ASHRAF GEETA KUMAR,MUMBAI vs. ACIT CC 42, MUMBAI

Brief facts are, the assessee is an individual. For the assessment year under dispute, initially, the assessee did not file any return of income under section 139(1) of the Act. Subsequently, a search and seizure operation under section 132(1) of the Act was carried out in case of Bharti Shipyard Group and the assessee was also covered under the said search and seizure operation. In response to the notice issued under section 153A of the Act, the assessee filed her return of income on 25th May 2013 declaring total income of ` 5,84,244. Though, the Assessing Officer ultimately completed the assessment under section 153A r/w section 143(3) of the Act vide order dated 12th March 2014, by accepting the income returned by the assessee, however, he initiated proceedings for imposition of penalty under section 271F of the Act for non–filing of return of income under section 3 Smt. Ashraf Geeta Kumar 139(1) of the Act and further he initiated proceedings under section 271(1)(c) of the Act alleging concealment of income by way of furnishing inaccurate particulars of income. As alleged by the Assessing Officer, in response to the show cause notice issued under section 274 r/w section 271(1)(c) of the Act, neither the assessee filed any explanation nor appeared before him. Thus, the Assessing Officer proceeded to pass an order imposing penalty of ` 77,096 under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income leading to concealment of income. Though, the assessee challenged the penalty order before the learned Commissioner (Appeals), however, she failed in her attempt to get the penalty deleted.

The learned Authorised Representative submitted, since, the assessee had not filed any return of income under section 139(1) of the Act and the income returned in the return of income filed in pursuance to notice under section 153A was accepted by the Assessing Officer without any variation, the assessee cannot be charged with the offence of furnishing inaccurate particulars of income. The learned Authorised Representative submitted, the learned Commissioner (Appeals) while sustaining the penalty imposed under section 271(1)(c) of the Act has applied Explanation–5A to section 271(1)(c) of the Act. The learned Authorised Representative submitted, when in 4 Smt. Ashraf Geeta Kumar course of search and seizure operation, no money, bullion, jewellery, etc. were found in the possession of the assessee, Explanation–5A to section 271(1)(c) of the Act cannot be applied.

Without prejudice to the aforesaid submissions, the learned Authorised Representative submitted, in the assessment order the Assessing Officer has not recorded any satisfaction whether the assessee has furnished inaccurate particulars of income or concealed her income. He submitted, in the show cause notice issued under section 274 r/w section 271(1)(c) of the Act the Assessing Officer has not specified the exact nature of offence committed by the assessee by striking off the inappropriate words. He submitted, for this reason also, the penalty order cannot be sustained. In support of such contention, he relied upon the following decisions:–

The learned Departmental Representative relied upon the observations of the Assessing Officer and the learned Commissioner (Appeals).

We have considered rival submissions and perused materials on record. As could be seen from the facts on record, for the impugned assessment year assessee had not filed any return of income under section 139(1) of the Act. The assessee filed her return of income only in pursuance to notice issued under section 153A of the Act by declaring income of ` 5,84,244. It is also a fact on record that the Assessing Officer while completing the assessment accepted the income returned by the assessee. No doubt, the Assessing Officer has imposed penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income by the assessee. However, when the assessee has filed a single return of income and the income returned therein has been accepted by the Assessing Officer without any variation, we fail to understand how the assessee can be charged with the offence of furnishing inaccurate particulars of income. Further, learned Commissioner (Appeals) while sustaining the penalty has observed that the assessee’s case falls within the ambit of Explanation–5A of section 271(1)(c) of the Act. However, a careful reading of the impugned assessment order does not reveal any reference to the fact that the income returned by the assessee was a result of assessee being found to be the owner of any money, bullion jewellery or other valuable article or thing unearthed during the search and seizure operation. Further, he has also not referred to any books

In view of our aforesaid decision, we do not find it necessary to deal with the without prejudice contention of the assessee regarding the defect in the show cause notice issued under section 274 r/w section 271(1)(c) of the Act.

In the result, assessee’s appeal for A.Y. 2009–10 is allowed. ./2016 Assessee’s Appeal – A.Y. 2010–11

Facts are identical for this assessment year, except, the quantum of penalty imposed under section 271(1)(c) of the Act at ` 75,845. Therefore, our decision in ITA no.872/Mum./2016, for assessment year 2009–10 will apply mutatis mutandis to this appeal also. That being the case, penalty imposed under section 271(1)(c) of the Act is deleted.

In the result, assessee’s appeal for A.Y. 2010–11 is allowed.

To sum up, both the appeals of the assessee are allowed. Order pronounced in the open Court on 29.06.2018