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In respect of above said appeals filed by the appellant in respect of penalty levied by the ld. CIT(A) on additions enhanced by CIT(A), there is an omission in Para 50 on Page 48 of the Order dated 17.10.2023 passed by this bench for which this corrigendum is hereby issued.
Para 50 of the order reads as under:
50. Owing to the decision of allowability of expenses, the penalty initiated and levied u/s 271(1)(c) by the Id. CIT(A) contested by the assessee in ITAT Nos 1204 to 1206/Del/2022 is liable to be obliterated.
Para 50 of order shall read as under:
The Id. CIT(A) has applied the theory of peak credit and made peak credit amount taxable of Rs 19,86,12,311/- in the hands of appellant by considering all the receipt and payment entries mentioned in excel sheets retrieved from the laptop of Saurabh Gupta categorized by assessing officer in 48 heads which has been affirmed by us in Para 32 of the order. Further, the ld. CIT(A) has also made addition of certain expenditures of Rs 11,50,12,654/- for which relief has been granted by us in Para 37 of order. Due to application of peak credit by ld. CIT(A) and addition of expenditure as stated above, there is enhancement of income by the ld. CIT(A) in Assessment Year 2012-13, 2013- 14 and 2014-15 for which penalty has been levied by the ld. CIT(A) vide order dated 29.03.2022.
ITA No. 1818 to 1824/Del/2021 3 to 59 & 1204 to 1206/Del/2022 OPG Securities Pvt. Ltd. Enhancement of income by the CIT(A) in AY 2012-13, 2013-14 and 2014-15 is as follows:
Particulars AY 2012-13 AY 2013-14 AY 2014-15 Unexplained net 90,66,389 63,50,507 9,20,911 cash received u/s 69A 0 4,20,400 0 Estimated Commission @ 2% Total Additions 90,66,389 67,70,907 9,20,911 made by AO (A) Additions modified by CIT(A) Peak Credit 91,30,339 2,75,56,842 4,51,648 Estimated 0 4,20,400 0 Commission @ 2% (Sustained) Unexplained 3,34,850 38,49,980 1,08,89,548 Expenditure Total Additions 94,65,189 3,18,27,222 113,41,196 made / sustained by CIT(A) (B) Total 3,98,800 2,50,56,315 1,04,20,285 Enhancement of income made by CIT(A) (A)-(B)
From the above table, it is evident that total enhancement of income made by ld. CIT(A) consist of two aspect one is enhancement of income due to peak credit and other is addition of expenditure. Year wise bifurcation of enhancement of income due to peak credit of and expenditure is as follows:
ITA No. 1818 to 1824/Del/2021 4 to 59 & 1204 to 1206/Del/2022 OPG Securities Pvt. Ltd.
Particulars AY 2012-13 AY 2013-14 AY 2014-15 Peak Credit 63,950 2,12,06,335 (4,69,263) Unexplained 3,34,850 38,49,980 1,08,89,548 expenditure Total 3,98,800 2,50,56,315 1,04,20,285
Since, we have already given relief in respect of addition made by the ld. CIT(A) in respect of unexplained expenditure in Para 37 of Page 44 of the penalty initiated and levied u/s 271(1)(c) by the Id. CIT(A) in respect of unexplained expenditure contested by the assessee in ITAT Nos. 1204 to 1206/Del/2022 is liable to be obliterated.
Further in respect of penalty levied on enhancement of income made by CIT(A) applying theory of peak credit the learned AR of the assessee has submitted that CIT(A) has imposed penalty by invoking Explanation 5A of section 271(1)(c) which is not applicable in the case of assessee and pleaded that penalty order is bad in law and liable to be quashed on this ground alone.
The ld. CIT(A) invoked and relied upon explanation 5A to Section 271(1)(c) of the Income Tax Act, 1961 while levying the penalty.
The said provisions read 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 utilising (wholly or in part) his income for any previous year; or ITA No. 1818 to 1824/Del/2021 5 to 59 & 1204 to 1206/Del/2022 OPG Securities Pvt. Ltd.
(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; 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.”
Having gone through the facts and law, arguments of both the parties, we find that Explanation 5A of section 271(1)(c) is not applicable in the case of assessee as the said explanation is invoked only in cases where the assessee is found to be the owner of any income based on documents or transactions and assessee claims that such documents or transactions represents his income for any previous year which has ended before the date of search and where the return of income for such previous year has been furnished before the said date but such income has not been declared therein and assessee declares such income in return of income furnished on or after the date of search, then he will be deemed to have concealed the particulars of income or furnished inaccurate particulars of income.
ITA No. 1818 to 1824/Del/2021 6 to 59 & 1204 to 1206/Del/2022 OPG Securities Pvt. Ltd. 10. Detail of returned income declared in 139 and 153A by the assessee are as under:
Assessment Year Returned income as Returned income as per Section 139 per Section 153A 2012-13 95,09,350 95,09,350 2013-14 1,35,22,400 1,35,22,400 2014-15 10,88,01,290 10,88,01,290
From the perusal of above table, it is evident that the assessee has not declared any additional income in return of income filed u/s 153A i.e. after the date of search in comparison to return of income filed u/s 139. Therefore, Explanation 5A to section 271(1)(c) is not applicable in the case of assessee and therefore penalty order passed by the ld. CIT(A) by invoking wrong section is bad in law and penalty order is liable to be quashed.