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Income Tax Appellate Tribunal, DIVISION BENCH ‘A’, CHANDIGARH
Before: SHRI SANJAY GARG & MS. ANNAPURNA GUPTA
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘A’, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.256/Chd/2017 (Assessment Year : 2010-11) Sh.Chetan Jain, Vs. The D.C.I.T., B-121, Pushap Vihar, Central Circle-III, Canal Road, Ludhiana. Ludhiana. PAN: AAYPJ0618H (Appellant) (Respondent)
Appellant by : None Respondent by : Smt.Chanderkanta, Addl. CIT Date of hearing : 24.04.2018 Date of Pronouncement : 04.07.2018
ORDER PER ANNAPURNA GUPTA, A.M. :
This appeal has been preferred by the assessee against
the order of learned Commissioner of Income Tax (Appeals)-
5, Ludhiana (hereinafter referred to as CIT(Appeals)) dated
25.11.2016 relating to assessment year 2010-11,challenging
the confirmation of levy of penalty u/s 271(1)© of the
Income Tax Act,1961.
The facts of the case are that return for the impugned
year was filed by the assessee on 11.12.2010 declaring
income of Rs.11,75,959/-. Thereafter search u/s 132 of the
Act was conducted at the residence of the assessee on
14.3.2012, during the course of which income of Rs.41 lacs
was surrendered. In response to notice issued u/s 153A,
return was filed by the assessee ,declaring income of
Rs.52,75,959/- which included the surrendered income of
Rs.41 lacs. Subsequently during assessment proceedings
the AO noted that during the year under consideration the
assessee had purchased two plots measuring 270 sq.yd.
each situated at Moja Barewal Awaria, Ashapuri, Ludhiana.
The source of investment in these properties Rs.41 lacs
was stated by the assessee as being out of the surrendered
income of Rs.41 lacs. The Assessing Officer noted that the
surrender was made after detection of concealment by the
Department by way of search u/s 132 of the Act and
therefore initiated penalty proceedings on the same u/s
271(1)(c) of the Act. During penalty proceedings the
assessee contended that the surrender had been suo moto
disclosed by the assessee in his return of income and had
not been added by the Assessing Officer and further that no
infirmity had been found in the explanation of the assessee
or the documents submitted in support of his contention. It
was therefore contended that no penalty u/s 271(1)© was
leviable in the present case. The Assessing Officer rejected
the contention of the assessee and levied penalty u/s
271(1)© of the Act, stating that the surrender was covered
only in the year of search or the preceding year of which
return was due but not filed by the assessee, and the
impugned year being neither, the assessee was not entitled
to claim immunity of the surrender granted by virtue of the
provisions of section 132(4) r.w.s. 271AAA(4)(b) of the Act.
The Assessing Officer also held that the assessee having not
disclosed the surrendered income in the original return of
income filed, the disclosure in the return filed subsequent
to search was only after detection of concealment and the
assessees contention that no penalty was leviable since
returned income had been accepted ,was not acceptable.
The AO accordingly imposed penalty u/s 271(1)(c) of the Act
amounting to Rs.11,68,020/-,being 100% of the tax sought
to be evaded on the income concealed.
The matter was carried in appeal before the
Ld.CIT(A),where the assessee reiterated the contentions
made before the AO and further contended that since no
incriminating material was found during search no penalty
could be imposed even by invoking Explanation 5A to
section 271(1)(c) of the Act. The Ld.CIT(A) rejected the
contentions of the assessee holding that the provisions of
Explanation-5A to section 271(1)(c) of the Income Tax Act,
1961 (in short ‘the Act’) were attracted in the present case
since the income declared in the return filed in response to
notice u/s 153A ,had not been declared in the original
return of income filed and the additional income declared
after search represented concealed income and hence
tantamounted to incriminating material for attracting
Explanation 5A to section 271(1)(c) of the Act.
