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Income Tax Appellate Tribunal, DELHI BENCH “F” DELHI
Before: SHRI PRADIP KUMAR KEDIA & SHRI NARENDER KUMAR CHOUDHRY
PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax (Appeals)-XXIX, New Delhi (‘CIT(A)’ in short) dated 09.01.2018 arising from the assessment order dated 26.12.2016 passed by the Assessing Officer (AO) under Section 153A r.w.s. 153C/143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2014-15.
When the matter was called for hearing, the ld. counsel for the assessee, at the outset, submitted that the imposition of penalty under Section 271(1)(c) of the Act amounting to Rs.1,02,01,110/- is totally outside the contours of Section 271(1)(c) of the Act r.w. Explanation 5A thereto. In this regard, the ld. counsel submitted that a search operation was carried out on 11.09.2013, i.e., Financial Year 2013-14 relevant to Assessment Year 2014-15 and the penalty was imposed on the assessed income under Section 271(1)(c) of the Act. In the matter, the ld. counsel adverted to the bare language of Explanation 5A to Section 271(1)(c) and pointed out that the Explanation 5A gets triggered and comes into motion only where the assessee, in the course of search initiated under Section 132 of the Act, is found to be owner of money, bullion, jewellery or other valuable articles or any income based on any entry in the books of accounts and such specified source of income relates to Financial Year where the return of income for such Financial Year/previous year has been already furnished or where the due date for filing the return of income for such previous year/financial year has expired. The assessee in the instant case however has neither filed the return of income nor the due date for filing of return of income had expired at the time of search.
2.1 It was submitted that the Financial Year 2013-14 (Assessment Year 2014-15) is the year of search. This year stands excluded from the operation Explanation 5A to Section 271(1)(c) as the stipulated conditions cannot be fulfilled for the year in which the search has been conducted. The ld. counsel submitted that the only option possibly available to the Assessing Officer was to invoke Section 271AAB on fulfillment of conditions specified therein. It was thus submitted that Explanation 5A to Section 271(1)(c) which is the premise of the penalty imposed is a complete non-starter at the threshold and consequently the penalty imposed on the basis of inapplicable provisions of the Act is illegal and thus nonest in law.
2.2 The ld. counsel accordingly urged for cancellation of penalty imposed under Section 271(1)(c) of the Act in question.
The ld. DR placed reliance of the penalty order passed by the Assessing Officer.
We have carefully considered the rival submissions and perused the order of lower authorities. In the instant case, a search operation was carried out on 11.09.2013 and 17.09.2013 at the residential premises of Shri Ashok Choudhary, i.e., 3rd party wherein certain documents belonging to the assessee were found and seized. The assessment was accordingly carried out under Section 153A r.w. Section 153C r.w. Section 143(3) of the Act for the Assessment Year 2014-15 in question. The income was assessed as per the returned income but however it was alleged that the return was filed belatedly after the due date on 31.03.2016 and consequently the whole of the returned income is an act of concealment of particulars of income. Penalty proceedings under Section 271(1)(c) were initiated while passing the assessment order and penalty at Rs.102,01,110/- was imposed by invoking Explanation 5A to Section 271(1)(c) of the Act alleging concealment of particulars of income.
4.1. In these factual backdrop, we straightaway notice that Explanation 5A is applicable only in relation to the assessee where search has been initiated under Section 132 of the Act and the assessee is found to be owner of the specified valuable assets. Significantly, Explanation 5A is applicable only in respect of any previous years which is closed before the date of search and where either (a) the assessee has furnished the return of income before the date of search and income found in the course of search has not been declared in the return of income or (b) the due date for filing return of income for any such previous year has expired but the assessee has not filed the return of income.
4.2 In the instant case, apparently, none of the conditions are satisfied. Neither the search has been carried out in the case of the assessee nor the previous year, i.e., 2013-14 which is year of search is covered by ambit of Explanation 5A to Section 271(1)(c) of the Act. None of the conditions for application of Explanation 5A are subsisting in the facts of the case. The imposition of penalty on the counters of Explanation 5A is devoid of any legitimacy. Under these circumstances, we see prima facie merit in the plea of the assessee in support of relief granted by the Ld. CIT(A). 4.3 The imposition of penalty by the Assessing Officer without satisfying the conditions of Explanation 5A invoked in the present case is thus bad in law, and therefore, rightly cancelled by the Ld. CIT(A).
In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 09/05/2022.