-. The last date for issuing of notice u/s 143(2) of the Act for framing scrutiny assessment was 31.08.2006 and no notice was issued u/s 143(2) by that date and hence assessment stood completed and is an unabated assessment on the date of initiation of search on 17-01-2008, thus, no assessment was pending on the date of search i.e. 17.1.2008. It is submitted that on 10th October, 2008, the return of income was filed against the notice dated 05-09-2008 issued by the AO u/s 153A(a) of the Act. It is submitted that the assessee earned long term capital gain on sale of shares which was invested in the property by booking of flats in Neelkanth Mansion Pvt. Ltd. and deduction was claimed in the year AY 2002-03 u/s 54F of the Act on amount invested of ₹ 1,03,44,000/-. The flat were under construction but in A.Y. 2005-06, the booking was cancelled and there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bal Logistics Limited v. DCIT (2012) 137 ITD 287(Mum) and CIT v Murli Agro Products Limited (2014) 49 taxmann.com 172(Bom) . The ld. counsel also relied on the decision of the Hon‟ble Bombay High Court in the case of CIT v. Gurinder Singh Bawa in IT Appeal No. 1839 of 2013 dated 5th October, 2015. It was submitted that the assessee had made investment in Neelkanth Manson Private Limited which is a family concern of the assessee for booking of the apartment. It was submitted that the AO treated the said amount paid to Neelkanth Mansion Private Limited as loans and advances and hence no deemed capital gains u/s 54F(3) has arisen to the assessee. Thus, no penalty is exigible in this case. 6. In rejoinder, the ld. D.R. brought to the notice of the bench to para 6 in the case of judgment of Hon‟ble Bombay High Court in the case of Gurinder Singh Bawa (supra) whereby it has been held as under:- Mr. Kotangale, the learned counsel for the revenue very fairly states that the decision of the Special Bench of the Tribunal in Al-Cargo Global Logistics Ltd. was a subject matter of challenge before this court as a part of the group of appeals disposed of as CIT Vs. Continenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only after detection by Revenue that the assessee submitted revised return of income followed by letter dated 22-12-2009 wherein the said deemed capital gain u/s 54F(3) was declared. It was submitted that no Cross Objections were filed by the assessee after admission by the assessee after concealment of income was detected by Revenue. It was submitted that absolutely new plea has been raised by the assessee about non applicability of Section 54F(3) before the tribunal for the first time which was not raised up-to the stage of first appeal. It was submitted that there were bank entries wherein the money has been received back from Neelkanth Mansion Private Limited which found credited in bank statement itself and hence no incriminating material was required. It was submitted that originally return of income was processed u/s 143(1) and bank account was not scrutinised by the AO. 9. We have considered rival contentions and also perused the material available on record including case laws relied upon by rival parties. We have observed that a search seizure action u/s 132(1) in the case of Patel Group of cases was carried out by the Revenue on 17th January, 2008, in which assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,03,44,000/- arising out of deemed capital gains u/s 54F(3) on the date of search also before the search party. The assessee was issued notice by the AO on 05-09-2008 u/s 153A to file return of income in pursuant to search u/s 132(1), which return of income was filed by the assessee on 10-10-2008 but the assessee again did not disclose and declare said deemed capital gains in the return of income filed in pursuant to notice u/s 153A. Thus, the assessee did not declare this deemed capital gains of ₹ 1,03,44,000/- earned by the assessee u/s 54F(3) even in the return of income filed in pursuance to notice u/s 153A . It is pertinent to mention that return of income contains verification which is to be signed by persons stipulated u/s 140. The verification as made by the assessee u/s 140 while filing return of income on 25-08-2005 read as under : VERIFICATION I, Mukesh Mohan Patel(name in full and in block letters), son/daughter of Mohan Velti Patel solemnly declare that to the best of my knowledge and belief, the information given in this return and the annexures and statements accompanying it are best of my knowledge and belief, the information given in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellate order of learned CIT(A) deleting the penalty levied u/s 271(1)(c), while Revenue is contending that when the assessee was cornered by the AO, the assessee had no choice but to surrender the said deemed capital gains u/s 54F(3) which was an involuntary action of the assessee under compulsion as the