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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI BHAVNESH SAINI & SHRI O.P.MEENA
Suresh B Desai Vs. DCIT, C.C.-3, Surat /ITA No’s.1720 & 1721/AHD/2017 A.Y. 2011-12 & 12-13 Page 1 of 9
आयकरअपीलीयअिधकरण,सुरत�यायपीठ,सुरत IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER आ.अ.सं./I.T.A.No’s.1720 & 1721/AHD/2017 िनधा�रणवष�/Assessment Years: 2011-12 and 2012-13 Suresh B Desai, Vs. Deputy Commissioner of 101, Vishal Apartment, NEar Jamna Income Tax, Central Circle – Nagar Bus Stand, Ghod Dod Road, 3, Surat. Surat – 395 007. [PAN: AAPPD 7237 H] अपीलाथ� Appellant ��यथ�/Respondent Shri Rasesh Shah – CA िनधा�रतीक�ओरसे /Assessee by Shri S.R.Meena –Sr.DR राज�वक�ओरसे /Revenue by 26.07.2019 सुनवाईकीतारीख/ Date of hearing: 26.07.2019 उ�ोषणाक�तारीख/Pronouncement on: आदेश /O R D E R PER O.P.MEENA, AM: The above two appeals by the assessee are directed against the 1. common order of learned Commissioner of Income Tax(Appeals)-4, Surat (in short the “CIT(A)”) dated 29.05.2017 for the A.Y. 2011-12 and 2012-13 challenging the confirmation of penalty levied u/s.271(1)(c) of the Act amounting to Rs.2,01,980/- and Rs.18,370/- respectively.
Briefly stated facts of the case are that a search u/s.132 of the 2. Act was carried out on 05.03.2013 in the case of Milestone Group in which assessee was also covered, consequent search a notice u/s. 153A of the Act was issued against which the assessee filed the Return of Income declaring total income of Rs.22,33,240/-. The Assessing Officer
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noted that earlier the assessee has filed his original return of income for A.Y. 2011-12 for assessment year under consideration declared total income of Rs.15,79,600/-, hence the additional income of Rs.6,53,640/- declared in the return of income filed u/s.153A as compared to original return is amounts to concealment of income, hence notice u/s.271(1)(c) of the Act was issued. The assessee explained that the additional income in 153A Return is declared on account of unexplained expenditure voluntarily to cover all the discrepancies and irregularity found in the seized material and loose paper to avoid further litigation and to buy peace of mind. Further the Assessing Officer did not find the explanation of the assessee acceptable and by invoking Explanation 5A to section 271(1)(c) levied a penalty of Rs.2,01,980/- u/s.271(1)(c) on the additional amount declared in the Return of Income u/s.153A of the Act. Being aggrieved, the assessee carried the matter before the 3. ld.CIT(A). However, the ld.CIT(A) observed that the assessee has declared the additional income based on seized material page 91, hence the same is found at the result of search. Therefore, the assessee is deemed to have concealed the income as per Explanation 5A to section 271(1)(c) of the Act, hence same was confirmed. Being aggrieved, the assessee carried the matter before this 4. Tribunal. At the outset, the ld.Counsel for the assessee submitted that no penalty leviable if the Return of Income has been accepted
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u/s.143(3) r.w.s 153A of the Act. Therefore. the ld.CIT(A) was not justified in invoking the provisions of Explanation 5A to section 271(1)(c) of the Act. The ld.Counsel further submitted that the issue is squarely covered by the decision of Surat Bench of ITAT in the case of ACIT vs. Shri Dhirajlal R Shah, IT(SS)A.No. 05/Ahd/2014 for A.Y.2006- 07 (copy filed) placed at paper book, page 18 to 40. Per contra, the ld.Senior Departmental Representative relied on 5. the order of Lower Authorities. We have heard the rival submissions and we find that the issue is 6. squarely covered by the decision of Surat Bench of ITAT in the case of IT(SS)A.No. 05/Ahd/2014 for A.Y.2006-07, ACIT Vs. Shri Dhirajlal R Shah (supra) wherein the Tribunal has given its finding as under :