Aggrieved by the same the assessee has come up in
appeal before us raising the following effective ground:
“1. That the learned CIT (A) has erred in confirming the penalty u/s 271(1)(c) of the Income Tax Act,1961 imposed by the Assessing Officer against the facts and circumstances of the case.” 5. None appeared on behalf of the assessee on the date of
hearing i.e. 24.4.2018. Further it was noticed that on
earlier occasions also i.e. 22.11.2017 and 19.2.2018 the
case had been adjourned on the request of the assessee’s
counsel through adjournment applications filed. Further, it
was pointed out to us that the issue in the present case was
identical with that in the case of Munish Jain Vs. DCIT in
ITA Nos.254 & 255/Chd/2017 the order in which case had
been pronounced by the ITAT Chandigarh Bench on
19.3.2018. Copy of the order was placed before us. On
perusing the records of the proceedings before us, it was
noticed that the Ld. counsel for assessee on several
occasions had sought adjournment stating that the facts
and circumstances of the present case are identical to that
in the case of Munish Jain Vs. DCIT in ITA Nos.254 &
255/Chd/2017. The Ld. counsel for assessee vide its letters
dated 19.9.2017, 22.11.2017 and 19.2.2018 had stated so.
In all the above letters the Ld. counsel for assessee pleaded
that the aforesaid case had been heard and since the facts
were identical to that in the present case the hearing in the
present case was sought to be adjourned till the order in
the case of Munish Jain Vs. DCIT in ITA Nos.254 &
255/Chd/2017 was pronounced. Since admittedly, the facts
of the present case were identical to that in the case of
Munish Jain Vs. DCIT in ITA Nos.254 & 255/Chd/2017,
and the order in the said case had been pronounced by the
Tribunal, the reason for which adjournment was sought by
the assessee on earlier occasions no longer remained
relevant and further no reason was given for seeking
adjournment on the present date of hearing. The matter was
therefore proceeded to be heard with since it appears
that the assessee is not serious in pursuing the appeal.
On perusal of the record of hearing before us it was
found that the assessee had sought to admit additional
ground before us vide its application dated 22.5.2017 as
under:
Dated: 19.05.2017 The Honorable Members, Income Tax Appellate Tribunal, Chandigarh.
Sub: Application for filing of Additional Grounds of Appeal In the case of Chetan Jain, B-121, Pushap Vihar, Canal Road, Ludhiana. PAN: AAYPJ0618H, A.Y.2010-11. ITA No.256/CHANDI-2017.
Respected Sir/Madam,
Respectfully submitted that the hearing of the above stated cases is fixed for 22.05.2017. The appellant hereby seeks Your Honor's permission to raise additional grounds of appeal as under:
On the facts and the circumstances of the case & in law, the penalty proceedings initiated vide notice u/s 274 read with section 271 of the I.T.Act,1961., dated 29.11.2013 are invalid and bad in law.
On the facts and are the circumstances of the case and in law, the penalty order dated 30.05.2014 passed u/s 271(l)(c) is invalid and bad in law.
The appellant hereby very humbly prays Your Honor to admit the additional grounds raised in the interest of justice, as these grounds being purely legal grounds were inadvertently omitted to be taken earlier and would go to the very root of the matter and would not involve further investigations in to the facts. The appellant shall be highly thankful for Your Honors kindness.
Thanking you,
Yours Sincerely Sd/- (Chetan Jain) Appellant
Dated: 22.05.2017 The Honorable Members, Income Tax Appellate Tribunal, Chandigarh.
Sub: Request for admission of additional grounds under rule 11 of ITAT, Rules,1963 in the case of Chetan Jain, B-121, Pushap Vihar, Canal Road, Ludhiana. PAN: AAYPJ0618H, A.Y.2010-11 ITA No.256/CHANDI-2017. -reg- fixed for hearing on 22.05.2017.
Respected Sir/Madam,
In reference to the above, kindly find enclosed request letter in triplicate received from appellant addressed to the Hon'ble ITAT praying for admission of additional grounds in the above case under Rule 11 of ITAT Rules, 1963.
