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Income Tax Appellate Tribunal, CHANDIGARH BENCH “B”, CHANDIGARH
आदेश/Order
PER DR. B.R.R. KUMAR, A.M
The present appeal has been filed by the Assessee against the order of the Ld. CIT(A)-3, Gurgaon dt. 05/09/2017.
In the present appeal Assessee has raised the following grounds: 1. That the Ld. CIT. has erred on facts & law without considering the facts of the case under the consideration. 2. That the Ld. CIT. has erred while holding that assessee was unable to explain the source of cash amounting to Rs. 3,13,000/- during the search is totally wrong and not correct on facts. 3. That the Ld. CIT. has erred in not accepting that mismatch of date of withdrawal of cash on 31.07.2010 and mistakenly recording this on 27.07.2010 in cash book is only a clerical mistake and cannot be the basis for imposing penalty. This does not prove mensrea. 4. That the Ld. CIT. erred in not accepting the contention of the assessee that money drawn out of husband's Bank Account is the source of cash found during the search proceedings. The penalty imposed u/s 271(l)(c) may kindly be deleted. 5. That the Ld. CIT. has erred in sustaining the penalty u/s 271(1) (c) in respect of addition to the income against the amount offered by the assessee under agreement with Assessing Officer that amount is being surrendered to buy the peace of mind if Assessing Officer agrees not to initiate any penalty proceeding. 6. That assessee prays to your honor for permission to take any additional ground before the appeal is taken up with your honor's prior permission.
Brief facts of the case are that a search under section 132(1) of the Income Tax Act,1961 was conducted on M/s Surya Group of cases on 17/09/2010 by the Investigation Wing (Income Tax), Chandigarh, Smt. Surekha Thukral was one of persons/concerns covered under section 132 of the Income
Tax Act,1961. In response to notice under section 142(1) of the Income Tax Act,1961, the assessee filed her return of income on 28/06/2011 declaring total income at Rs. 5,19,234/- under the head ‘Salary’, ‘Income from House Property and ‘Income from Other sources’. Assessment in this case was completed on 31.01.2013 at Rs. 8,32,234/-. An addition of Rs. 3,13,000/- was made on account of unexplained cash found during the course of search. The Penalty proceedings under section 271(1)(c) were separately initiated for concealment of income and furnishing of inaccurate particulars. Notice under section 271(1)(c) of the IT. Act, 1961 was issued on 31/01/2013. The Assessing Officer has imposed penalty under section 271(1)(c) of the Act amounting Rs. 1,05,889/- on the addition of Rs. 3,13,000/- made on account of unexplained cash found during the search.
The Ld. CIT(A) confirmed the addition relying on the grounds taken by the Assessing Officer that
i) No income was surrendered by the appellant in statement made under section 132(4) of the Act neither any income disclosed in return of income filed under section 142(1) of the Act. ii) The appellant chose to surrender the addition made only during the course of assessment proceedings. iii) The appellant during the assessment proceedings could not explain the source of cash amounting Rs. 3,13,000/- fount at her residence during the course of search. iv) During the assessment proceedings when confronted on this issue by the Assessing Officer, the appellant agreed to surrender this amount of Rs. 3,13,000/- for being charged to tax during the year under consideration. Thus the appellant agreed to the addition when the concealment was established. 5. Before us, the assessee has taken additional ground of appeal which reads as under:
“ That the Ld. Assessing Officer having wrongly initiated penalty under section 271(1)C instead of under section 271AAA, the penalty so imposed and upheld by the CIT(A) is illegal, invalid and beyond jurisdiction and hence merits deletion.” 6. The Ld. DR opposed admission of the additional grounds.
Since the additional grounds filed by the Assessee for the year 2011-12 is hereby admitted based on the ratio in the case of NTPC Vs. CIT 229 ITR 383 (Supreme Court). In this background the grounds taken by the assessee is examined with reference to the provisions of the Income Tax Act,1961. Section 271 of Income Tax Act,1961 reads as under:
Section 271 271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person. a…. b…. c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or … … Expalanation1. Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner to be false, or (B) Such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him. then, the amount added or disallowed ………………. Section 271AAA of Income Tax Act,1961 reads as under:
Penalty where search has been initiated.
(1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007 [5368][but before the 1st day of July, 2012], the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent. of the undisclosed income of the specified previous year.
(2) Nothing contained in sub-section (1) shall apply if the assessee,—
(i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived;
(ii) substantiates the manner in which the undisclosed income was derived; and
(iii) pays the tax, together with interest, if any, in respect of the undisclosed income.
(3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1).
(4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section.
The date of search in the case of the assessee as per the assessment order is 17/09/2010, hence we find that the penalty can only be levied under section 271AAA but not under section 271(1)(c).
As a result the penalty levied under section 271(1)(c) is liable to be deleted.
As a result, appeal of the Assessee is allowed.
Order pronounced in the open Court.
Sd/- Sd/- संजय गग� डा. बी.आर.आर, कुमार, (SANJAY GARG ) ( DR. B.R.R. KUMAR) �याय�क सद�य/ Judicial Member लेखा सद�य/ Accountant Member
आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :
अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File