Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ACCOUNTING STANDARD :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARDS :: VAT Audit :: articles on VAT and GST in India :: TDS :: list of goods taxed at 4% :: due date for vat payment :: VAT RATES :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: Central Excise rule to resale the machines to a new company :: empanelment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
 
 
Latest Circulars »
 RBI-Information from Unauthenticated Sources – Advisory to banks
 RBI-Aadhaar-based Authentication for Card Present Transactions
 RBI-External Commercial Borrowings (ECB)
 Issuance of 28 days Cash Management Bills under Market Stabilisation Scheme (MSS)
 Withdrawal of Legal Tender Character of the existing Bank Notes in the denominations of ₹ 500/- and ₹ 1000/- (Updated as on November 30, 2016)
 All You wanted to know from RBI about: Withdrawal of Legal Tender Status of ₹ 500 and ₹ 1000 Notes
 Deposit of Specified Bank Notes (SBNs) – Chest Balance Limit / Cash Holding Limit
 Withdrawal of Legal Tender status of banknotes of ₹ 500 and ₹ 1000: Activity at Banks during November 10-27, 2016
 Reserve Bank of India Act, 1934 – Section 42(1A) Requirement for maintaining additional CRR
 Chest Guarantee Scheme for Specified Bank Notes (SBNs) - CGSS
 Quarterly Projection Model for India: Key Elements and Properties

Suman Raheja, C/o Vinod Kumar Bindal & Co., CA.,Shiv Sushil Bhawan,D-219, Vivek Vihar, Phase-New Delhi. Vs. DCIT, Cen. Circle 25, New Delhi.
May, 28th 2012
               IN THE INCOME TAX APPELLATE TRIBUNAL
                    (DELHI BENCH `G' : NEW DELHI)
               BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND
                    SHRI B.C. MEENA, ACCOUNTANT MEMBER

                              ITA Nos.4411 & 4412/Del./2011
                              (Assessment Years : 2001-02 & 02-03)

Suman Raheja,                                Vs.            DCIT, Cen. Circle 25,
C/o Vinod Kumar Bindal & Co., CA.,                          New Delhi.
Shiv Sushil Bhawan,
D-219, Vivek Vihar, Phase-I,
New Delhi.
(PAN/GIR No.ADHPR6608M)

(Appellant)                                              (Respondent)

                      Assessee by : Shri V.K. Bindal, C.A.
                      Revenue by : Smt. Surjani Mohanty, Sr.DR


                                             ORDER
PER U.B.S. BEDI, J.M.



       These two appeals of the assessee are directed against the separate          orders

passed by CIT(A)-I, dated 24th August, 2011, whereby confirmation of penalties of

Rs.91,323/- and Rs.43,461/- imposed u/s 271(1)(c) of the I.T. Act, 1961 for the

assessment years 2001-02 & 02-03 have been challenged.


2.     At the very outset, Ld.Counsel for the assessee submitted that penalties on

additional income of Rs.1,60,181/- and Rs.86,179/- offered in the respective returns filed

by the assessee in response to notice u/s 153A of the Act, were imposed for the

assessment at Rs.91,323/- and Rs.43,461/- for the assessment years 2001-02 & 02-03,

respectively and under similar circumstances confirmation of penalty of Rs.47,51,579/-
                                            2          I.T.A. Nos.4411 & 4412/Del./2011
                                                               (A.Ys. : 2001-02 & 02-03)
levied u/s 271(1)(c) of the Act, in relation to additional income declared in response to

notice u/s 153A of the Act came to be deleted by `F' bench of the ITAT, Delhi in the case

of Prem Arora vs. DCIT in I.T.A. No.4702/Del./2010 for assessment year 2004-05 vide

order 9.3.2012 and by placing photocopy of the Tribunal order (supra), it was pleaded

that since facts are similar and issue is identical with difference in amount of income and

penalty, therefore, in view of the said order, appeals of the assessee should be accepted

and impugned penalties imposed for both the years may be deleted.


