TMI Blog2019 (2) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... physical form. Therefore, the AO has erred in visiting the assessee with penalty by observing that since no return was filed under section 139, therefore it is to be assumed that assessee has concealed the income. This concealed income should be represented by some incriminating material during the course of search. In response to a notice under section 153A assessee furnishes a return disclosing higher income, it could be considered as concealed income only if some incriminating material representing that higher income was found during the course of search. In view of the above we allow appeal and delete penalty. - Decided in favour of assessee. - ITA No.1562 and 1563/Ahd/2017 - - - Dated:- 18-2-2019 - Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member For the Assessee : Shri P.M. Mehta, AR with Shri Biren Shah For the Revenue : Shri S.K. Dev, Sr.DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Present two appeals are directed at the instance of the assessee against separate orders of the ld.CIT(A)-11, Ahmedabad dated 15.3.2017 for the Asstt.Years 2008-09 and 2010-11. 2. Solitary grievance of the assessee is that the ld.CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said flat by ₹ 1,05,300/-. The assessee, vide his reply received on 27/02/2014, has agreed to the addition to be made in respect of STCG of ₹ 1,05,300/-. Accordingly ₹ 1,05,300/- is added to the short term capital gain offered by the assessee. Penalty proceedings u/s 271(l)(c) r.w.s 274 is separately initiated for concealing the particulars of total income. 4. In the assessment year 2010-11, originally the assessee has not filed return of income under section 139 of the Act. He filed return in response to the notice under section 153A declaring total income at ₹ 6,85,480/-. This return was filed on 24.1.2013. The ld.AO did not make any addition to the income. He accepted the return and the discussion made by him reads as under: 3. The assessee has filed his return of income in response to the notice u/s. 153A of the I.T. Act, 1961 for A.Y.2010-11 on 24/01/2013, declaring total income of Rs.6,85,480/-. Notice u/s. 143(2) of the I.T. Act, 1961, dated 01/07/2013 was issued and served upon to the assessee. A notice u/s.!42(l) of the I.T. Act, 1961 along with detailed questionnaire was issued on 09/07/2013 and served upon the assessee. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e determined. Recently, there were jurisprudential developments in this area, and we would like to take into consideration the following decision on the point. i) CIT Vs. Kabul Charwala, 380 ITR 0183 (Del) ii) CIT Vs. Kurele Papers, 380 ITR 571 (Del) iii) CIT Vs. Lata Jain, 384 ITR 543 (Del) 9. Thus, it is clear from authoritative pronouncement of Hon ble Delhi High Court as well as Hon ble jurisdictional High Court that additions to the income of the assessee in an assessment under section 153A are to be made on the basis of incriminating material found during the course of search. We have extracted the assessment order passed in the case of the assessee in both years. The ld.AO has not made reference to any seized material. In the Asstt.Year 2010-11, he has accepted returned income submitted by the assessee. In the Asstt.Year 2008-09, he has disputed the cost of acquisition and scaled down to a lower figure. In this background of facts, let us evaluate whether the assessee deserves to be visited with penalty in both the assessment years or not. First we take Assessment year 2010-11. It is pertinent to observe that penalty for an assessment framed under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Explanation 5 is available to the assessee under Explanation-5A also, if he fulfills the conditions narrated in section 271AAA. The Explanation appended to Section 271AAA provides the definition of undisclosed income and specified previous year. A perusal of the expression specified previous year would indicate that the year of search and immediately earlier year, if due date of filing of the return has not expired and income-tax return for such year has not been filed. Since the assessment years involved before us are the Asstt.Years 2008-09 and 2009-10, the due date for filing of the return for the Asstt.Year 2009-10 was expired before the search action. Thus, both these years do not fall within the ambit of specified years . Since the period of these two assessment years does not fall within the expression specified year provided in Section 271AAA, therefore, we do not deem it necessary to construe and explain the meaning of Explanation 5A within the scope of Section 271AAA. The assessees as such cannot claim immunity akin to one available in sub-clause (1) and (2) of the Explanation 5, more particularly, on the strength of the judgment of Hon ble Gujarat High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that incriminating material. Let us see the finding in the assessment order. 11. In the light of the above, let us examine the facts of present case. We have extracted the assessment order. Nowhere the AO has made reference to any seized material. Meaning thereby, the assumption of the AO that the assessee has concealed the income amounting to ₹ 6,85,480/- is misplaced. He assumed concealment of this figure while comparing with non-filing of the return under section 139. The assumption for considering it as concealed income could only be made if incriminating material qua that was found during the course of search. Explanation 5A could authorise him to visit the assessee with penalty. In the case of Shri Mansukhbhai R. Sorathia (supra), we have rejected assumption at the end of the Revenue that additional income in the return after search was filed because some incriminating material was found. The assumption of incriminating material cannot be entertained or construed. It should be in physical form. Therefore, the AO has erred in visiting the assessee with penalty by observing that since no return was filed under section 139, therefore it is to be assumed that as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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