CHERAKU SAROTHAM REDDY,HYDERABAD vs. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), HYDERABAD

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ITA 1159/HYD/2018Status: DisposedITAT Hyderabad17 September 2021AY 2010-114 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the conditions for invoking Explanation 5A to Section 271(1)(c) were not met, as the Assessing Officer's own assessment order indicated that no specified material (money, bullion, jewellery, or entries in books) attracted the explanation. Therefore, the penalties were wrongly imposed.

What were the facts?

The assessee's appeals challenge penalties imposed under Section 271(1)(c) following a search action and subsequent assessments. The additions made by the Assessing Officer related to differences in agricultural income and undisclosed income unearthed during the search.

What were the issues?

Whether the penalties imposed under Section 271(1)(c) were validly invoked based on the facts and circumstances, particularly in light of Explanation 5A to the said section.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad

Before: Shri S.S. Godara & Shri Laxmi Prasad Sahu

For Appellant: Smt. V. Srilatha, AR
Hearing: 15/09/2021Pronounced: 17/09/2021

Per S. S. Godara, J.M.

1.

These assessee’s five appeals to 1162/Hyd/2018 for A.Ys. 2009-10 to 2013-14 arise from the CIT(A)-11, Hyderabad’s as many orders; all dated 28.02.2018 passed in Case Nos.410 to 414/2016-17/ACIT-CC-1(1) / CIT(A)- 11 Hyd thereby confirming the assessing officer’s action imposing penalty of Rs.10,00,000/-, 1,90,000/-, 93,00,000/-, 63,00,000/- and 20,00,000/- for the assessment years in proceedings u/s 271(1)(c) of the Income Tax Act, 1961 (in short the Act), respectively.

Heard both the parties. Case files perused.

2.

It emerges at the outset that the assessee’s all five instant appeals raise his identical sole substantive ground challenging correctness of the impugned penalty proceedings invoked u/s 271(1)(c) of the Act by both learned lower authorities. There is further no quarrel that all these penalties emanate from the department search action dt.30.09.2013 undertaken in assessee’s case followed by initiation of Sec.153A proceedings vide notice dated 12.11.2014 culminating in the corresponding quantum assessments; all framed on 23.03.2016.

3.

We notice with the able assistance coming from both the sides that the Assessing Officer’s assessment had made additions; involving varying sums regarding the difference in agricultural income as well as additional undisclosed income which was allegedly unearthed during the course of search. We make it clear that the Assessing Officer thereafter issued his identical penalty notices that alleging the assessee go “have concealed the particulars of your income furnished, inaccurate particulars of such income”. And that he thereafter declined the assessee’s explanation and imposed the impugned penalties which in turn have been upheld in CIT(A)’s identical lower appellate discussion.

This leaves the assessee aggrieved.

4.

We have given our thoughtful consideration to rival pleading against and in support of impugned penalties and find no reason to agree with the department’s stand. This is because of the clinching fact that we are dealing with a search dated 30.09.2013 i.e. carried out after 01.06.2007 i.e., covered under Page 2 of 4 Sec.271(1)(c) Explanation 5A prescribing that when an assessee is found to be the owner of specified categories of assets not declared in the return already furnished or has not filed any return within the due date, he shall be deemed to have concealed the particulars of such an income or furnished inaccurate particulars thereof. We keep in mind this specific provision and notice from a perusal of the Assessing Officer’s identical detailed discussion in para 2.1 of his assessment order (s) reading as under :

“He was found to have not maintained proper books of accounts, all the receipt and expenditures are noted down in note books and scribbling pads. Assessments are done after taking into consideration the material seized from the premises of the assessee, undisclosed income estimated and subsequent admission by the assessee”.

Meaning thereby that the learned assessing authority itself makes it clear that none of the specified material i.e., money, bullion or jewellery or entry in books of accounts u/s 271(1)(c) Explanation 5A is attracted in the given facts and circumstances before us. It also takes care of learned CIT-DR’s contention in the light of hon’ble apex Court’s decision in K. P. Madhusudhanan Vs. CIT (2001) 251 ITR 99 (SC) that invocation of the main provision u/s 271 also includes the Explanation therein. We conclude with these facts and circumstances that the learned lower authorities have erred in law and on facts in imposing the impugned penalties in all these assessment orders in violation of the specific conditions u/s 271(1)(c) Explanation 5A of the Act. The same are deleted accordingly. All other pleadings on merits are rendered infructuous.

5.

These assessee’s five appeals are allowed. A copy of this common order be placed in the respective case files.

Order pronounced in the Open Court on 17th September,2021.

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