TMI Blog2020 (1) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... of search. Therefore, with regard to first fold of contentions, we do not find any merits in the contentions of the learned Counsel for the assessee. It is rejected. As far as second fold of contentions is concerned, it is pertinent to observe that even if the assessee has filed the return of income and declared certain income, but the penalty proceeding is an independent proceeding. If on account of any legal or factual ground, assessee is able to absolve himself from levy of penalty, then all such rights are available in the penalty proceedings. The contention of the assessee is that agricultural land sold by him along with co-owners was not a capital asset and no capital gain tax was imposable upon the assessee. It is a different matter that he has paid the capital gain tax but that admission cannot be accepted even for visiting the assessee with penalty. In the penalty proceedings, he wants to take an independent stand that since no capital gain tax is leviable; therefore, no penalty is imposable. This is an independent plea. It ought to have been examined and ought to have been adjudicated. This plea has been specifically raised in the note appended to the return as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the amount of ₹ 1,13,96,770/- declared in the statement under Section 132(4) of the Income-tax Act. The return was accepted as it is and penalty proceedings were initiated by the learned Assessing Officer. The learned Assessing Officer has imposed penalty under Section 271(1)(c) of the Act vide order dated 25th September 2014 amounting to ₹ 23,47,735/-. The learned Assessing Officer, while concluding as to how the penalty is imposable upon the assessee, considered the Explanation 5A appended to Section 271(1)(c) of the Act as well as the facts unearthed during the course of search. The observations of the learned Assessing Officer are worth to be noted which read as under:- 3. In view of the noncompliance from the side of the assessee the matter needs to be decided on merits keeping in view the details and material available with this office. A careful consideration need to be made to verify whether the provisions of section 271(1)(c) and explanation 5A in particular as substituted by Finance (No.2) Act 2009 w.r.e.f. 01/06/2007 are attracted or not. For the sake of clarity the said explanation is reproduced here in below: [Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been declared by the assessee for the first time in his return filed on 30/03/2012 u/s. 153 A of the Act. vii) The disclosure was not voluntary declaration but was made in consequence of the search initiated u/s 132 and was based on certain incrementing documents found at the time of search. In the light of above narrated facts it is clear that as per the provisions of section 271(1)(c) explained vide Explanation 5A, as amended w.e.f. 01-06- 2007 by Finance Act 2009 the assessee has deemed to have concealed the particulars of his income to the extent of ₹ 1,13,96,770/- in respect of unaccounted income in capital gain on sale of land. 3. Appeal to the learned CIT(A) did not bring any relief to the assessee. 4. Before us, learned Counsel for the assessee raised two fold submissions. In his first fold of contentions, he submitted that Explanation 5A could be attracted if any money, bullion, jewellery or asset representing the admitted undisclosed income was found during the course of search. Only on the basis of a statement under Section 132(4) admitting certain amount as undisclosed income and further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derstanding the assessee filed his return of income offered said income under the head capital gains. That the Ld. A.O has assessed the said income and thus as there is no variation to returned income. He pointed out that this issue has not been adjudicated by both the authorities. 6. The learned Departmental Representative, on the other hand, relied upon the orders of the Revenue Authorities. With regard to first fold of contentions of learned Counsel for the assessee, he pointed out that, during the course of search, loose-papers inventorised as Annexure B1 to B3 were found. The assessee has admitted the transactions i.e. sale of land. He has admitted receipt of cash over and above the consideration stated in the sale deed. Thus, there was direct evidence found during the course of search exhibiting the discovery of unexplained assets in the shape of sale consideration representing alleged undisclosed income. With regard to second fold of contentions of learned Counsel for the assessee, he was unable to controvert the contentions of the learned Counsel for the assessee. 7. We have duly considered the rival contentions and gon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st day of June, 2007 but before the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) Nothing contained in sub-section (1) shall apply if the assessee,- (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income. (3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation.-For the purposes of this section,- (a) undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpression 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. 7. At the cost of repetition, we would like to observe that as per Explanation 5A, if in the course of search initiated under section 132 on or after the 1st June, 2007, the assessee is found to be owner of any money, bullion, jewellery or other valuable article or things and the assessee claims such assets have been acquired by him by utilsing the whole or partly of his income from any previous year or any income based on any entry in any books of account or other documents or transactions found during the course of search, and the assessee claims that such entry in the books of account or other documents or transactions represents his income from any previous year, which has ended before the date of search, then, notwi hstanding such income is declared by him in any return of income furnished on or after the date of search, he shall for the purpose of imposition of penalty under clause (c) of sub-section (1) of this Section be deemed to have been concealed particulars of income or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found during the course of search exhibiting the fact that income was not disclosed by the assessee in his regular books of accounts as well as in the return. The case of the assessee falls within the mischief of Explanation 5A. It is incorrect at the end of the assessee to say that no asset, money, jewellery or bullion representing the alleged undisclosed income was found during the course of search. Therefore, with regard to first fold of contentions, we do not find any merits in the contentions of the learned Counsel for the assessee. It is rejected. 9. As far as second fold of contentions is concerned, it is pertinent to observe that even if the assessee has filed the return of income and declared certain income, but the penalty proceeding is an independent proceeding. If on account of any legal or factual ground, assessee is able to absolve himself from levy of penalty, then all such rights are available in the penalty proceedings. The contention of the assessee is that agricultural land sold by him along with co-owners was not a capital asset and no capital gain tax was imposable upon the assessee. It is a different matter that he has paid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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