AO detected the said non disclosure of deemed capital gains u/s 54F(3) and the conduct of the assessee is not voluntary and bonafide through out as it is deliberate action on the part of the assessee in non declaration of said income in the return of income filed twice once u/s 139(1) and secondly pursuant to notice issued u/s 153A pursuant to search conducted u/s 132(1) by the Revenue and hence penalty is exigible as it is hit by explanation 1 to Section 271(1)(c). It is also pertinent to mention here that the tax and interest due to be paid even on declaration of said income arising from deemed capital gains u/s 54F(3) while filing revised return of income on 22-12-2009 was not paid by the assessee while filing revised return of income on 22-12-2009, which tax and interest was finally paid by the assessee on 17-02-2010. With the above background discussed in brief, now le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars of allotment . The assessee earlier also filed details of capital gains before AO on 31-07-2009 but again deemed capital gains u/s 54F(3) were not declared and disclosed . Thus, the assessee submitted wrong declaration of capital gains earned by the assessee before the AO on 31-07-2009 and 11-12-2009 wherein deemed capital gains u/s 54F(3) were not included in total capital gains earned by the assessee. The assessee vide letter dated 03-12-2009 in response to notice of the AO u/s 142(1) also submitted bank statements which were filed by the assessee in response to notice u/s 142(1) calling for requisite information . Thus, at this stage the assessee had furnished bank statement for the first time which captured the refund from the builder Neelkanth Mansion Private Limited on account of cancellation of allotment of flat in FY 2004-05 within three years of allotment which included an amount of ₹ 1,03,44,000/- being deemed capital gains u/s 54F(3) earned in FY 2004-05, which flat was earlier allotted to the assessee in AY 2002-03. It is also pertinent to mention that the said concern Neelkanth Mansion Private Limited is assessee‟s family owned concern. Thus, at this st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently, I am filing herewith voluntarily revised return of income u/s.153A and I request you to consider the same at the time of completion of the assessment. In view of my voluntarily revising the return of income consequent upon the genuine mistake of not considering the provisions of section 54F(3) and there being no intention of making any wrong claim in the return of income, I most earnestly request you not to initiate any penalty proceedings in relation to the said revised return. I shall be grateful to you for granting my legitimate request. The AO, thereafter, framed assessment u/s 143(3) r.w.s. 153A vide assessment orders dated 24-12-2009 assessing income of the assessee at income of ₹ 1,20,08,286/-, wherein the income returned in the said revised return of income was accepted by the AO which included deemed capital gains u/s 54F(3) of ₹ 1,03,44,000/- . The A.O. initiated penalty proceedings u/s 271(1)(c) of the Act separately for furnishing of inaccurate particulars of income and concealing of the income and notice dated 24-12-2009 u/s 274 r.w.s. 271(1)(c) of the Act was issued to the assessee. The assessee first appeal against quantum assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the appeal does not qualify to be admitted. Accordingly, I dismiss the appeal. The A.O. had observed during penalty proceedings u/s 271(1)(c) that the act of the assessee in omitting to declare deemed capital gain chargeable to tax u/s 54F(3) was deliberate and intentional act of the assessee because the assessee cancelled the booking of flat during F.Y.2004-05 within three years of allotment which was earlier allotted in AY 2002-03 against which deduction u/s 54F was claimed in AY 2002-03, therefore, the assessee at the time of filing of original return of income u/s.139(1) of the Act on 25-08-2005 or at the time of filing of return of income in response to notice u/s.153A of the Act should have withdrawn the said claim by offering to tax said deemed capital gains of ₹ 1,03,44,000/- chargeable to tax u/s 54F(3). The AO had observed that the assessee revised return of income only during the course of scrutiny proceedings u/s 153A r.w.s. 143(2) and that too at the fag end of the assessment proceedings on 22-12-2009 by declaring total income of ₹ 1,20,08,286/- which included an amount of ₹ 1,03,44,000/- being deemed capital gains u/s.54F(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In support of his contention, the assessee relied upon the relevant provisions of section 139(5) of the Act. The assessee also relied upon various case laws wherein it is held that no penalty is exigible if an assessee had committed default under a bonafide belief which was rectified by filing a revised