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TMI Blog2019 (12) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under section 271(1)(c) of the Income Tax Act, 1961 ["Act" in short]. 2. Both the cross appeals filed by the assessee as well as Revenue are delayed by 10 days and 39 days respectively, for which, the ld. Counsel for the assessee has filed a petition in support of an affidavit for condonation of the delay in the filing the appeal by the assessee and the Department has filed a petition for condonation of delay in filing the appeal, to which; the ld. DR as well as ld. Counsel have not raised any objection. Consequently, since the assessee as well as Revenue was prevented by sufficient cause, the delays in filing of both the appeals are condoned and the appeals are admitted for adjudication. 3. The assessee filed the appeal challenging th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal before the Tribunal and the ld. Counsel for the assessee argued that penalty under section 271AAA of the Act is not leviable and prayed for quashing the direction issued to the Assessing Officer to levy penalty under section 271AAA of the Act and also prayed for confirming the order of the ld. CIT(A) having found that the penalty levied under section 271(1)(c) of the Act is untenable. 6. Per contra, by filing cross appeal, the ld. DR has submitted that the ld. CIT(A) has erroneously directed the Assessing Officer to levy the penalty under section 271AAA of the Act since the provisions of section 271AAA of the Act are applicable in respect of income of "specified previous year" as provided in Explanation (b) to section 271AAA of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment under section 153A r.w.s. 143(3) of the Act was completed by determining the total income of the assessee at Rs..4,03,96,828/- after making various additions. Since the assessee has not preferred further appeal against the additions, the Assessing Officer initiated penalty under section 271(1)(c) of the Act and levied penalty on the assessed income of Rs..4,03,96,828/- at Rs..1,35,97,572/-. Against levy of penalty, the assessee preferred further appeal before the ld. CIT(A). After considering the submissions of the assessee, the ld. CIT(A) has observed that the search and seizure operation under section 132 of the Act was carried out on 10.01.2008, which was after 01.06.2007. It was further observed that the assessment year involved is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable in respect of income of "specified previous year" a provided in Explanation (b) to section 271AAA of the Act. We find force in the arguments of both the Counsels. We have perused the relevant provisions and reproduced hereunder: (b) " specified previous year" means the previous year - (i) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted.] In this case, the date of filing the return of income under section 139(1) of the Act has expired on 31.09.2007 and much ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions. Since the assessee could not furnish proper evidence and vouchers, the Assessing Officer estimated the expenses and disallowed 50% of the claim. From the above, it is clear that the addition was made purely based on estimate basis. In the case of CIT v. K. Meenakshi Kutty 258 ITR 494, the Hon'ble Jurisdictional High Court has categorically held that penalty cannot be levied where additions are made on estimate basis. In view of the direct decision on this issue, the penalty levied under section 271(1)(c) of the Act stands deleted. 8.3 With regard to levy of penalty of Rs..11 lakhs, based on the seized materials, the Assessing Officer observed that the assessee has paid unaccounted cash of Rs.. 11 lakhs to Shri K. Devaraj. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39, 390/- and Shri S. Rajendran of Rs..25,450/- totalling to Rs..64,840/- in connection with land development. The assessee had no explanation to offer, the Assessing Officer made disallowance under section 40(a)(ia) of the Act. During the course of penalty proceedings, the Assessing Officer observed that even while filing the return of income under section 153A of the Act, the assessee should have added back himself the statutory disallowances applicable as per law. By not doing so, the assessee has furnished inaccurate particulars of income with the intention to conceal his total income, thereby warranting levy of penalty under section 271(1)(c) of the Act. Thus, the Assessing Officer levied penalty. 8.6 We have heard the rival submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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