Keeping in view the decision of the Hon'ble Apex Court in the case of NTPC Ltd. vs CIT (229 ITR 383)(SC) copy enclosed, Hon'ble Bench is humbly requested that the additional grounds of appeal as raised by the appellant may kindly be admitted as these grounds are crucial in passing a judicial matter and in the interest of Justice.
Thanking you, Yours sincerely, (CA Rajeev K. Gupta) (Counsel)
It was also stated in the said application that being a
legal ground the same be admitted for adjudication in view
of the decision of the Hon'ble Apex Court in the case of
NTPC Limited Vs. CIT, 299 ITR 383.
The Ld. DR did not object to the same.
Since the ground raised by the assessee is a legal
ground challenging the validity of the order passed u/s
271(1)(c) of the Act, we hereby admit the same in view of
the decision of the Hon'ble Supreme Court in the case of
NTPC Limited (supra).
Further it was pointed out, as stated earlier, that the
facts of the present case and the issue involved were
identical to that in the case of Munish Jain (supra) and the
decision rendered therein by the ITAT, dismissing all the
grounds raised by the assessee ,thereby upholding the levy
of penalty ,therefore squarely applied in the present case.
We have heard the Ld.DR and also gone through the
orders of the authorities below and the order of the ITAT in
the case of Munish Jain (supra).On going through the order
of the I.T.A.T. in the case of Munish Jain (supra), We find
that the facts of the present case and the issue involved are
identical to that in the case of Munish Jain (supra), wherein
search was conducted on the same date as the assessee i.e.
14.3.2012, during which the assessee surrendered Rs.28
lacs, disclosed the same in the return of income filed in
response to notice issued u/s 153A of the Act and
thereafter, on investment in land being detected by the
Assessing Officer, attributed the source of the same to the
surrendered income. The Assessing Officer in the said case
also had levied penalty on the surrendered income, which in
turn was upheld by the CIT(A) holding that penalty was
leviable as per the provisions of Explanation 5A to section
271(1)(c), as in the case of the assessee. In that case also,
we find the assessee had raised additional ground
challenging the validity of the penalty levied u/s 271(1)(c)
of the Act. The said additional ground was dismissed by
the I.T.A.T. The I.T.A.T. thereafter also dealt with the
merits of the case and held that the provisions of
Explanation 5A to section 271(1)(c) were applicable in the
present case since search was initiated after 1 s t June 2007,
as prescribed for the applicability of the Explanation, and
the assessee having not disclosed the surrendered income
in the original return of income filed, the assessee fulfilled
the condition prescribed for applicability of the
Explanation, thereby deeming the assessee to have
concealed the particulars of his income or furnished
inaccurate particulars of his income for levying penalty. The
ITAT also rejected the contention of the assessee that no
incriminating material was found during search so as to
attract Explanation 5A to section 271(1)©, holding that the
surrender made by the assessee was suo moto and remained
unretracted throughout and the same was attributed during
assessment proceedings as source of investment in
properties ,which tantamounted to the assessee himself
coming clean before the Revenue about the fact of earning
such income and investing it in assets, which in turn met
the requirement of Explanation 5A of the assessee being
found during search to be the owner of assets acquired out
of earlier undisclosed income. The relevant findings of the
ITAT are as under:
“13. We have heard the rival contentions. The genesis of the arguments of the Ld. counsel for assessee originates from the order of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (supra) which was followed by the Hon'ble Karnataka High Court again in SSA’s Emerald Meadows (supra) wherein SLP filed before the Hon'ble Supreme Court was dismissed and the said judgment was also relied upon by the Tribunal in a number of decisions rendered and cited by the Ld. counsel for assessee before us. It is, therefore, pertinent to understand
the reasoning laid down by the Hon'ble Karnataka High Court in Manjunatha Cotton & Ginning Factory (supra) while holding that the notice u/s 274 must specifically spell out the charge fixed on the assessee for the purpose of levy of penalty whether concealment or furnishing of inaccurate particulars of income by striking out the irrelevant clause in the notice. Para 59 of the order deals with the same and is being reproduced hereunder for reference: “NOTICE UNDER SECTION 274
As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under Section 274, they could conveniently refer to the said order which contains the satisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discerned from the said order and if it is a case of relying on deeming provision contained in Explanation-1 or in Explanation-1(B), then though penalty proceedings are in the nature of civil liability, in fact, it is penal in nature. In either event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as the Section 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271(1)(c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As the said provisions have to be held to be strictly construed, notice issued under Section 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee.
Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of
the grounds mentioned in Section 271(1)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confined only to those grounds and the said grounds have to be specifically stated so that the assessee would have the opportunity to meet those grounds. After, he places his version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on which he is called upon to answer. It is not open to the authority, at the time of imposing penalty to impose penalty on the grounds other than what assessee was called upon to meet. Otherwise though the initiation of penalty proceedings may be valid and legal, the final order imposing penalty would offend principles of natural justice and cannot be sustained. Thus once the proceedings are initiated on one ground, the penalty should also be imposed on the same ground. Where the basis of the initiation of penalty proceedings is not identical with the ground on which the penalty was imposed, the imposition of penalty is not valid. The validity of the order of penalty must be determined with reference to the information, facts and materials in the hands of the authority imposing the penalty at the time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable.
The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujrat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 171 Taxmn 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind.”
As is evident from the above that the Hon'ble High Court has very lucidly explained that the purpose of issuing notice is to make the accused person aware of the charge against him for which he is being penalized i.e. for concealing particulars of income and/or furnishing inaccurate
particulars of income so that he can adequately defend himself. The Hon'ble High Court further clarified that the same may be clear from the order of the authorities itself passed in proceedings during the course of which he was satisfied of the existence of the impugned condition, which is a statutory requirement for initiating penalty proceedings u/s 271(1)(c) of the Act. In such cases the Hon'ble High Court held, where ground for initiating penalty is clearly coming out from the order, reference to the order in the notice u/s 274 of the Act would be sufficient to make the person charged with the same, aware of the charge. As per the Hon'ble High Court, reference to the order in the notice which contains clear satisfaction of the authority of the existence of any of the grounds would be sufficient compliance of the aforesaid condition. The Hon’ble High Court further held that in situation where the order of the authority is not clear vis-a-vis ground for which it is initiated, as in cases where there is deemed concealment as per Explanation-1 to section 271(1)(c) of the Act and deemed satisfaction of the authority of concealment as per section 271(1)(b) of the Act, then, the Hon'ble High Court has held, that the notice should clearly reflect the exact ground for which penalty is levied. The Hon’ble High Court has in very clear words explained that the proceedings being penal in nature the assessee should be made aware of the grounds on which penalty is being levied so that he can adequately defend himself. The crux of the judgment therefore is that the notice u/s 274 should clearly bring out the charge against the person who is being penalized either by referring to the assessment order where the AO has clearly recorded his satisfaction of the existence of ground warranting levy of penalty or where the same is absent ,by way of striking off the irrelevant ground which finds mention in the standard performa used by the Revenue while issuing notice u/s 274 of the Act. At this juncture, it is relevant to point out that the penalty u/s 271(1)(c) of the Act is levied for concealing and/or for furnishing inaccurate particulars of income. The Hon'ble High Court has clarified that there may be circumstances whether the charges are overlapping and both the conditions exist. The facts, therefore, should clearly point out the existence on either or both the grounds as is applicable in each cases. 11. Having said so we shall proceed to apply the aforesaid ratio to the facts of the present case. The notice issued to the assessee u/s 274 of the Act states that during the course of proceedings
for the impugned year it appeared that the assessee had concealed particulars of his income and (emphasis supplied by us) furnished inaccurate particulars of income. The relevant notice produced before us is as under:
NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961. PAN: ABNPJ4747M Office of the Dy. Commissioner of Income Tax, Central Circle-Ill, Dandi Swami Chowk, Civil Lines, Ludhiana. Dated, Ludhiana the 29/11/2013. To Sh. Munish Jain, B- 121,PushapVihar, Canal Road, Ludhiana.