return of income withdrawing the claim and also there was no concealment or furnishing inaccurate particulars of income. The case laws relied upon by the assessee were CIT v. Suresh Chandra Mittal, (2011) 119 taxman 433(SC) and CIT v. Suresh Chandra Mittal, (2002) 123 Taxman 1052(MP). The A.O. rejected the contention of the assessee because the assessee had revised his return of income admitting total revised income at ₹ 1,20,08,286/- only at the fag end of scrutiny proceedings that too only after realizing that A.O. is going on right track about finding that deduction claimed by the assessee u/s 54F was wrong and to be withdrawn in the previous year relevant to the impugned assessment year by offering the same as deemed capital gain u/s 54F(3). The AO observed that it is best known to the assessee as to how he did not realized the mistake of claiming wrong exemption u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and mere filing of revised return of income would not absolve assessee from presumption as to concealment of income in original return of income and hence the assessee was guilty of furnishing of inaccurate particulars of income as per provisions of section 271(1)(c) of the Act, the AO imposed penalty of ₹ 23,21,194/- being 100% tax sought to be avoided vide penalty order dated 30-03-2012 passed u/s 271(1)(c) of the 1961 Act. The ld. CIT(A) in first appeal against penalty order, after considering the submissions of the assessee observed that the assessee had claimed deduction u/s. 54F of the Act amounting to ₹ 1,03,44,000/- in respect of long term capital gain in A.Y. 2002-03 as he had booked a flat for this amount which was cancelled in F.Y. 2004-05 i.e. year under consideration. It was observed by learned CIT(A) that the assessee has not withdrawn the claim of deduction u/s. 54F of the Act and did not offer the amount of ₹ 1,03,44,000/- for taxation in his return of income filed for the impugned AY 2005-06. This amount has been offered for taxation in the revised return of income filed on 22nd December, 2009 during the course of assessment proceedings u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act was originally filed on 25th August, 2005 hence the time limit for completing the processing had already expired on 31st March, 2007 i.e. one year from the end of the financial year. The learned CIT(A) observed that the notice u/s 143(2) could have been issued by the AO by 31st August, 2006 i.e. 12 months after the end of the month in which the return of income was filed, hence, the assessment stood completed and was not pending on the date of initiation of search i.e. 17-01-2008. Thus, the ld. CIT(A) concluded that the addition was made on the basis of voluntary declaration made by the assessee in the revised return of income filed on 22nd December, 2009, therefore, the imposition of penalty u/s 271(1)(c) of the Act was not justifiable and accordingly learned CIT(A) directed the A.O. to delete the same, vide appellate order dated 27-03-2014 passed by learned CIT(A). After carefully considering all the relevant material on record including orders of the authorities below and the case laws cited by both the rival parties We have observed that the appellate order of learned CIT(A) is not sustainable in the eyes of laws for the following reasons : a. )The assessee made decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) was whopping to the tune of ₹ 1,03,44,000/- while the other income earned by the assessee in aggregate was only ₹ 15,90,638/-. Then on 22-12-2009, the assessee filed revised return of income declaring said income from deemed capital gains u/s 54F(3) of ₹ 1,03,44,000/- and also filed letter dated 22-12-2009 intimating about the disclosure of the said deemed capital gain income in the revised return of income filed with the Revenue on 22-12-2009. Incidentally the assessee did not pay taxes and interest at this stage also on 22-12-2009 which he was required to pay along with revised return of income declaring and disclosing said income of deemed capital gains of ₹ 1,03,44,000/-. The disclosure was made at the stage when the assessment proceedings were at fag end, which assessment proceedings culminated into an assessment order dated 24-12-2009 u/s 153A r.w.s. 143(3). It is pertinent to mention that this income is an admitted income which was not earlier disclosed by the assessee to Revenue . On consideration of overall factual matrix of the case, we are of considered view that the conduct of the assessee is not at all bonafide and explanations offered by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the instant case, several successive stages have passed wherein the assessee continued with non disclosure of said income to the Revenue as we have seen in preceding para‟s and it is only at the fag end when assessments were about to be concluded, at the requisition of information by