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Facts
The assessee, Attupurattu Ismail, filed an income tax return for AY 2013-14. Following search and seizure operations u/s 132, undisclosed investment of Rs. 14,00,000/- and interest of Rs. 42,184/- were unearthed. The AO completed reassessment u/s 147 r.w.s. 144B and subsequently levied a penalty of Rs. 13,035/- u/s 271(1)(c), which was confirmed by the CIT(A).
Held
The Tribunal dismissed the assessee's appeal, holding that Explanation 5A to Section 271(1)(c) was squarely applicable. This Explanation creates an unrebuttable statutory presumption of concealment of income when additional income is disclosed consequent to search operations, thus overriding the argument regarding the specificity of the show cause notice.
Key Issues
The key legal issues were the applicability of penalty under Section 271(1)(c) for concealment of income in a search-and-seizure case, specifically whether Explanation 5A to Section 271(1)(c) creates an unrebuttable presumption of concealment, and if this presumption overrides the requirement for a specific show cause notice.
Sections Cited
132, 147, 148, 144B, 271(1)(c), 274, 153A, 271(1)(c) Explanation 5A
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI MANU KUMAR GIRI, JM
Assessment Year: 2013-14 Attupurattu Ismail .......... Appellant Attupuratt House, Thalassesry, Kannur 670676 [PAN: ABFBI7471M] vs. The Income Tax Officer, Ward-2, Kannur ......... Respondent Assessee by: Shri Ananthakrishnan R. CA Revenue by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 07.11.2025 Date of Pronouncement: 19.11.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi (NFAC) dated 01.09.2025 for Assessment Year (AY) 2013-14.
Brief facts of the case are that the appellant is an individual. The return of income for AY 2013-14 was filed on 22.03.2014 disclosing total income of Rs. 2,63,300/-. The search and seizure operations u/s. 132 of the Income Tax Act, 1961 (the Act) was conducted in the business premises of Parco Group of concerns Attupurattu Ismail which is engaged in the business of jewellery shops under the brand name M/s. Swarnanjali Gold. It was unearthed during the course of search and seizure operations in the said case that the appellant had invested a sum of Rs. 14,00,000/- in the firm M/s. Soan Fashion Jewellery and having 2% share in the firm and also received interest on capital contribution of Rs. 42,184/-. Based on this information the AO formed an opinion that income escaped assessment to tax. Accordingly, a notice u/s. 148 of the Act was issued. The assessment was completed vide order dated 24.09.2021 passed u/s. 147 r.w.s. 144B of the Act at a total income of Rs. 1,70,54,484/-. On further appeal, the CIT(A) deleted the addition made on capital contribution of Rs. 14,00,000/-. However, he confirmed the addition of interest of Rs. 42,184/-. The AO had initiated penalty proceedings u/s. 274 r.w.s. 271(1)(c) of the Act and levied penalty of Rs. 13,035/- vide order dated 27.03.2025 passed u/s. 271(1)(c) of the Act.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the penalty.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
The learned counsel for the assessee contended before us that the order of penalty is vitiated as the show cause notice did not specify whether the penalty proceedings were initiated for i) CIT v. SSA’s Emerald Medows in of 2015 dated 23.11.2015, Karnataka ii) CIT v. Samson Peerinchery, of 2014 and Others dated 05.01.2017, Bombay 6. On the other hand, the learned Sr. DR supporting the orders of the learned lower authorities submits that no interference is called for.
We have heard the rival contentions and perused the material available on record. The issue in the present appeal relates to levy of penalty u/s. 271(1)(c) of the Act on the case of assessment made u/s. 148 of the Act. In our opinion provisions of Explanation 5A to section 271(1)(c) were squarely applicable to the facts of the present case, which reads as under: -
“Failure to furnish returns, comply with notices, concealment of income, etc. 271. (1) If the Assessing Officer or the 98[Joint Commissioner (Appeals) or the] Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person— ............................ 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 Attupurattu Ismail 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.”
Thus, provision of Explanation 5A raises a presumption that where the appellant discloses additional income consequent to search seizure operations in the return filed in response to section 153A of the Act the appellant is guilty of concealment of income. The statutory provisions raise unrebutable presumption that the assessee is guilty of concealment of income. The statutory provisions clearly override the show cause notice.
Order pronounced in the open court on 19th November, 2025.