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Pawan Kumar Gupta Flat No. 203-206, Second Floor Hoover Apartments, Khasra No. 773 & 774, Sant Nagar Buradi, Delhi. Vs. ACIT Central Circle-6 New Delhi.
July, 31st 2014
                   (DELHI BENCH `F': NEW DELHI)


              ITA Nos. 4652, 4653,4654, 4655/DEL/2011
       (Assessment Years: 2004-05, 2005-06,,2006-07, 2007-08)

      Pawan Kumar Gupta              Vs.            ACIT
      Flat No. 203-206, Second Floor                Central Circle-6
      Hoover Apartments,                             New Delhi.
      Khasra No. 773 & 774, Sant Nagar
      Buradi, Delhi.
      PAN AAEPG9014E
       (APPELLANT)                                 (RESPONDENT)

            Assessee by :Shri Ajay Wadhwa, CA
            Revenue by :Shri Manoj Kumar Chopra, Sr. DR



      In all these appeals the assessee has questioned upholding of

penalty imposed u/s 271(1)© of the Act by the Ld. CIT(A).

2.   The main contention of the Ld. AR is that when no concealment

was detected by the revenue and the income declared in the return filed

u/s 153A was voluntary which was accepted as such in the assessment

made u/s 153A / 143(3) of the Act, there was no question of levy of

penalty u/s 271(1)© of the Act. He submitted further that the issue

                                  ITA Nos.4652,4653,4654,4655/DEL/2011

raised is fully covered in favour of the assessee in almost similar facts by

the following decisions :-

      i)     Prem Arora vs. DCIT (2012) 24 Taxman.Com 260 (Delhi

      ii)    Neeraj Lal T. Galea (HUF) vs. ACIT (2013) 33 taxman. Com
             620 (Mumbai)

     iii)   Suman Rajeja vs. DCIT ITA No. 4411 and 4412/Del/2011 (asstt.
            years 2-001-02 and 2002-03 order dated 25.5.2012

      iv) Nutan Gupta vs. DCIT ITA 4728 to 4731/Del/2011 (asstt.years
          2001-02 to 2006-07) order dated 24.8.2012

       v) Shri Kiran Shah vs. ACIT ITA Nos. 5919 to 5925/Mumbai/2011
          for asstt. yaer 1999-200 to 2005-06 order dated 8.1.2014

3.          Ld. DR on the other hand placed reliance on the orders of the

authorities below and the decisions relied upon by them. He submitted

that it is an admitted fact in all these appeals that only after the search

conducted the assessee disclosed its income revealed during the course

of search.

4.          In view of above submissions and the decisions relied upon, we

have considered the orders of the authorities below. The relevant facts

are that the Hoover Builders (P) Ltd. was carrying on the business of

constructing and sale of flats. The AO observed during assessment

proceedings that the assessee had not disclosed the correct income in

                                ITA Nos.4652,4653,4654,4655/DEL/2011

the return filed on 29.9.2004 with ITO ward 12 (4) as he has declared

an income of Rs. 2,10,000/- in the asstt. years 2004-05, Rs. 3 lac in the

asstt. year 2005-06 Rs. 5,55,746/- and Rs. 2,41,560/- was demanded

for asstt. year 2007-08 hence subsequent to the search carried out at

the premises of the assesee, the assesee filed its return u/s 153A

showing    an income of Rs. 3,35,000/- including an income of Rs.

1,25,000/- from undisclosed sources for the asstt. year 2004-05, in asstt

year 2005-06 it showed income of Rs. 22 lacs which included an income

of Rs. 19 lac from undisclosed sources in asstt. year 2006-07 it showed

an income of Rs. 18,62,746/- which included undisclosed income of Rs.