We have heard the rival submissions of both the parties and have perused the material available on record. We find that a search and seizure operation under section 132(1) was conducted on 28.01.2010 in the case of the assessee. Consequently, the assessee was served a notice under Section 153A to file fresh return of his income. Thereafter, the assessee filed the return under Section 153A which was accepted as such by the A.O. barring addition of Rs.38,52,703/- on account of unexplained investment, which also stands deleted by the Tribunal. We find that the Tribunal has deleted the quantum addition of Rs.38,52,703/- in I.T.(S.S.A) No. 546/Ahd/2012 dtd.03.05.2013 in the case of the assessee, hence, the CIT (A) has rightly deleted the penalty levied in respect of this addition. With regard to disclosure of Rs.40 lac, we note that the AO was of the opinion that inasmuch that the income disclosed by the assessee under Section 153A was higher than the income in the original return filed under Section 139(1) and since in his view, such disclosure of income was a consequence of the search conducted on the assessee, there was concealment of income which attracted Section 271(1)(c) of the Act. However, we find that there is no finding that any incriminating material was found during search. Therefore, the question that needs to be answered is whether penalty is to be levied automatically whenever the assessee declares a higher income in his return filed under Section 153A in comparison to the original return filed under Section 139(1). A perusal of the penalty order reveals that the AO has accepted the return disclosing therein undisclosed income of Rs. 40
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lakhs, but rejected the claim of the assessee on the basis that the disclosure was not voluntary and made on the basis of finding and seized material. However, before us no such seized material relating to such disclosure of Rs. 40 Lakh has been brought to our notice. The perusal of the assessment order reveals that the AO has accepted the undisclosed income of Rs. 40 Lakh as disclosed in the return of income filed under section 153A of the Act. The learned counsel for the assessee has referred to the statement recorded u/s. 132(4) which clearly indicate that there was no seizure of assets like cash etc. or any incriminating material was found or identified, therefore, the provisions of Explanation-5A are not applicable. We observe that conditions u/s. 271(1)(c) were not applicable in the case of the assessee as these proceedings u/s. 153A are independent and has no relation to other assessment proceedings. Further, it was submitted that invoking Explanation-5A, there should be a finding that assessee is the owner of any money, bullion, jewellery or other article or thing or any income based on any entry in any Books of Account or other documents or transactions. We find that Explanation-5A of Section 271(1)(c) is specifically made applicable for all the searches initiated u/s. 132 on or after first day of June, 2007. The search in the impugned case was initiated on 28.01.2010; consequently, whether Explanation-5A is applicable to the facts of this case is to be considered. Explanation 5 has been amended by the Finance Act, 2007 to restrict the application of that explanation to searches initiated before 01-06-2007. A new Explanation 5A was introduced by Finance Act 2009, with retrospective effect from 01-06-2007 to cover searches initiated after 01-06-2007 which read as under: “[Explanation 5A- Where, in the course of a search initiated under section 132 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.] 8. On a plain reading of the aforesaid Explanation, it is apparent that following conditions are essential for levy of penalty under section 271(1)(c):- (i) this Explanation is applicable to an assessee in whose case search has been initiated under section 132 on/or after 1st June 2007; further, (ii) during the course of search, the assessee should be found to be the owner of - (a) any money, bullion, jewellery, for other valuable article or thing and the assessee claims to have acquired such assets by utilizing his income for any previous year; or
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(b) any income which is based on any entry in any books of account or other documents or transactions and claims that these represents income for any previous year which is ended before the date of search; and further, (iii) if such asset or income which represents the income of any previous year, firstly, has not been shown in the return of income which has been furnished before the date of search i.e., such income has not been declared therein and secondly, the due date for filing the return of income had expired i.e., the assessee has not shown this income in the return of income filed on or before the due date;
(iv) then on such income declared by him in the return of income furnished on or after the date of search, he is liable for penalty under section 271(1)(c) and he is deemed to have concealed the particulars of his income or furnish inaccurate particulars of income.