Whereas in the course of proceedings before me for the assessment year 2010-11 it appears to me that you:-
have without reasonable cause failed to furnish me return of income which you were required to furnish by a notice given under section of the Income Tax Act, 1961, dated____________________ .
have without reasonable cause failed to comply with the notice u/s -------- --------------- issued on ---------------------- fixing the case for hearing on which was served on have concealed the particulars of your income and for furnishing inaccurate particulars of such income.
You are hereby requested to appear before me at 11.30AM on 26.12.2013 and show cause why an order imposing a penalty on you should not be made under section 274 read with section 271 of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorized representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271(1 )(c) of the I.T.Act,1961.
(SUKHJIT SINGH) Dy. Commissioner of Income Tax, Central Circle-Ill, Ludhiana.
The charge against the assessee is therefore on both Courts which as pointed out above by us has been held to be plausible as the same can be overlapping in certain circumstances.
There is, therefore, no infirmity in the notice and the ground for which penalty was initiated on the assessee has been clearly and unambiguously brought out in the said notice. The assessee has
also, we find, responded to the notice and was given full opportunity to defend himself against the said charges which was duly availed of also by the assessee. Necessary and requisite reply defending himself from the charges was filed before the Assessing Officer. It is not the case of the assessee that due opportunity was not given to the assessee. Under the aforesaid circumstances we find that there is no violation of the principles of natural justice in the present case when the assessee having been aware of the specific charge for which penalty was initiated and also having been given due opportunity to defend himself from the said charge. We, therefore, cannot agree with the contention of the Ld. counsel for assessee that the notice issued to it u/s 274 of the Act suffered from infirmity. Moreover, we find that the decisions relied upon by the Ld. counsel for assessee are of no assistance since they are all distinguishable on facts as in all the said cases the ground on account of which penalty was initiated was not clear with the notice being in a standard format mentioning both the charges alternatively without striking of the incorrect charge which is different from the facts of the present case. In view of the above, we dismiss the additional ground of appeal raised by the assessee. 16. Now coming to the ground raised challenging the levy of penalty as per Explanation 5A to section 271(1)© of the Act, before us the Ld. counsel for assessee relied upon the submissions made before the Ld.CIT(Appeals) reproduced in the order of the Ld.CIT(Appeals) at para-2 and which briefly stated are as under: 1. Since no incriminating material was discovered and no valuable article was found by the Revenue during search, no penalty was leviable as per Explanation-5A to section 271(1)(c) of the Act. 2) When return of income filed u/s 153A is accepted by the Assessing Officer, there will be no concealment of income and consequently penalty u/s 271(1)(c) of the Act cannot be imposed. 17. The Ld. counsel for assessee also relied upon the decision of various Tribunals in this context which were referred before the Ld.CIT(Appeals) also. 18. The Ld. DR, on the other hand, supported the order of the Ld.CIT(Appeals).
We have heard the rival contentions. The relevant finding of the Ld.CIT(Appeals) while upholding the levy of penalty after dealing with the above contentions of the assessee before him is as under: “To decide the issue, it is relevant to note here that there was an amendment in section 271(1} by Finance Act 2007 and a new explanation 'Explanation 5A' was inserted w.e.f. 01.06.2007, which is applicable to cases where search u/s 132 was initiated on or after 1st day of June 2007. Further 'Explanation 5' has been made applicable to cases where search was initiated before 1st day of June 2007. In the present case under consideration search action u/s 132 was initiated on 30.06.2009, therefore, this case is covered by the provisions of 'Explanation 5A' which is reproduced as under: “[Explanation 5A- Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007., the assessee is found to be the owner of- (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilizing (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account of other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and,- (a) Where the return of income for such previous year has been furnished before the said date but such income has not been declared therein: or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income]” A plain reading of the above explanation shows that if the income declared by the assessee after search, in response to notice u/s 153A, which was not declared by the assessee earlier for any previous year which has ended before the date of search, then the assessee shall be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. The undisputed fact in
