TMI Blog2018 (12) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing which we uphold the levy of penalty u/s 271(1)(c). - Decided against assessee. - ITA No.256/Chd/2017 - - - Dated:- 4-7-2018 - Shri Sanjay Garg, Judicial Member And Ms. Annapurna Gupta, Accountant Member For the Appellant : None For the Respondent : Smt.Chanderkanta, Addl. CIT ORDER PER ANNAPURNA GUPTA, A.M. : This appeal has been preferred by the assessee against the order of learned Commissioner of Income Tax (Appeals) 5, Ludhiana (hereinafter referred to as CIT(Appeals)) dated 25.11.2016 relating to assessment year 2010-11,challenging the confirmation of levy of penalty u/s 271(1) of the Income Tax Act,1961. 2. The facts of the case are that return for the impugned year was filed by the assessee on 11.12.2010 declaring income of ₹ 11,75,959/-. Thereafter search u/s 132 of the Act was conducted at the residence of the assessee on 14.3.2012, during the course of which income of ₹ 41 lacs was surrendered. In response to notice issued u/s 153A, return was filed by the assessee ,declaring income of ₹ 52,75,959/- which included the surrendered income of ₹ 41 lacs. Subsequently during assessment proceedings the AO noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the income declared in the return filed in response to notice u/s 153A ,had not been declared in the original return of income filed and the additional income declared after search represented concealed income and hence tantamounted to incriminating material for attracting Explanation 5A to section 271(1)(c) of the Act. 4. Aggrieved by the same the assessee has come up in appeal before us raising the following effective ground: 1. That the learned CIT (A) has erred in confirming the penalty u/s 271(1)(c) of the Income Tax Act,1961 imposed by the Assessing Officer against the facts and circumstances of the case. 5. None appeared on behalf of the assessee on the date of hearing i.e. 24.4.2018. Further it was noticed that on earlier occasions also i.e. 22.11.2017 and 19.2.2018 the case had been adjourned on the request of the assessee s counsel through adjournment applications filed. Further, it was pointed out to us that the issue in the present case was identical with that in the case of Munish Jain Vs. DCIT in ITA Nos.254 255/Chd/2017 the order in which case had been pronounced by the ITAT Chandigarh Bench on 19.3.2018. Copy of the order was placed before us. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the interest of justice, as these grounds being purely legal grounds were inadvertently omitted to be taken earlier and would go to the very root of the matter and would not involve further investigations in to the facts. The appellant shall be highly thankful for Your Honors kindness. Thanking you, Yours Sincerely Sd/- (Chetan Jain) Appellant Dated: 22.05.2017 The Honorable Members, Income Tax Appellate Tribunal, Chandigarh. Sub: Request for admission of additional grounds under rule 11 of ITAT, Rules,1963 in the case of Chetan Jain, B-121, Pushap Vihar, Canal Road, Ludhiana. PAN: AAYPJ0618H, A.Y.2010-11 ITA No.256/CHANDI-2017. -reg- fixed for hearing on 22.05.2017. Respected Sir/Madam, In reference to the above, kindly find enclosed request letter in triplicate received from appellant addressed to the Hon'ble ITAT praying for admission of additional grounds in the above case under Rule 11 of ITAT Rules, 1963. Keeping in view the decision of the Hon'ble Apex Court in the case of NTPC Ltd. vs CIT (229 ITR 383)(SC) copy enclosed, Hon'ble Bench is humbly requested that the additional grounds of appeal as raised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le in the present case since search was initiated after 1st June 2007, as prescribed for the applicability of the Explanation, and the assessee having not disclosed the surrendered income in the original return of income filed, the assessee fulfilled the condition prescribed for applicability of the Explanation, thereby deeming the assessee to have concealed the particulars of his income or furnished inaccurate particulars of his income for levying penalty. The ITAT also rejected the contention of the assessee that no incriminating material was found during search so as to attract Explanation 5A to section 271(1) , holding that the surrender made by the assessee was suo moto and remained unretracted throughout and the same was attributed during assessment proceedings as source of investment in properties ,which tantamounted to the assessee himself coming clean before the Revenue about the fact of earning such income and investing it in assets, which in turn met the requirement of Explanation 5A of the assessee being found during search to be the owner of assets acquired out of earlier undisclosed income. The relevant findings of the ITAT are as under: 13. We have heard the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As the said provisions have to be held to be strictly construed, notice issued under Section 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(1)(c) when it is a sine qua non for initiation or proceedings, the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. 