SUBBARAO P. PAILA,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-12, MUMBAI

At the outset it is noted that these appeals are delayed as under :- 2006-07 252 days 2007-08 118 days 2008-09 118 days 2009-10 252 days 3. The reasonable cause attributed is that the assessee is a 77 year old person suffering from several ailments. Upon careful consideration and hearing the learned DR in the substantial interest of justice we condone the delay.

Brief facts of the case are that the assessment was completed under section 153A pursuant to search action. The additions were not based upon any incriminating materials found during the course of search. Rather the additions were on account of deposit in bank account and cash offered by the assessee in the return of income. The penalty was levied on the ground that these were not offered the original return of income and but for the search they would not have been offered. The assessee’s explanation was that nothing incriminating to this effect was found during search and the said income was voluntarily offered by the assessee by way of return of income. Hence, it was pleaded that there is no concealment of income or furnishing of inaccurate particulars of income.

But the aforesaid plea was rejected by the Assessing Officer as well learned CIT(A). Against the above order the assessee is in appeal before us.

We have heard the learned DR and perused the records. None appeared on behalf of the assessee.

Upon careful consideration we note that the addition on account of cash and bank deposits were made during the course of assessment on the basis of income shown in the return of income. Nothing to this effect was found during the course of search. It is not the case of the Revenue that any incriminating material to this effect or any cash was found during search. It is settled law that addition pursuant to search and seizure action u/s. 153A cannot be made dihorce any incriminating material found during search. In this view of the matter it is abundantly clear that the assessee’s offer of these incomes in the return of income was voluntary the assessee’s conduct was bonafide. In this view of the matter the assessee does not deserve to be visited with the rigours of penalty u/s. 271(1)(c) of the Act. In this regard we draw support from the decision of Hon'ble Supreme Court in the case of Hindustan Steel Vs. State of Orissa (82 ITR 26) for the proposition that the authority may not levy penalty if the conduct of the assessee is not found to be contumacious.

In the background of aforesaid discussion and precedent we set aside the orders of the authorities below and delete the levy of penalty.

In the result, appeals filed by the assessee are allowed. Order has been pronounced in the Court on 27.3.2019.