this case are that the income declared for the year under consideration in the return filed in response to notice u/s 153A (after the search) was more than the income declared in the return filed u/s 139 before the search i.e. the surrendered/extra income was not forming part of income in the return filed before the date f search). The case of the assessee is thus covered u/s 271(1)(c) by the deeming fiction created by ‘Explanation 5A’ which has been inserted by Finance Act, 2007 w.e.f. 01.06.2007. Further, the case laws quoted by the Ld. Counsel for assessee relates to cases where the search u/s 132 was conducted before 1st June 2007 and in those cases 'Explanation 5’ was applicable and hence these are not applicable to the present case. This view find support from the judgment of the Hon'ble ITAT Chandigarh Bench in ITA No. 516/CHP/2012, Sh. Rajnish Vohra Vs. DCIT, CC-I, Chandigarh dated 31.10.2012. The relevant para of the judgment dated 31.10.2012 are reproduced below: "29. In the present case, the normal return of income for the assessment year 2007-08 was filed by the assessee, on 31.3,2007 i.e. the date of search itself. However, the assessee filed his return of income in response to notice dated 27.1.2009 issued u/s 153A of the Act, on 23.7.2009, declaring income of Rs.3,27,01,440/-, including the additional amount of Rs.2,00,60,000/-,declared by the assessee, in the statement recorded u/s 132(4) of the Act. The assessee filed return of income, in response to the said notice u/s 153A of the Act, on 23.7.2009 and on the date of filing the return, the Explanation 5A inserted by the Finance (No.2)Act of 2009, with retrospective effect from 1.6.2007, was on the Statute. In the present case, return of income was filed in response to notice u/s 153A of the Act, which is covered by Explanation 5A to Section 271(1) (c) of the Act, inserted by Finance (No.2) Act of 2009. The facts of present case, are not similar to the facts, as obtaining, in the case law, relied upon by the assessee, as discussed above. 30. Further, the provisions of Section 153A are specifically are brought on the Statute book, for assessment, in case of search u/s 132(1) of requisition of books of account u/s 132A of the Act. The opening sentence of Section 153A of the Act, overrides the provisions of Section 139, 147, 148, 149, 151 and 153 of the Act. The assessee has declared undisclosed income, in the return filed- in response to notice u/s 153A of the Act and the CIT(Appeals), having regard to the facts of the case, invoked the currently applicable Explanation 5A Section 271(1) (c) of the Act and upheld the penalty, levied by the AO. In such a fact-situation, the CIT(Appeals) has acted in accordance with the currently operative and relevant penal provisions, with reference to the return of income, filed in response to Section 153A of the Act.
In view of the above legal and factual discussions, and having regard to the express statutory provisions of Section 271(1) (c) of the Act read with Explanation 5A there under, as inserted by the Finance. (No. 2) Act, 2009, with retrospective effect from 01.06.2007, we do not find any infirmity, in the findings of ld CIT(Appeals). Therefore, the findings of the CIT(Appeals) are upheld and, consequently, the grounds of appeal of the assesses are dismissed. 32. In the result appeal of the assessee is dismissed. " In the present case the provisions of Explanation-5A to Section 271(l)(c) are attracted. During the appellate proceedings, the main argument of the AR was that no incriminating document was found and the income returned in response to notice u/s!53A has been accepted. However, perusal of the assessment order shows that the additional income has been declared by the assessee after the search. The extra income offered/assessed u/s 153A represent concealed income which was not declared in the return filed before the search and had there been no search this extra income would never have been brought to tax. Therefore, in view of the facts and circumstances of the case and in the light of the above judgment of the Hon'ble ITAT, Chandigarh Bench passed in ITANo.516/CHD/2012 dated 31.10.2012, the penalty imposed by the AO in this is found as per law in view of Explanation-5A to section 271(l)(c) and therefore upheld.” 20. As is evident from the above, the Ld.CIT(Appeals) has held that since search in the present case was initiated on or after 1 s t day of June, 2007, the present case is covered by the provisions of Explanation-5A to section 271(1)(c) of the Act. At this juncture it is relevant to reproduce the provisions of Explanation 5A to section 271(1)© since the challenge of the assessee is to the applicability of the said Explanation in the facts of the present case: “[Explanation 5A- Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of— (i) any money, bullion, jewellery or other valuable article or thing Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income(wholly or in part) for any previous year, which has ended before the date of search and,—