3.     Ld.DR while taking support form Hon'ble Karnataka, Madras and Rajasthan High

Courts decisions in the case of K.L. Swamy vs. CIT, M. Sajjanraj Nahar vs. CIT and CIT

vs. Dr. R.C. Gupta & Co. has pleaded for confirmation of the impugned order and at this

stage when assessee was asked to clarify as to whether in these cases, the return filed

was in response to notice u/s 153A of the Act and additional income was shown in

response thereto, Ld.DR. submitted that in these cases revised returns were filed and in

none of the cases, additional income was shown in response to notice u/s 153A of the

Act. But, she relied upon the orders of the authorities below to plead for confirmation of

the impugned orders for both the years.





4.     We have heard both the sides, considered the material on record and find that for

both the years under consideration, additional income was disclosed in returns filed in

response to notice u/s 153A of the Act, on which penalties u/s 271(1)(c) with respect to

such additional income has been imposed.          In the precedent relied upon by the

Ld.Counsel for the assessee in the case of Prem Arora vs. DCIT (supra), similar issue has

been dealt with by `F' bench of the tribunal which has concluded in its order from
                                            3           I.T.A. Nos.4411 & 4412/Del./2011
                                                                (A.Ys. : 2001-02 & 02-03)
paras.27-33, which reads as under:


       27. Hon'ble Delhi High Court in the case of M/S S.A.S. Pharmaceuticals(supra)
       while deciding the issue levy of penalty u/s 271(1)(c) in paragraph 15 & 16 has
       held as under:

              "15. It necessarily follows that concealment of particulars of income or
              furnishing of inaccurate particulars of income by the assessee has to be in
              the income tax return filed by it. There is sufficient indication of this Court
              in the judgment in the case of Commissioner of Income Tax, Delhi-I Vs
              Mohan Das Hassa Nand 141 ITR 203 and in Reliance Petro Products
              Pvt.Ltd (supra), the Supreme court has clinched this aspect, viz., the
              assessee can furnish the particulars of income in his return and everything
              would depend upon the income tax return filed by the assessee. This view
              gets supported by Explanation 4 as well as 5 and 5A of section 271 of the
              Act as contended by the learned counsel for the respondent.

              16. No doubt, the discrepancies were found during the survey. This has
              yielded income from the assessee in the form of amount surrendered by the
              assessee. Presently, we are not concerned with the assessment of income
              ,but the moot question is to whether this would attract penalty upon the
              assessee under provisions of section 271(1)(c) of the Act. Obviously, no
              penalty can be imposed unless the conditions stipulated in the said
              provisions are duly and unambiguously satisfied. Since the assessee was
              exposed during survey, may be, it would have not disclosed the income but
              for the said survey. However, there cannot be any penalty on surmises, on
              conjectures and possibilities. Section 271(1)(c) of the Act has to be
              construed strictly. Unless it is found that there is actually a concealment
              or non-disclosure of the particulars of income, penalty cannot be imposed.
              There is no such concealment or non-disclosure as the assessee had made
              a complete disclosure in the income tax return and offered the
              surrendered amount for the purpose of tax."

       If the facts of the case are examined in the light of decision of Hon'ble Delhi High
       Court in SAS Pharmaceuticals (supra) penalty u/s 271(1)(c) is not imposable
       where there is neither concealment of income nor furnishing of inaccurate
       particulars of income in return filed u/s 153A of the Act. In earlier paragraphs we
       have held that the concealment of income is to be determined with reference to
       the return of income to be filed in response to notice u/s 153A of the Act. Once
       returned income filed u/s 153A is accepted by the assessing officer it can neither
       be a case of concealment of income nor furnishing of inaccurate of particulars of
       such income. Hence, the assessee's case is squarely covered by the decision of
       Hon'ble Delhi High Court in the case SAS Pharmaceuticals (supra). Hence,
       penalty u/s 271(1)(c) is not exigible.
                                     4         I.T.A. Nos.4411 & 4412/Del./2011
                                                       (A.Ys. : 2001-02 & 02-03)
28.     The next contention of ld AR of the assessee is that if the provisions of
Explanation 5 of section 271(1) in respect of searches initiated on or before
1.6.2007 were sufficient enough for imposition of penalty u/s 271(1)(c), there was
no need for inserting of Explanation 5A and section 271AAA into the statute by
the Finance Act, 2007. On the contrary ld CIT(DR) has contended that the
amended provisions of Explanation 5 will apply to the fact of the assessee's case.
Provisions of Explanation 5 of section 271(1) comes into operation in the cases
where in the course of a search the assessee is found to be the owner of any
money, bullion, jewellery or other valuable article or thing, and the assessee
claims that such assets have been acquired by him by utilizing (wholly or in part)
his income ­ (a) for any previous year which has ended before the date of search
but the return of income for such year has not been furnished before the said date
or where such return has been furnished before the said date, such income has not
been declared therein; or (b) for any previous year which is to end on or after the
date of the search, then, notwithstanding that such income is declared by him in
any return of income furnished on or before the date of search, he shall, for the
purposes of imposition of a penalty under section 271(1)(c ) be deemed to have
concealed the particulars of his income or furnished inaccurate particulars of such
income unless the case falls in exceptions provided either under clause (1) or
clause (2) of the Explanation 5.Clause (1) covers the cases where such income or
transactions resulting in such income is/are recorded in the books of accounts
maintained by him for any source of income before the date of search or such
income is otherwise disclosed to chief commissioner or commissioner before the
date of search. On the other hand Clause(2) is applicable where the assessee
makes a statement under section 132(4) that any money, bullion, jewellery or
other valuable article or thing found in his possession or under his control has
been acquired out of his income which has not been disclosed in his return of
income to be furnished before the expiry of time specified in sub-sec. (1) of sec.
139 and also specifies in the statement the manner in which such income has been
derived and pays tax together with interest, if any, in respect of such income.

29. We also find that the Finance Act, 2007 has inserted words "search initiated
under sec. 132 before the first day of June, 2007" in Explanation 5 of sec. 271(1)
of the Act. Further Explanation 5A was inserted in the Statute by the Finance Act,
2007 in respect of a search initiated under section 132 on or after the 1st day of
June, 2007. Thus Explanation 5 will not be applicable in respect of a search
initiated on or after 1.6.2007. Further the words "search initiated under sec. 132
before the first day of June, 2007" have been inserted by the Finance Act, 2007
w.e.f. 1.6.2007. In our considered opinion the amended provisions of Explanation
5 will be applicable only for assessment year 2008-09 if any money, bullion,
jewellery or other valuable article or thing is found from the possession of the
searched person in respect whom searches are initiated on or after 1.4.2007 to
31.05.2007.
                                     5         I.T.A. Nos.4411 & 4412/Del./2011
                                                       (A.Ys. : 2001-02 & 02-03)
30.      In case of a search initiated on or after 1.6.2007 as provided in
Explanation 5A, the assessee will be liable for penalty/s 271(1)(c) both in respect
of assets as   well as any income based on any entry in any books of account or
other documents or transactions. But no such provision relating to entries was in
existence in Explanation 5 prior to insertion of Explanation 5A in section 271(1)
of the Act. Hence the scheme of assessment till insertion of Explanation 5A and
section 271AAA by the Finance Act, 2007 gave immunity to the assessees in
respect of undisclosed income based on entries recorded in seized material.
Explanation 5A substituted by the Finance Act, 2009 w.e.f. 1.6.2007 is
reproduced as under:

       "Explanation 5A.-- Where, in the course of a search initiated under
       section132 on or after the 1st day of June, 2007, the assessee is found to
       be the owner of--

       (i) any money, bullion, jewellery or other valuable article or thing
       (hereafter in this Explanation referred to as assets) and the assessee
       claims that such assets have been acquired by him by utilising (wholly or
       in part) his income for any previous year; or

       (ii) any income based on any entry in any books of account or other
       documents or transactions and he claims that such entry in the books of
       account or other documents or transactions represents his income(wholly
       or in part) for any previous year, which has ended before the date of
       search and,--

       (a) where the return of income for such previous year has been furnished
       before the said date but such income has not been declared therein; or

       (b) the due date for filing the return of income for such previous year has
       expired but the assessee has not filed the return, then, notwithstanding
       that such income is declared by him in any return of income furnished on
       or after the date of search, he shall, for the purposes of imposition of a
       penalty under clause (c) of sub-section (1) of this section, be deemed to
       have concealed the particulars of his income or furnished inaccurate
       particulars of such income."




31. From above discussion it is clear that the provisions of Explanation 5 are
applicable in the cases where during the course of search initiated on or before
1.6.2007 any money, bullion, jewellery or other valuable article or thing is found
in the possession or under control of the assessee. In the case of the assessee the
search was conducted on 2.11.2006 and cash of Rs.1,11,45,350/- was found from
the possession of the assessee. The assessee had undisclosed commission income
as well as purchases and sales as seen from the statement of affairs made by the
assessee based on seized material. The assessee had drawn cash flow statement
for the entire period of six years in order to determine undisclosed income based
                                            6          I.T.A. Nos.4411 & 4412/Del./2011
                                                               (A.Ys. : 2001-02 & 02-03)
       on seized material for each of six assessment years. Explanation 5 to section
       271(1) of the Act cannot be invoked in assessment year 2004-05 merely on
       presumption that the assessee might have been in possession of cash throughout
       the period covered by search assessments. The income offered to tax u/s 153A for
       assessment year 2004-05 is based on entries recorded in the seized material.
       Unlike provisions of Explanation 5A, the provisions of Explanation 5 cannot be
       invoked in assessment year 2004-05 in respect of entries recorded in seized
       material. Thus invoking of Explanation 5 in assessment year 2004-05 is based on
       presumptions, surmises and conjectures. It is settled law that suspicion howsoever
       strong, it cannot take place of actual evidence and hence the contention of the
       Revenue that assessee was in possession of cash throughout the period of six
       assessment years has to be rejected. In view of above discussion we are of the
       considered opinion that even the amended provisions of Explanation 5 cannot be
       applied in assessment year 2004-05. Consequently penalty u/s 271(1)(c) cannot be
       imposed by invoking Explanation 5 of the Act in assessment year 2004-05 in
       respect of cash found in previous year relevant to assessment year 2007-08.

       32.    Now coming to the decisions relied by Ld CIT (DR) in the case of Ajit B
       Zota (supra) and in Kirit Dahyabhai Patel (Ahd)(supra) we find that these
       decisions are distinguishable on facts and hence not applicable............

       33.     In view of above discussions it is held that penalty u/s section 271(1)(c) is
       not imposable on the facts and in the circumstances of case discussed in detail as
       above. Explanation 5 is not applicable for the reasons mentioned above in our
       decision. Therefore, ld. CIT(A) was not justified in confirming the penalty
       u/s271(1)(c) of the Act. The assessing officer is, therefore, directed to delete the
       penalty."



5.     Since neither any contrary material has been placed on record by the Ld.DR, nor

any higher courts' decision reversing the order of the Tribunal has been placed before us,

whereas facts are almost identical and issue is similar, therefore, we have no option, but

to follow the above noted decision and to delete the impugned penalties imposed by the

Assessing Officer and confirmed by the CIT(A) for both the years under consideration.

We follow the same and direct to delete the impugned penalties being a covered issue.
                                            7          I.T.A. Nos.4411 & 4412/Del./2011
                                                               (A.Ys. : 2001-02 & 02-03)
6.    As a result, both the appeals of the assessee get accepted.


      Order pronounced in open court on




 (B.C. MEENA)                                         (U.B.S. BEDI)
 ACCOUNTANT EMBER                               JUDICIAL MEMBER


Dated : May    25 , 2012
SKB



Copy of the order forwarded to:-
  1. Appellant
  2. Respondent
  3. CIT
  4. CIT(A)-I, New Delhi.
  5. CIT(ITAT)                                              Deputy Registrar, ITAT
 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Company Overview

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions