9911796707
TMI Blog2023 (3) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the case are that a search operation u/s 132 was carried out at the business premises of the assessee company on 11/09/2013. During the search proceedings, the assessee through its authorized representative made a statement u/s 132(4) that in order to purchase peace of mind, to avoid litigation and multiplicity of proceedings, the assessee hereby offers a sum of Rs. 80,00,00,000/- as additional income over and above the book results to cover various discrepancies such as cash, stock, assets, deductions, disallowable expenses etc. and a detailed bifurcation shall be submitted after looking into entire seized documents in due course of time. As per the detailed bifurcation subsequently submitted by the assessee, a sum of Rs. 23,28,88,868/- pertained to the impugned assessment year. Thereafter, pursuant to notice under section 153A(1) dt. 24/03/2014, the assessee filed its return of income dt. 02/03/2015 declaring loss of Rs. 29,01,51,706/- including a sum of Rs. 23,28,88,868/- which was offered by way of disallowance of expenditure under Section 14A of the Act. The assessment proceedings were thereafter completed under section 153A r.w.s 143(3) vide order dt. 30/01/2017 making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 53 r/w para 40 to 43 of its order dated 28/02/2019. 6. The AO thereafter passed an order dt. 29/03/2019 to give the appeal effect to the aforesaid order dated 28/02/2019 so passed by the Coordinate Benches and the contents thereof read as under: "Effect of Hon'ble Income Tax Appellate Tribunal, Division Bench, 'B' Chandigarh order passed in ITA No. 160/Chd/2018 dated 28.02.2019 Income assessed u/s 153A r.w.s 143(3) dt. 30.01.2007 : Rs. 241,64,40,094/- Less relief allowed by Hon'ble ITAT dated 28.02.2019 . On account of proceed of GDR receipt : Rs. 241,64,40,094/- . On account of self disallowance u/s 14A : Rs. 23,28,88,868/- Total relief allowed Rs. 264,93,28,962/- 7. During the course of penalty proceedings, it is brought to our notice that the assessee brought the said facts in terms of passing of the order by the Tribunal dt. 28/02/2019 and the appeal effect order dated 29/03/2019 to the notice of the AO, however, the AO proceeded ahead and passed the penalty order u/s 271AAB vide order dt. 31/03/2019 holding that the disclosure so made by the assessee during the course of search in its statement recorded u/s 132(4) falls within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning of "undisclosed income" as per the provision of Section 271AAB(1)(c) and accordingly the penalty has been rightly levied @ 30% of the undisclosed income. 12. The Ld. CIT DR accordingly supported the order and the findings of the AO and submitted that the Ld. CIT(A) has failed to appreciate the fact that the assessee has surrendered the income during the course of search and therefore the same falls within the definition of "undisclosed income" on which the penalty has been rightly levied by the AO. He accordingly submitted that the order of the Ld. CIT(A) be set aside and that of the AO be sustained. 13. Per contra, the Ld. AR taken us through the order of the Ld. CIT(A) and it was submitted that the Ld. CIT(A) has rightly taken into consideration the decision rendered by the Coordinate Benches as well as appeal effect order passed by the AO wherein necessary relief has been allowed to the assessee in terms of deletion of disallowance of expenditure under Section 14A of the Act. Referring to the findings of the Coordinate Benches, it was submitted that as rightly held by the Coordinate Benches, the disallowance under Section 14A is not made on account of any additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% of the undisclosed income invoking the provisions of section 271AAB(1)(c) of the Act and which has wrongly been set-aside by the ld CIT(A). 17. In this regard, we refer to the definition of "undisclosed income" as per clause (C)(ii) of explanation to section 271AAB which has been invoked by the AO and the same reads as under: "(c) "Undisclosed" income means- (i) ......... (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted." 18. It thus talks about any entry in respect of an expenditure which is recorded in the books of accounts or other documents maintained in the normal course of assessee's business, such an entry should relates to the specified previous year and such an entry has to be found to be false basis the search action conducted at the assessee's premises. In the entire penalty order, we find that there is no whisper by the Assessing officer, forget recording of his sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) or clause (b). In other words, there could be cases where there is an admittance u/s 132(4) but other conditions are not fulfilled as specified under clause (a) or a case where there is no admittance but at the same time, other conditions so specified in clause (b) are also not satisfied. Thus, we find that though an admittance is a relevant criteria so far as determining the quantum of levy of penalty is concerned but for fastening the charge, basis which the penalty can be levied, the threshold of income qualifying as undisclosed income as found during the course of search as so defined has to be met and satisfied and in the facts of the present case, whether the disallowance of expenditure under Section 14A is covered within the definition of "undisclosed income" for the purpose of levy of penalty under section 271AAB of the Act need to be examined. 21. In the instant case, we find that the Coordinate Benches in its order dated 28/02/2019 referred supra had an occasion to examine the same in assessee's own case and the relevant findings read as under: "40. Now coming to the merits of the case. First of all, it is pertinent to mention here that disallowance u/s 14A of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Jurisdictional High Court in the case of 'Bright Enterprises Pvt. Ltd Vs. CIT, Jalandhar' (supra), 'CIT Vs. Kapsons Associates' (2016) 381 ITR 204 (P&H) and the latest decision of the Coordinate Bench of the Tribunal in the case of 'ACIT Vs. Janak Global Resources Pvt Ltd' ITA No. 470/Chd/2018 order dated 16.10.2018, holding that that if the assessee is possessed of sufficient own interest free funds to meet the investments / interest free advances, then, under the circumstances, presumption will be that interest free advances / investments have been made by the assessee out of own funds / interest free funds. Reliance in this respect can also be placed on the decision of the Hon'ble Supreme Court in the case of 'Hero Cycles (P) Ltd Vs. CIT' 379 ITR 347 (SC) and also on the latest decision of the Hon'ble Supreme Court in the case of 'CIT (LTU) Vs. Reliance Industries Ltd.' [2019] 410 ITR 466 (SC). 41. Moreover, the assessee has taken a specific stand that no expenditure has been incurred by the assessee for making investments etc. and that no disallowance u/s 14A of the Act is attracted. Neither the Assessing officer nor the CIT(A) has recorded any satisfacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of any documents or entries in the account book. It has been held that it was a notional disallowance made by the assessee on the footing that out of the total expenditure, some of the expenditure might have been attributable to the activity of making investment from which the assessee has earned tax exempt income. It has been held that it is not the case of the AO that the aforesaid disallowance made by the AO u/s 14A is attributable/relating to the incriminating documents found during the search action or that the aforesaid surrender can be related to part of any other income of the assessee. It has been held that the AO has not recorded any satisfaction from the accounts of the assessee that the contention of the assessee that it has not incurred any expenditure for making investment is not correct. In light of these findings of the Coordinate Benches, we find that the disallowance of expenditure u/s 14A doesn't represent any income of the specified previous year by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and which would not hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
