ACIT, CHENNAI vs. A.N.RADHAKRISHNAN, CHENNAI

All the appeals of the assessee and Revenue are directed against the respective orders of the Commissioner of Income Tax (Appeals) confirming the penalty levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act').

Shri S. Sridhar, the Ld.counsel for the assessee, submitted that there was a search operation in the premises of the assessee on 29.09.2008. Consequent to the search operation, notice under Section 153A of the Act was issued for all the assessments under consideration. According to the Ld. counsel, the Assessing Officer found that the penalty can be levied even on agreed addition. Moreover, there was a difference of `40,00,000/- offered by the assessee. The source was stated to be loan advanced and personal source. In respect of other assessment years also, according to the Ld. counsel, the Assessing Officer found that there was difference between assessed income and returned income. Consequently, the Assessing Officer found that the assessee has concealed the income of the assessee, accordingly, he levied penalty under Section 271(1)(c) of the Act placing reliance on the judgment of Apex Court in Union of India v. Dharmendra Textile Processors (2008) 306 ITR 277. According to the Ld. counsel, there was no concealment of income nor the assessee has furnished any inaccurate particulars. The assessee has furnished the income and offered for taxation which was accepted by the Assessing Officer without any further addition. When the income was accepted without any further addition, according to the Ld. counsel, there cannot be any levy of penalty. Therefore, according to the Ld. counsel, the Assessing Officer is not justified in levying penalty under Section 271(1)(c) of the Act.

The Ld.counsel further submitted that for the assessment year 2003-04, the CIT(Appeals) deleted the penalty. However, for the assessment year 2004-05, the CIT(Appeals) partly deleted the penalty. For the assessment year 2005-06, the CIT(Appeals) deleted the penalty partially. According to the Ld. counsel, when there was no concealment, the CIT(Appeals) ought to have deleted the entire penalty levied by the Assessing Officer.

On the contrary, Shri Sahadevan, the Ld. Departmental Representative, submitted that the assessee has not disclosed entire income in the original return. Incriminating materials were found during the course of search operation on 29.09.2008. The assessee claimed before the Assessing Officer that he cooperated with the Department during assessment and enquiry and offered the amount voluntarily for taxation, therefore, it is an agreed addition, hence, there cannot be any penalty. According to the Ld. D.R., merely because the assessee agreed for addition that cannot be the reason for not levying penalty. The fact that the assessee did not disclose entire income is not in dispute. When the assessee has not furnished entire source of income and furnished inaccurate particulars, according to the Ld. D.R., penalty has to be levied under Section 271(1)(c) of the Act. Therefore, according to the Ld. D.R., the CIT(Appeals) ought not have deleted the penalty levied.

We have considered the rival submissions on either side and perused the relevant material available on record. Consequent to the search operation carried on in the premises of the assessee on 29.09.2008, the Assessing Officer found that there was concealment of income, therefore, he levied penalty under Section 271(1)(c) of the Act, for all the assessment years.

We have carefully gone through the provisions of Section 271(1)(c) of the Act. The Assessing Officer is empowered to levy penalty under Section 271(1)(c) of the Act in case the assessee has furnished inaccurate particulars of income or concealed any part of income. The Parliament, by amendment, introduced provisions of Section 271AAA of the Act with effect from 01.04.2007 by Finance Act, 2007. On or after 01.06.2007, the penalty for the undisclosed income computed as a result of search operation has to be levied under Section 271AAA(1) of the Act. By way of sub-section (3) of Section 271AAA of the Act, the Parliament clarified that no penalty under Section 271(1)(c) of the Act shall be imposed on the assessee in respect of undisclosed income referred to in sub- section (1) of Section 271AAA of the Act.

In the case before us, the search took place on 29.09.2008 and the undisclosed income computed falls under Section 271AAA(1) of the Act. Therefore, penalty, if any, has to be levied only under Section 271AAA(1) of the Act. There is a prohibition under Section 271AAA(3) of the Act for levying penalty under Section 271(1)(c) of the Act in respect of income which falls under Section 271AAA(1) of the Act. In view of Section 271AAA(3) of the Act, this Tribunal is of the considered opinion that there cannot be any penalty under Section 271(1)(c) of the Act when the undisclosed income was computed under Section 153A of the Act, on the basis of search operation carried on 29.09.2008. In the case before us, no penalty was levied under Section 271AAA of the Act and the penalty was levied only under Section 271(1)(c) of the Act.

In the result, the appeals filed by the Revenue are dismissed and the appeals filed by the assessee are allowed.