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TMI Blog2017 (4) TMI 1426X X X X Extracts X X X X X X X X Extracts X X X X ..... r of CIT(A) wherein the action of the Assessing Officer (AO) towards imposing penalty under s.271(1)(c) was sustained. 4. Briefly stated, assessee derives income from proprietary concern, viz. Vijay Transport. The assessee also derives interest income from partnership-firm and income from other sources. The assessee is an individual and a partner in partnership-firm which is carrying on business as contractors. A search and seizure operation was carried out on 17/01/2007 in the case of assessee and its group wherein various materials were found during the course of search. Consequently, the proceedings under s.153A of the Act were initiated in the case of assessee. The assessee declared total income of Rs. 6,76,140/- in the return filed in response to notice under s.153A as against Rs. 4,40,605/- declared in the original return of income under s.139(1) of the Act filed prior to search. It was accordingly observed by the AO that the assessee has declared additional income of Rs. 2,35,535/- relevant to AY 2003-04 in consequence of search action and incriminating documents found during the course of search. The AO inter alia noted in the course of the penalty proceedings that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... context, ld.AR referred to the judgment of the Hon'ble Jurisdictional High Court in the case of Kirit Dahyabhai Patel vs. ACIT in Tax Appeal No.1181 of 2010 & Ors. dated 03/12/2014 for the proposition that income returned in response to notice under s.153A is required to be considered for the purpose of penalty under s.271(1)(c) of the Act and penalty can be levied only on the income assessed over and above the income returned under s.153A of the Act, if any. The Ld.AR for the assessee accordingly emphasized that imposition of penalty under S.271(1)(c) towards additional income offered in the return filed under S.153A is not sustainable in law. The Ld.AR pointed out that the CIT(A) relied upon the decision of the Tribunal in the case of ACIT vs. Kirit Dahyabhai Patel reported at (2009) 121 ITD 159 [Ahd.(TM] for imposition of penalty towards difference in income declared in return filed under s.139(1) and section 153A of the Act. The aforesaid decision of the Tribunal has since been reversed by the Hon'ble Gujarat High Court as pointed out. It was thus submitted that the order of CIT(A) sustaining the penalty under s.271(1)(c) on unaccounted income included in return filed under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per order of the ITAT "B" Bench Ahmedabad in quantum appeal in IT(SS)A Nos.211 to 214/Ahd/2010 for AYs 2003-04 to 2006- 07, order dated 13/11/2013. The Ld.AR, thus, contended that the penalty imposed by revenue is not sustainable in law and on facts and hence requires to be deleted. 7. The Ld.DR, on the other hand, relied upon the order of the CIT(A) and submitted that no inference is called for. 8. We have carefully considered the rival submissions. In the present set of appeals, the controversy involves around imposition of penalty broadly on two counts:- (i) towards underreporting of income found in the return originally filed and under S.139 of the Act prior to search vis-a-vis return subsequently filed on account of search action as a consequence of notice u/s.153A of the Act. (ii) unexplained investments in the construction of bungalow of the assessee in various years in appeal. 8.1. In terms of the first issue framed, the primary question that emerges for determination is whether penalty under s.271(1)(c) can be imposed if return filed by the assessee under s.153A of the Act declared higher income than in the return filed under s.139(1) of the Act? Section 153A prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f imposition of penalty under s.271(1)(c) of the Act be deemed to have concealed the particulars of his income. Ostensibly, this Explanation has been added to specifically address the situations where consequent to a search, assets and valuables are discovered to be in control or possession of the assessee, and thereafter the assessee files return of income after the date of search. In such cases, even after the assessee includes the amounts utilized by him in acquiring the assets (found in his control or possession during the search operations) as his income in the return filed after the search, the assessee would be deemed to have been concealed his income. Thus, Explanation-5 creates a deeming fiction whereby, notwithstanding the fact that the assessee includes such unrecorded income (which represents the value of the assets found in his possession during the search) in his return filed after the search, it will be deemed that such return disclosing additional income was filed only because the assets were found in his control or possession during the search. To put differently, it is presumed by the statute that assessee would not have disclosed such unrecorded income in the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the quantum order or penalty order or appellate order of CIT(A) are non-descript in so far as the nature and specification of incriminating material are concerned. Returning to this point, in our considered view, reference to assets in the form of money, bullion, jewellery or other article or thing is a sin qua non for putting Explanation-5 in motion. Hence, on facts, Explanation cannot be invoked in the aforesaid assessment years on declarations based presumably on entries in the purportedly seized documents in the absence of its correlation with any corresponding undisclosed asset. A reading of substituted Explanation 5A seeking to plug this purported anomaly also underscores this view. In view of the aforesaid discussion, we are of the considered view that recourse to Explanation-5 cannot be taken without bringing on record, the particulars of undisclosed assets discovered to be in command of the assessee. Having regard to the aforesaid legal position, we find merit in the plea of the assessee that penalty under s.271(1)(c) of the Act cannot be levied in respect of additional income incorporated in the return filed under s.153A of the Act in the facts of the case. 9. Notwit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before the date of search subject to fulfillment of conditions as contemplated in the said Explanation. 9.2. We shall now advert to the decision in the case of Kirit Dahyabhai Patel (supra) referred to and extensively relied upon on behalf of the assessee. We notice that in that case, the 'substantial question of law' framed for decision before the Hon'ble Gujarat High Court was confined to availability of immunity under clause(2) to Explanation-5 of Section 271(1)(c) in the facts of the case. For ready reference, it is reproduced hereunder:- "Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in restoring the penalty imposed under Section 271(1)(c) of the Act holding that benefit under explanation 5 to Section 271(1)(c) of the Act would be available only for period where due date for filing the return under Section 139(1) of the Act had not expired?" In the context of above question posed, the Hon'ble Gujarat High Court after referring to series of decisions of various Courts found that the assessee has broadly satisfied all the conditions required for claiming immunity from payment of penalty under s.271(1)(c) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered in the light of questions which were presented before the Court. A decision of the Court takes its colour from its question in which it is rendered as enumerated in CIT vs. Sun Engineering works Pvt.Ltd. (1992) 198 ITR 297 (SC). Thus, context holds the key and the decision of the Court has to be read in the context of the facts involved therein and not on the basis of what logically flows there from. A stray sentence cannot be allowed to be put into service to draw a meaning which was never probably meant by the author himself. A judgment is not to be read as statute. Thus, in the light of question framed for decision by Hon'ble Gujarat High Court, we are inclined to hold that the abstract proposition of non-applicability of penalty proceedings in all circumstances (wherever undisclosed income has been included in the return filed post-search) is singularly misplaced and is not supported by the factual context in which the decision in Kirit Dahyabhai Patel(supra) was rendered. 10. On holistic considerations, it is manifest that the abstract proposition suggested on behalf of the assessee that penalty can be reckoned only with reference to return of income filed under 153A reg ..... 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