There are two saving clause in the aforesaid Explanation wherein penalty cannot be held to be leviable under section 271(1)(c), firstly, the assessee had shown such asset as mentioned in clause (i) or income as mentioned in clause (ii) in the return of income furnished before the date of search and, secondly, such asset and the income has been shown in the return of income filed on the due date. Thus, if any assessee falls under these saving clauses, Explanation 5A can be invoked. 10. For the purpose of the instant case, we have to see whether the assessee has shown the income in the return of income filed on the "due date". Provisions of section 139(1) provides for various types of assessees to file return of income before the due date and such due date has been provided in the Explanation-2, which varies from year-to-year. Whereas, provisions of section 139(4) provides for extension of period of "due date" in the circumstances mentioned therein and it enlarges the time limit provided in section 139(1). The operating line of sub-section 4 of section 139 provides that "any person who has not furnished the return within the time allowed", here the time allowed means under section 139(1), and then in such a case, the time limit has been extended. Wherever the legislature has specified the "due date" or has specified the date for any compliance, the same has been categorically specified in the Act. For e.g., under section 44AB where the assessee is required to get his accounts audited before the specified date and furnish by that date, the specified date has been specifically mentioned as the date provided in section 139(1). Similarly, in section 43B also, the "due date" has been specifically provided as the date mentioned in sub-section (1) of section 139. In the aforesaid Explanation 5A, the legislature has not specified the due date as provided in section 139(1) but has merely envisaged the words "due date". This "due date" can be very well inferred as due date of the filing of return of income filed under section 139, which includes section 139(4). Where the legislature has provided the consequences of filing of the return of income under section 139(4), then the same has also been specifically provided. For e.g., section 139(3), provides that for the purpose of carry forward losses under sections 72 to 74A, the return of income should be filed within the time-limit provided under section 139(1), otherwise losses cannot be set-off. In absence of such a restriction, the limitation of time of "due date" cannot be strictly reckoned with section 139(1). Thus, the meaning of the words "due date", sans any limitation or restriction as given in clause (b) of Explanation 5A, cannot be read as "due date" as provided in section 139(1). The words "due date" therefore, can also mean date of filing of the return of income under section 139(4).
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This proposition has been explained by the various High Courts also wherein in the context of sections 54F and 54(2), it has been interpreted that the due date of section 139 can be inferred as due date under section 139(4) also. In CIT v. Jagriti Aggarwal [2011] 339 ITR 610/203 Taxman 203/15 taxmann.com 146 (P&H) , wherein it has been observed and held as under: "6. Sec. 54 of the Act contemplates that the capital gain arises from the transfer of a long-term capital asset, but if the assessee within a period of one year before or two years after the date on which the transfer took place purchases residential house, then instead of the capital gain, the income would be charged in terms of provisions of sub-s. (1) of s. 54. As per sub-s. (2), if the amount of capital gains is not appropriated by the assessee towards the purchase of new asset within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under s. 139, the amount shall be deposited by him before furnishing such return not later than due date applicable in the case of assessee for furnishing the return of income under sub-s. (1) of s. 139 in an account in any such bank or institution as may be specified. Relevant sub-s. (2) of S. 54 of the Act. 12. The question, which arises, is whether the return filed by the assessee before the expiry of the year ending with the assessment year is valid under s. 139(4) of the Act. However, despite the fact that there is no requirement of proving mens-rea specifically, but still were are of the view that the word “conceal” inherently carries with it the requirement of establishing that there was a conscious act or omission on the part of the assessee to hide his true income. Section 153A provides the procedure for completion of assessment where a search is initiated under Section 132 or books of account, or other documents or any assets are requisitioned under Section 132A after 31.05.2003. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under Section 132 or requisition was made under Section 132A. The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or requisition under Section 132A, as the case may be, shall abate. [Ref to Memorandum accompanying the Finance Bill, 2003] Section 153A opens with a non-obstante clause relating to normal assessment procedure covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after May 31, 2003. The sections, so excluded, relate to returns, assessment and reassessment provisions. However, the provisions that are saved are those under Section 153B and 153C, so that these three Sections 153A, 153B and 153C are intended to be a complete code for post-search assessments. Considering that the non- obstante clause under Section 153A excludes the application of, inter alia, Section 139, it is clear that revised return filed under Section 153A takes the place of the original return under Section 139, for the purposes of all other provisions of the Act. This is further buttressed by Section 153A(1)(a) which reads: “Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after