(a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; (b) the date for filing the return of income for such previous year has expired but the assessee has not filed the return. Then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income.]” 21. There is no dispute vis-à-vis the finding of the CIT(A) that since search in the present case was initiated after 1 s t day of June 2007 Explanation 5A to section 271(1)(c) was applicable. Ld.Counsel for the assessee has made no arguments challenging this finding of the CIT(A). 22. Further we find no infirmity in the interpretation of the Ld.CIT(A) of Explanation 5A to section 271(1)(c) since the language of Explanation 5A is very clear and unambiguous, that the assessee will be deemed to have concealed particulars of his income vis a vis income declared in the return filed in response to notice u/s 153A after search, which was not declared in the original return of income filed. Therefore, we hold, that the Ld.CIT(A) has rightly dismissed the contention of the assessee that where income returned u/s 153A is accepted no penalty is leviable. Ld.CIT(A) has, we find, distinguished the case laws relied upon by the assessee in support of its aforesaid contention, as not having been rendered in the context of Explanation 5A to section 271(1)(c) and hence not applicable in the facts of the present case. Ld Counsel for the assessee was unable to controvert this. Therefore we find no reason to interfere in this finding of the CIT(A) also. 23. As for the contention of the assessee that the Explanation-5A to section 271(1)(c) of the Act is attracted only when some incriminating material is found during the course of search in the form of money, bullion, jewellery or any income based on an entry in the books of account and since no such incriminating material was found during the course of search in the present case, no penalty as per Explanation-5A to section 271(1)(c) of the Act is leviable, we find no merit in the same. The facts on record point otherwise. Undoubtedly it was the assessee who had surrendered Rs.28 lacs during search. The surrender was never retracted by
the assessee. Nothing to this effect is recorded in the orders of the authorities below nor has been brought to our notice during the course of hearing before us. Thus as per the assessees own admission, he had not disclosed income to the tune of Rs.28lacs earned during the year. Then subsequently during assessment proceedings the assessee claims /admits to have invested this income in two properties. What this tantamounts to is that the surrender made by the assessee was on account of undisclosed income for the year, invested in assets. And since the assessee had suo moto made the surrender it tantmounted to the assessee himself coming clean before the Revenue about the fact of earning such income and investing it in assets. Thus at the point of time when the surrender was made by the assessee during search the Revenue for all purposes had found the assessee to be the owner of assets acquired out of earlier undisclosed income during search. After the suo moto disclosure by the assessee no requirement remained for the Revenue to make any further discovery at all. The requirement of Explanation 5A of the assessee being found during search to be the owner of assets acquired out of earlier undisclosed income is therefore met. The contention of the assessee that no incriminating material was found during search, we hold, has been rightly dismissed by the CIT(A). 24. In view of the above we uphold the order of the CIT(A) Act, confirming the levy of penalty of Rs.7,66,320/- u/s 271(1)(c) of the Act.”
In the present case, vis a vis the additional ground
raised by the assessee that the order passed u/s 271(1)©
was invalid and bad in law as also the penalty proceedings
initiated vide notice u/s 274 r.w.s 271(1)© of the Act,since
no submissions were made in this regard ,oral or written,by
the assessee nor any copy of the notice issued u/s 274 filed
before us pointing out any infirmity in the same,the said
additional grounds are dismissed.
As for the ground raised challenging the levy of
penalty on merits ,since admittedly the facts in the present
case are identical to that in the case of Munish Jain (supra)
the decision rendered by the ITAT in the said case squarely
applies to the present case following which we uphold the
levy of penalty u/s 271(1)© of the Act of Rs. 11,68,020/-.
The ground of appeal raised by the assessee in this regard
is also therefore dismissed.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the Open Court.
Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 4th July, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR
Assistant Registrar, ITAT, Chandigarh