12,75,000/-. In asstt. year 2007-08 it returned income of Rs. 8,18,320/-

was accepted in the assessment framed u/s 143(3) and disallowance of

Rs. 15,000/- was made out of the payment made to the creditors. In all

these years asstt. u/s 153A / 143(3) were framed on the income

undisclosed by the assessee in its return of income filed in response to

the notice issued u/s 153A of the Act. During the course of appellate

proceedings it was explained by the assesee that by Hoover Building (P)

Ltd. flats are sold in finished and semi finished conditions. Finished flats

are standardised. Some customers had purchased semi finished flats

and wanted extra work for finishing. In order to maintain customers

relations and good will and also to provide services with the underlying

                                ITA Nos.4652,4653,4654,4655/DEL/2011

objective of selling the flats the said work for the customers on no profit

no loss basis has to be undertaken. Money are received from the

customers for the purpose of finishing according to their satisfactions

and the entire amount is spent for on the said job. This is an additional

service which is being provided in order to boost sales of the flats. It

was explained that this activity was being carried on by one of the

Directors Mr. P.K. Gupta on an individual basis since there was no profit

from this activity, no income from the same was shown in the original

returns. But now he himself has offered to tax suo moto voluntarily and

prior to any query in the matter, net amount appearing in the seized

material ( receipt less expenses so stated) even though the same

amounts are mere scribbling to which no meaning can be described in

the absence of any corroborative evidence to support of the same. It

was accordingly submitted that the income returned may be accepted

without any penal action since the same is voluntary and bonafide and

has been declared even though there is no evidence of the same having

being earned. Penal proceedings were initiated and the AO levied

penalty u/s 271(1)© of the Act on the declared undisclosed income. The

Ld. CIT(A) has also justified the action of the AO saying that the case of

the assessee falls within the general provisions of section 271(1)(C) as

well as within the Explanation 5 thereof. We find that an identical issue

                               ITA Nos.4652,4653,4654,4655/DEL/2011

was raised before Delhi Bench of the Tribunal in the case of Prem Arora

vs. DCIT(supra) wherein after discussing related provisions in detail, the

Tribunal has come to the conclusion that for the purpose of imposition

of penalty u/s 271(1)(c) as a result of search assessments made u /s

153A, original return of income filed u/s 139 cannot be considered. It

was held that concealment of income has to be seen with reference to

additional income brought to tax over and above the income returned by

the assesee in response to notice issued u/s 153A and therefore once

return of income u/s 153A is accepted by AO, it can neither be a case of

concealment of income nor furnishing of inaccurate particulars of such

income. In that case search was conducted on 22.11.2006 and cash was

found from possession of the assessee. The assessee has drawn cash

flow statement for entire period of 6 years in order to determination of

undisclosed income based on seized material for each of six assessment

years. The question raised before the Tribunal was as to whether

penalty u/s 271(1)(C) cannot be imposed by invoking Explanation 5 in

asstt. year 2004-05 in respect of cash found in previous year relevant to

asstt. years 2007-08, merely on presumption that assessee might have

been in possession of cash throughout period covered by search

assessments. It was answered in affirmative i.e. in favour of the

assessee. The Tribunal held further that the word `pending' occurring in

                               ITA Nos.4652,4653,4654,4655/DEL/2011

the second proviso to section 153A and words "all other provisions of

this Act shall apply to the assessment made under this section" as

occurring in (Explanation I) to section 153A of the Income Tax Act 1961.

Similar view has been expressed by the other coordinate benches of the

Tribunal in the above cited cases by the Ld. AR. Respectfully following

the above decisions we find that the Ld. CIT(A) was not justified in

upholding the penalty levied by the AO in the present case wherein

returned undisclosed income in response to the notice issued u/s 153A

was accepted by the AO in the assessment framed u/s 153A / 143(3) of

the Act. We thus while setting aside orders of the authorities below

direct the AO to delete the penalty in question levied in the years in

appeals. The ground is accordingly allowed in favour of the assessee.

       In the result appeals are allowed.

       The order is pronounced in the open court on 25th July, 2014.

           sd/-                                        sd/-
        (T.S. KAPOOR)                           ( I.C. SUDHIR )
     ACCOUNTANT MEMBER                        JUDICIAL MEMBER

Date 25th July, 2014


Copy of order forwarded to:
  1. Appellant
  2. Respondent
  3. CIT(A)
  4. CIT

        ITA Nos.4652,4653,4654,4655/DEL/2011

5. DR                By Order
                     Asstt. Registrar, ITAT
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