Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “A” BENCH: MUMBAI
Before: Hon’ble Sri Mahavir Singh, JM & Hon’ble Sri Ramit Kochar, AM
Date of Pronouncement:08-07-2016 ORDER Shri Mahavir Singh, Judicial Member: This appeal of revenue is arising out of order of CIT(A) in Appeal No. CIT(A)- 27/ACIT 16 (2)/24/2011-12 dated 04-03-2013. Assessment was framed by DCIT, Circle-6(2), Mumbai for the assessment year 2005-06 u/s 144/153C of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 24-12-2008. The penalty under dispute was levied by ACIT, 16(2), Mumbai u/s. 271(1) ( c) of the Act vide his order dated 29-03-2011.
The only issue in this appeal of revenue is against the order of the CIT(A) in deleting the penalty levied u/s. 271(1) ( c) of the Act for non disclosure of seized cash of Rs. 50 lakhs while framing the assessment u/s. 153C of the Act. For this, the revenue has raised the following ground:-
“1. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the penalty levied under Explanation 5 of section 271(1) ( c) of the I.T Act, 1961 without appreciating the fact that the assessee had filed original return declaring income far below the assessed income and disclosure by the assessee was subsequent to seizure made by the Investigation Wing.
2. Whether in view of clause (2) of Explanation 5 to section 271(1)( c), the ld.CIT(A) has erred in deleting the penalty without appreciating the fact that assessee has not explained the nature and the manner in which income of Rs. 50 lacs was derived by the assessee and mere acceptance on part of the assessee of the seized cash does not entitle him exemption from levy of concealment penalty.
Brief facts leading to the above issue are that a search was conducted u/s. 132 of the Act on 22-07-2004 at vehicle no.MH 04 S 1298 at Mumabi Railway Station in the case of M/s. Patel Ambalal Hargovandas. During the course of search a cash of Rs. 70 lacks was seized. During the course of search itself the party, M/s. Jayantilal Ambalal Chokshi admitted the cash belong to them amounting to Rs.20 lacks. For balance cash Shri Ashok B Patel, the present assessee admitted that this cash of Rs. 50 lacks belonged to him. The assessee while filing the return of income on 05-10-07 included this cash of Rs. 50 lacks and declared the same and also paid the taxes on the same. The assessment was completed u/s. 144/153C of the Act on 24-12-2008. This quantum order was not appealed because assessee was not aggrieved. The AO initiated the penalty proceedings u/s. 271(1) (c) on income disclosed for a sum of Rs. 50 lacks under the head ‘undisclosed income ‘. As no Explanation was forthcoming from the assessee despite repeated opportunities, the AO levied the penalty u/s. 271(1) © of the Act for concealment of income of Rs. 50 lacks.
Aggrieved, the assessee preferred appeal before the CIT(A), who deleted the addition just simply on the submissions of the assessee and for the reason that no statement was recorded by the revenue u/s. 132(4) of the Act. The assessee filed his return voluntarily disclosing the cash of Rs. 50 lacks and paid taxes thereon.
We have heard the rival contentions and gone through the facts and circumstances of the case. We find from the penalty order that the Explanation was not submitted by the assessee during the course of penalty proceedings u/s. 271(1) ( c) of the Act and the explanation submitted before the CIT(A) was that there is no search in the case of the assessee, whereas a search was conducted u/s. 132 of the Act on 22-07- 2004 at vehicle no.MH 04 S 1298 at Mumabi Railway Station in the case of M/s. Patel Ambalal Hargovandas. The amount of Rs. 50 lacks out of Rs. 70 lacks belongs to assessee was found from the possession of one, M/s Jayantilal Ambalal Chokshi and the assessee admitted the ownership of Rs. 50 lacks. In view of the facts of the case, we are of the view that the assessee has to file an explanation before the AO at the first instance and on the basis of explanation the issue can be decided by the AO. Before us the ld. Counsel for the assessee fairly conceded that the issue can be remitted back to the file of the AO, so that the assessee can file his explanation before the AO. The AO cannot be surpassed being first adjudicating authority and for that reason, we set aside the orders of the lower authorities and remit the matter back to AO for fresh adjudication after allowing reasonable opportunity of being heard to the assessee. The grounds raised by the revenue are allowed for statistical purpose.
In the result, the appeal of the revenue is allowed for statistical purpose. Order pronounced in the open court on 08.07.2016