the AO u/s 142(1) vide notice dated 27-11-2009, the assessee was compelled to file bank statements and details of capital gains vide reply dated 03-12-2009 filed on 11-12-2009. Incidentally even while filing reply on 11-12-2009, still the assessee chose not to disclose deemed capital gains u/s 54F(3) to the tune of ₹ 1,03,44,000/- and rather wrong declaration of capital gains were made which did not included deemed capital gains of ₹ 1,03,44,000/- earned by the assessee u/s 54F(3). It is the coming of bank statements of the assessee in possession of the AO vide reply filed on 11-12-2009 ( reply dated 03-12-2009), wherein said amounts of refund of ₹ 1,03,44,000/- on cancellation of booking of flat stood credited along with the details of capital gains submitted by the assessee before the AO wherein deemed capital gains u/s 54F(3) were not reflected submitted by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistics Limited v. DCIT (2012) 137 ITD 287(Mum) and CIT v Murli Agro Products Limited (2014) 49 taxmann.com 172(Bom), the plea has been taken by the assessee that the leviability of penalty is not justifiable as quantum itself is not sustainable as the assessment was an unabated assessment for AY 2005-06. The factual matrix of the case before us is clearly distinguishable, it is a case before us wherein the assessee has earned undisputedly and admittedly an deemed capital gains of ₹ 1,03,44,000/- u/s 54F(3) which was always taxable as admitted by the assessee and was also reflected in the bank statements of the assessee which bank accounts were declared to the revenue as the said deemed capital gain earned by the assessee being part of refund on cancellation of booking of flat stood credited in the said declared bank accounts but the assessee did not disclose the said income arising from deemed capital gains u/s 54F(3) to Revenue despite being undisputedly and admittedly liable to taxation and the assessee executed wrong verifications u/s 140 of having declared true and correct disclosure of total income while filing return of income u/s 139(1) on 25-08-2005 and u/s 153A on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isturbing concluded assessment in the absence of incriminating material as otherwise this income was claimed by the assessee as an income not chargeable to tax as per provisions of the 1961 Act but for Revenue bringing to tax the same under 153A assessment without any incriminating material, nor is the claim of the assessee that Revenue is taking a different view on the same receipts which were earlier held to be exempt by Revenue by disturbing concluded assessment in the absence of incriminating material and is now been brought to tax by Revenue post search and that too without any incriminating material. It is rather income simplicitor chargeable to tax which assessee was concealing from Revenue and which got detected during assessment proceedings u/s 153A. It is claimed that in the instant case no addition is made based on the incriminating material found during the course of search u/s 132(1) but in our considered view bank statements of the bank accounts held by the assessee which bank accounts were declared but income was not declared, wherein the said refund on cancellation of allotment of flat were credited were in itself incriminating material and the said bank accounts wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slature by Finance Act 2003, decided to discard Chapter XIV B provisions and introduce Sections 153A, 153B and 153C in the IT Act. (9) What Section 153A contemplates is that, notwithstanding the regular provisions for assessment/reassessment contained in the IT Act, where search is conducted under Section 132 or requisition is made under Section 132A on or after 31/5/2003 in the case of any person, the Assessing Officer shall issue notice to such person requiring him to furnish return of income within the time stipulated therein, in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made and thereafter assess or reassess the total income for those assessment years. The second proviso to Section 153A provides for abatement of assessment/reassessment proceedings which are pending on the date of search/requisition. Section 153A (2) provides that when the assessment made under Section 153(A)(1)is annulled, the assessment or reassessment that stood abated shall stand revived. (10) Thus on a plain reading of Section 153A of the Income-tax Act, it becomes clear that on initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that any material was unearthed during the search or during the 153A proceedings which would show that the relief under Section 80 HHC was erroneous. In such a case, the A.O. while passing order under Section 153A read with Section 143(3) could not have disturbed the assessment order finalised on 29.12.2000 relating to Section 80 HHC deduction and