14. As is evident from the above that the Hon'ble High Court has very lucidly explained that the purpose of issuing notice is to make the accused person aware of the charge against him for which he is being penalized i.e. for concealing particulars of income and/or furnishing inaccurate particulars of income so that he can adequately defend himself. The Hon'ble High Court further clarified that the same may be clear from the order of the authorities itself passed in proceedings during the course of which he was satisfied of the existence of the impugned condition, which is a statutory requirement for initiating penalty proceedings u/s 271(1)(c) of the Act. In such cases the Hon'ble High Court held, where ground for initiating penalty is clearly coming out from the order, reference to the order in the notice u/s 274 of the Act would be sufficient to make the person charged with the same, aware of the charge. As per the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Swami Chowk, Civil Lines, Ludhiana. Dated, Ludhiana the 29/11/2013. To Sh. Munish Jain, B-121, PushapVihar, Canal Road, Ludhiana. Whereas in the course of proceedings before me for the assessment year 2010-11 it appears to me that you:- have without reasonable cause failed to furnish me return of income which you were required to furnish by a notice given under section of the Income Tax Act, 1961, dated____________________ . have without reasonable cause failed to comply with the notice u/s ------- --------------- issued on ---------------------- fixing the case for hearing on which was served on have concealed the particulars of your income and for furnishing inaccurate particulars of such income. 2. You are hereby requested to appear before me at 11.30AM on 26.12.2013 and show cause why an order imposing a penalty on you should not be made under section 274 read with section 271 of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorized representative you may show cause in writing on or before the said date which will be considered before any such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come filed u/s 153A is accepted by the Assessing Officer, there will be no concealment of income and consequently penalty u/s 271(1)(c) of the Act cannot be imposed. 17. The Ld. counsel for assessee also relied upon the decision of various Tribunals in this context which were referred before the Ld.CIT(Appeals) also. 18. The Ld. DR, on the other hand, supported the order of the Ld.CIT(Appeals). 19. We have heard the rival contentions. The relevant finding of the Ld.CIT(Appeals) while upholding the levy of penalty after dealing with the above contentions of the assessee before him is as under: To decide the issue, it is relevant to note here that there was an amendment in section 271(1} by Finance Act 2007 and a new explanation 'Explanation 5A' was inserted w.e.f. 01.06.2007, which is applicable to cases where search u/s 132 was initiated on or after 1st day of June 2007. Further 'Explanation 5' has been made applicable to cases where search was initiated before 1st day of June 2007. In the present case under consideration search action u/s 132 was initiated on 30.06.2009, therefore, this case is covered by the provisions of 'Explanation 5A&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search u/s 132 was conducted before 1st June 2007 and in those cases 'Explanation 5 was applicable and hence these are not applicable to the present case. This view find support from the judgment of the Hon'ble ITAT Chandigarh Bench in ITA No. 516/CHP/2012, Sh. Rajnish Vohra Vs. DCIT, CC-I, Chandigarh dated 31.10.2012. The relevant para of the judgment dated 31.10.2012 are reproduced below: 29. In the present case, the normal return of income for the assessment year 2007-08 was filed by the assessee, on 31.3,2007 i.e. the date of search itself. However, the assessee filed his return of income in response to notice dated 27.1.2009 issued u/s 153A of the Act, on 23.7.2009, declaring income of ₹ 3,27,01,440/-, including the additional amount of ₹ 2,00,60,000/-,declared by the assessee, in the statement recorded u/s 132(4) of the Act. The assessee filed return of income, in response to the said notice u/s 153A of the Act, on 23.7.2009 and on the date of filing the return, the Explanation 5A inserted by the Finance (No.2)Act of 2009, with retrospective effect from 1.6.2007, was on the Statute. In the present case, return of income was filed in response to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch passed in ITANo.516/CHD/2012 dated 31.10.2012, the penalty imposed by the AO in this is found as per law in view of Explanation-5A to section 271(l)(c) and therefore upheld. 20. As is evident from the above, the Ld.CIT(Appeals) has held that since search in the present case was initiated on or after 1st day of June, 2007, the present case is covered by the provisions of Explanation-5A to section 271(1)(c) of the Act. At this juncture it is relevant to reproduce the provisions of Explanation 5A to section 271(1) since the challenge of the assessee is to the applicability of the said Explanation in the facts of the present case: [Explanation 5A- Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of- (i) any money, bullion, jewellery or other valuable article or thing Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of search in the present case, no penalty as per Explanation-5A to section 271(1)(c) of the Act is leviable, we find no merit in the same. The facts on record point otherwise. Undoubtedly it was the assessee who had surrendered ₹ 28 lacs during search. The surrender was never retracted by the assessee. Nothing to this effect is recorded in the orders of the authorities below nor has been brought to our notice during the course of hearing before us. Thus as per the assessees own admission, he had not disclosed income to the tune of ₹ 28lacs earned during the year. Then subsequently during assessment proceedings the assessee claims /admits to have invested this income in two properties. What this tantamounts to is that the surrender made by the assessee was on account of undisclosed income for the year, invested in assets. And since the assessee had suo moto made the surrender it tantmounted to the assessee himself coming clean before the Revenue about the fact of earning such income and investing it in assets. Thus at the point of time when the surrender was made by the assessee during search the Revenue for all purposes had found the assessee to be the owner of assets ..... X X X X Extracts X X X X X X X X Extracts X X X X
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