SURESH PRODUCTIONS ,HYDERABAD vs. DCIT., CENTRAL CIRCLE-1(2), HYDERABAD

Only issue involved in this matter is whether the penalty under section 271(1)(c) of the Income Tax Act, 1961 (‘the Act’) is leviable when

Brief facts of the case are that the assessee filed the return of income on 29/09/2015 for the assessment year 2015-16 declaring an income of Rs. 1,20,70,540/-. Pursuant to the search and seizure operations and issuance of notice under section 153C of the Act, the assessee admitted an income of Rs. 1,23,15,540/- including an additional income of Rs. 2.45 lakhs. By order dated 25/09/2021, the assessment was made accepting the returned income and demand payable at NIL.

Learned Assessing Officer, however, initiated the proceedings under section 271(1)(c) of the Act and concluded the same with the levy of penalty of Rs. 1.2 lakhs. In appeal, learned CIT(A) confirmed the same. Hence, the assessee is in this appeal.

By placing reliance on the decision reported in the cases of CIT vs. Suresh Chand Bansal [2010] 329 ITR 330 (Calcutta) and CIT vs. Suraj Bhan [2007] 159 Taxman 26, he argued that assessee had offered additional income following search and such income had been accepted in entirety without any attempt to obtain explanation of the assessee, no penalty is leviable under section 271(1)(c) of the Act.

Per contra, learned DR placed reliance on the explanation 5A to section 271 of the Act and submitted that certain incriminating material pertaining to assessee was found and seized during the search on 20/11/2019 and it is only pursuant to the same, the assessee admitted the additional income and, therefore, the assessee is liable to pay penalty

We have gone through the record in the light of the submissions made on either side. In the cases of Suresh Chand Bansal and Suraj Bhan (supra), the search took place long prior to the amendment to explanation 5A to section 271 of the Act. In our opinion, once it is established that the disclosure of the additional income emanated from out of the seized material, then, explanation 5A of section 271 of the Act comes into play notwithstanding the fact that the assessee offered the additional income and the same is accepted by the learned Assessing Officer, without any variation. This view of ours finds support from the decision of the Hon'ble Bombay High Court in the case of Dr. Nitin Laxmikant Lad vs. ACIT 307 CTR 213 (Bom) which has also been followed by the Co-ordinate Bench of Pune Tribunal in the case of Rahul Shamrao Mahajan vs. ACIT, in ITA Nos. 602 & 603/PUN/2022, vide order dated 13/04/2023.

With this view of the matter, we do not find anything illegality or irregularity in the finding of the well reasoned order of the learned CIT(A) and dismiss the grounds raised by assessee.

In the result, appeal of the assessee is dismissed.