consequently the C.I.T. could not have invoked jurisdiction under Section 263 of the Act. 29. We are not in agreement with Mr. Pinto that these observations are made in passing or that they are not binding on us because the essential controversy before the Bench was somewhat different. He urges that was only in relation to the legality and validity of the order of the Commissioner under section 263 of the IT Act. Had that been the case, the Division Bench was not required to trace out the history of section 153A of the IT Act and the power that is conferred thereunder. When the Revenue argued before the Division Bench that the power under section 153A can be invoked and exercised even in cases where the second proviso to sub-section (1) is not applicable that the Division Bench was required to express a specific opinion. The prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench's understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record. The Special Bench in that regard held as under : 48. The provision under section 153A is applicable where a search or requisition is initiated after 31.5.2003. In such a case the AO is obliged to issue notice u/s 153A in respect of 6 preceding years, preceding the year in which search etc. has been initiated. Thereafter he has to assess or reassess the total income of these six years. It is obligatory on the part of the AO to assess or reassess total income of the six years as provided in section 153A(1)(b) and reiterated in the 1st proviso to this section. The second proviso states that the assessment or reassessment pending on the date of initiation of the search or requisition shall abate. We find that there is no divergence of views in so far as the provision contained in section 153A till the 1st proviso. The divergence starts from the second proviso which states that pending assessment or reassessment on the date of initiation of search shall abate. This means that an assessment or reassessment pending on the date of initiation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessments stand on a different footing from the pending assessments because appeals etc. proceedings continue to remain in force in case of completed assessments and their fate depends upon subsequent orders in appeal. On consideration of the provision and the submissions, we find that this provision also makes it clear that the abatement of pending proceedings is not of such permanent nature that they cease to exist for all times to come. The interpretation of the Ld. Counsel, though not specifically stated, would be that on annulment of the assessment made u/s 153(1), the AO gets the jurisdiction to assess the total income which was vested in him earlier independent of the search and which came to an end due to initiation of the search. 50. The provision contained in section 132 (1) empowers the officer to issue a warrant of search of the premises of a person where any one or more of conditions mentioned therein is or are satisfied, i.e. - (a) summons or notice has been issued to produce books of account or other documents but such books of account or documents have not been produced, (b) summons or notice has been or might be issued, he will not produce the books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B. 53. The question now is - what is the scope of assessment or reassessment of total income u/s 153A (1) (b) and the first proviso ? We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results :- ( a) In so far as pending assessments are concerned, the jurisdiction to make original assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the AO has made any additions which is not qua incriminating material but it is the assessee which when cornered by Revenue filed revised return of income declared and offered for tax deemed capital gains of ₹ 1,03,44,000/- u/s 54F(3). The bank statements wherein the said deemed capital gains of ₹ 1,03,44,000/- was found credited is itself an incriminating material which justifies the chargeability to tax of the said income which was not earlier disclosed to the Revenue. This contention of the assessee is, therefore,rejected. c.) A feeble attempt is made to contend that the said amount which was advanced to Neelkanth Mansion Private Limited was in the nature of loan and advances and hence Section 54F(3) is not applicable is a self destructible contention and is not acceptable. The assessee has made booking of flats bearing No. 1301, 1302, 1401 and 1402 at Dhawalgiri Building from Neelkanth Mansion Private Limited and claimed exemption u/s 54F of the Act of ₹ 1,03,44,000/- for AY 2002-03. The assessee relied upon observations of the AO wherein it was observed by the AO that the said amount was not reflected in the asset side of the balance sheet of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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