DR.S.F.V.SELVARAJ,CHENNAI vs. DCIT, CHENNAI

All these appeals of the assessee are directed against the common order passed by the Commissioner of Income Tax (Appeals) – 18, Chennai, dated 27.01.2016, for the assessment years 2006-07 to 2011-12, confirming the penalty levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act').

Shri G. Baskar, the Ld.counsel for the assessee, submitted that there was a search operation in the premises of the assessee on 24.11.2011. During the course of search operation, the Revenue authorities found cash of `3,45,45,000/-. In response to notice under Section 153A of the Act, the assessee admitted the entire income and paid taxes. The assessee disclosed the entire amount of ` 3,45,45,000/-, which was earned in the course of investment in the shares in the return filed under Section 153A of the Act and the same was also accepted by the Assessing Officer without any further addition. However, the Assessing Officer found that the assessee could not explain the difference between the income disclosed in the original return under Section 139(1) of the Act on 31.10.2006 and the income disclosed in the return of income filed under Section 153A of the Act. Accordingly, the Assessing Officer levied penalty under Section 271(1)(c) of the Act. The CIT(Appeals) has also confirmed the penalty levied by the Assessing Officer under Section 271(1)(c) of the Act referring to Explanation 5A(a) of the Act. The Ld.counsel submitted that this Bench of the Tribunal in DCIT v. Lakshmi Ceramics in on identical set of facts, found that when there was search and the assessee filed return of income disclosing all the income, penalty cannot be levied. In the case before this Tribunal in Lakshmi Ceramics (supra), a revised return was filed by the assessee, which was admitted by the Assessing Officer. In the case before us, the return filed consequent to the notice issued under Section 153A of the Act was accepted and no further addition was made. Therefore, according to the Ld. counsel, the case of the present assessee is better than the case before this Tribunal in Lakshmi Ceramics (supra).

On the contrary, Shri Shiva Srinivas, the Ld. Departmental Representative, submitted that the assessee filed return of income in the regular course. However, the income generated out of share transaction was not disclosed in the regular return. Consequent to the search operation, a notice was issued under Section 153A of the Act and the assessee has filed return disclosing all the income.

We have considered the rival submissions on either side and perused the relevant material available on record. From the orders of the lower authorities it appears that the assessee is a medical practitioner by profession. The assessee had filed return of income in the regular course under Section 139(1) of the Act. During the course of search operation, the Revenue authorities found cash in the premises of the assessee. In fact, the assessee admitted the entire amount as income while filing return of income consequent to the notice issued under Section 153A of the Act. The claim of the assessee is that the cash found was from medical profession or transaction of purchase and sale of shares. The Assessing Officer accepted the entire income disclosed in the return filed under Section 153A of the Act without any further addition. The question arises for consideration is when the return filed by the assessee under Section 153A of the Act was accepted by the Assessing Officer without further addition, can we say there was concealment of income under Section 271(1)(c) of the Act? This fact was examined by this Tribunal in Lakshmi Ceramics (supra). In the case of Lakshmi Ceramics (supra) also, there was search operation under Section 132 of the Act. This Tribunal found that power to levy penalty under Section 271(1)(c) of the Act is one thing and exercise of that power is another thing. This Tribunal further found that when the return of income was accepted by the Assessing Officer without any further addition, exercising the power to levy penalty is not justified and accordingly, the penalty was deleted by this Tribunal. In this case also, the return filed by the assessee consequent to the notice issued under Section 153A of the Act was accepted and no further addition was made.

We have carefully gone through the provisions of Section 271AAA of the Act. Section 271AAA was, in fact, introduced in the statute book by Finance Act, 2007 with effect from 01.04.2007. As

In the result, all the appeals filed by the assessee are allowed.