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the 31st day of May, 2003, the Assessing Officer shall-a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. 13. Therefore, the position that emerges from the above-mentioned provision is that once the assessee files a revised return under Section 153A, for all other provisions of the Act, the revised return will be treated as the original return filed under Section 139. On similar lines, the Hon`ble jurisdictional High Court of Gujarat in the case of Kirit Dahyabhai Patel v. Assistant Commissioner of Income Tax, (2015) 280 CTR (Guj) 216, held that: “13. Considering the facts and circumstances of the case and also considering the decision relied upon by the learned senior advocate for the appellant, we are of the considered opinion that the view taken by the Tribunal is erroneous. The CIT (A) rightly held that it is not relevant whether any return of income was filed by the assessee prior to the date of search and whether any income was undisclosed in the return of income. In view of the specific provision of Section 153A of the I.T. Ac is to be considered as return filed under section 139 of the Act, as the Assessing Officer has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under Section 271(1)(c) of the I.T. Act and the penalty is to be levied on the income assessed over and above the income returned under Section 153A, if any. 14. Further, in the present case, it appears from that the assessee had satisfied all the conditions which are required for claiming immunity from payment of penalty under section 271(1)(c) of the Act. The provision does not specify any time limit during which the aforesaid amount i.e. the amount of penalty with interest held to be paid. Admittedly when the assessee herein above paid the entire amount with interest , the Assessing Officer ought to have granted immunity available under section 271(1)(c) of Income Tax Act.” 14. Thus, it is clear that when the A.O. has accepted the revised return filed by the assessee under Section 153A, no occasion arises to refer to the previous return filed under Section 139 of the Act. For all purposes, including for the purpose of levying penalty under Section 271(1)(c) of the Act, the return that has to be looked at is the one filed under Section 153A. In fact, the second proviso to Section 153A(1) provides that “assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate.” What is clear from this is that Section 153A is in the nature of a second chance given to the assessee, which incidentally gives him an opportunity to make good omission, if any, in the original return. Once the A.O. accepts the revised return filed under Section 153A, the original return under Section 139 abates and becomes non-est. Now, it is trite to say that the “concealment” has to be seen with reference to the return that it is filed by the assessee. Thus, for the purpose of levying penalty under Section 271(1)(c), what has to be seen is whether there is any concealment in the
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return filed by the assessee under Section 153A, and not vis-a vis the original return under Section 139. 15. No doubt, the un-amended provisions as applicable between 01- 06-2007 and 01-04-2009 of Explanation-5A is applicable, provided the conditions as specified in Item Nos. 1 & 2 are satisfied. As already stated above, assessee is not found to be the owner of either any money/bullion/jewellery or other available article or thing or any income based on any entry in Books of Account or other documents or transactions. Thus, Explanation- 5A either pre-amendment or post- amendment is not applicable to the facts of the case. 16. We find that a search was carried out in the case of the assessee, but there was no incriminating documents were found and seized during search, therefore, Explanation 5A is not applicable. It is the case of the assessee that returned income was accepted by the AO without making any addition. Proceeding u/s. 153A are separate and have no relevance to earlier assessment proceedings. There is no variation between income returned and income assessed. Consequently, it cannot be said that there is any concealment of income so as to attract penalty provisions under section 271(1) (c) of the Act. The decision of Mak Data (P.) Ltd. vs. CIT [2013] 358 ITR 593(SC) / [2013] 38 taxmann.com 448(SC) and others relied by the Learned Departmental Representative are not applicable as the disclosure was not based on seized material whereas in the cases relied by the ld. Sr. D.R. disclosure was based on incriminating material found during survey or search, hence, disclosure was not voluntary. We are therefore, of the opinion that levy of penalty under section 271(1)(c) is not warranted and accordingly the CIT (A) has rightly deleted the penalty under section 271(1)(c) of the Act. Hence, same is upheld. Accordingly grounds of appeal of revenue are dismissed. In the result, the appeal of the assessee stands allowed. 17. 8. In the light of facts discussed in the above order, we are of the considered opinion that Lower Authorities are not justified in imposing the penalty u/s.271(1)(c) of the Act in the light of legal position discussed in the aforesaid order of Tribunal, accordingly the penalty of Rs.2,01,980/- levied u/s.271(1)(c) of the Act for A.Y. 2011-12 is therefore deleted. ITA No.1721/Ahd/2017 for A.Y. 2012-13: 9. Since the assessee has challenged the levy of penalty of Rs.18,370/- u/s.271(1)(c) of the Act, the facts and circumstances are
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identical as in the above order, therefore our finding given in ITA No.1720/Ahd/2017 for A.Y. 2012-13 would mutatis mutandis apply to this appeal also, accordingly, this grounds appeal filed by the assessee is allowed. 10. In the result, both appeals filed by the assessee are allowed. 11. The order pronounced in the open court on 26.07.2019
Sd/- Sd/- (BHAVNESH SAINI) (O.P.MEENA) (�याियकसद�यतथा/JUDICIAL MEMBER) (लेखासद�यकेसम� /ACCOUNTANT MEMBER) सुरत/ Surat, �दनांक Dated: 26th July, 2019/S.Gangadhara Rao, Sr.PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat