"J"
IN THE INCOME TAX APPELLATE TRIBUNAL "J" BENCH, MUMBAI
BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER
AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER
./I.T.A. No.1852 /Mum/2011
( / Assessment Year : 2005-2006
Asstt. Commissioner of / Shri Rajesh P. Shah,
Income Tax Central 309, Shanti Sagar,
Vs.
Circle -2, Narpoli Gaon,
Thane Pawar Industrial Devji Nagar,
Estate, Bhiwandi.
Edulji Road,
Charai,
Thane 400 601.
. / PAN : AVPPS2809B
( /Appellant) .. ( / Respondent)
Appellant by Shri Akhilendra P. Yadav
Respondent by : None
/ Date of Hearing : 10-03-2015
/Date of Pronouncement : 15-05-2015
[
/ O R D E R
PER R.C. SHARMA, A.M. :
This is an appeal filed by the Revenue is directed against the order
passed by the ld. CIT(A) - 1, Thane dated 15-11-2010 for the A.Y. 2005-06 in
the matter of imposition of penalty of Rs. 5,93,473/- u/s 271(1)(c) of the
Income Tax Act, 1961.
2. At the time of hearing, nobody from assessee's side has appeared
instead of giving notices to the assessee. The Bench, therefore decided to
dispose of the appeal after hearing the ld. D.R. and considering the material
placed on record.
2 ITA 1852/M/11
3. The facts of the case are that, there was a search & seizure operation
carried out in the premises of the assessee on 05/01/06. In response to the
notice u/s 153C, the assessee filed a return on 05/01/07, admitting a total
income of Rs. 20,25,360/-. Earlier the original return had been filed on
30/10/05, admitting a total income of Rs 2,79,776/-. The AO, then,
proceeded to complete the assessment accepting the returned income at Rs
20,25,360/- and initiated penalty proceedings holding that, the additional
income had been offered only as a result of search. The AO after affording
opportunity to the assessee, passed order imposing a penalty of Rs
5,93,473/-. The following is the reasoning given by the AO for levy of penalty.
"It is clear that, it is only after the search that the assessee had filed
income on higher side u/s 153A from 2,79,7761- u/s 139(1) to Rs
20,25,3601-.) The incriminating evidences gathered during the search
and admission of the assessee during the course of search, clearly
reflects that, assessee has not shown his true and correct income and
that the assessee has declared additional income only since the
evidences gathered during the search reflected that the assessee has
concealed the particulars of his income and had furnished inaccurate
particulars of such income. During the course of assessment
proceedings, analysis of material showed that the assessee had earned
income which was not reflected in the return of income filed by the
assessee u/s 153A of the IT Act and also that the assessee filed return
of higher income u/s 153A as a result of search only. Thus, it is learnt
that, the assessee has concealed the particulars of his income and also
furnished inaccurate particulars of his income."
By the impugned order, the ld. CIT(A) deleted the penalty after having
following observation:-
"5. I find that I the income has been declared on the basis of estimate @ 8
% of the turnover in contract business. In my view, penalty cannot be levied
on income which is quantified on the basis of estimate. Moreover, the
appellant has made disclosure in the statement recorded u/s 132(4) to the
effect that he would admit income @ 8 % of contract receipts.
6. The above submissions and the decisions relied upon are perused and
considered. As stated above, the appellant has disclosed the income arising
out of unaccounted turnover, admitted it duly in the return filed in response
to the notice u/s 153A and paid taxes with interest and the same has been
3 ITA 1852/M/11
accepted by the AO in the assessment, hence there is no case for levy of
penalty u/s 271(1)(c).
7. In this case the appellant had duly included the additional income
surrendered by him in his statement on oath recorded u/s 132(4) of the IT Act
, 1961 in the income disclosed in the return filed in response to notice u/s
153A of the IT Act. The AO has held that the appellant disclosed higher
income in the return filed in response to notice u/s 153A only because of the
search & seizure action. The AO levied penalty u/s 271(1)(c) of the IT Act,
1961 holding the appellant responsible for non disclosure of her true and full
income in her original return filed u/s 139(1) of the IT Act, 1961. The action of
the AO does not appear to be legally sustainable. No concealment penalty is
leviable on the income disclosed in the return of income filed in response to
notice u/s 153A of the IT Act, 1961. This view has been upheld by the Ld.
ITAT, 'B' Bench, Pune in the case of Smt Sarala M Ahuja Vs DCIT, Central
Circle, Kolhapur in ITA No 1301 to 1304/Pn/~ decided on 26/10/07. The
concealment of income has to be determined with reference to the income
disclosed in the return of income filed in response to notice u/s 153A of the IT
Act , 1961 and not with reference to the income returned in the original return
filed u/s 139(1). There is no difference in the income returned by the appellant
in the return of income furnished in response to notice u/s 153A of the IT Act
and the assessed income u/s 153A(b) of the IT Act and as such, there is no
concealment of income in this case.
8. In view of the facts mentioned above, I find that clause `2' of
explanation `5' to section 271(1)(c) is fully applicable in this case and hence
the appellant is entitled for getting benefit of immunity from the levy of
penalty u/s 271(1)(c). In view of the facts and legal position explained above,
the penalty of Rs. 5,93,473/- levied u/s 271(1)(c) of the I.T. Act, 1961 is
hereby set aside."
Aggrieved by the above order of ld. CIT(A), the Revenue is in appeal before us.
4. We have heard the ld. D.R. and gone through the orders of authorities
below. From the record, we find that the penalty was imposed with respect to
the disclosure in the statement recorded u/s 132(4) of the Act wherein the
assessee admitted income @ 8% of the contract receipts. The ld. CIT(A) after
recording the findings to the effect that the assessee has disclosed the income
arising out of unaccounted turnover admitted it in the return filed in response
to the notice u/s 153A of the Act and paid taxes with interest and the same
has been accepted by the A.O. in the assessment framed. The ld. CIT(A) also
observed that the income disclosed in the return of income filed by the
4 ITA 1852/M/11
assesseee in response to notice u/s 153A of the Act and the assessed income
u/s 153A(b) of the Act were same as such there is no concealment of income
in this case. The ld. CIT(A) also observed that clause `2' of Explanation 5 to
section 271(1)(c) of the Act is fully applicable, therefore, the assessee is
entitled for getting benefit of immunity from the levy of penalty u/s 271(1)(c)
of the Act. We do not find any infirmity in the order of ld. CIT(A) for deleting
the penalty as clause `2' of Explanation 5 to section 271(1)(c) was fully
applicable to the case of the assessee.
5. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 15th March, 2015.
15-05-2015
Sd/- sd/-
(I.P. BANSAL) (R.C. SHARMA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai; Dated 15-05-2015
[
. ../ RK , Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A) 1 Thane
4. / CIT (Central), Pune
5. , , / DR, ITAT, Mumbai J Bench
6. / Guard file.
/ BY ORDER,
//True Copy//
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai
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