Income Tax Appellate Tribunal - Chandigarh
M/S H.R. Narrow Fabrics, Ludhiana vs Dcit, Ludhiana on 28 February, 2019
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आयकर अपील य अ धकरण, च डीगढ़ यायपीठ "ए" , च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'A' , CHANDIGARH
ी संजय गग , याय क सद!य एवं ीमती अ नपण
ू ा ग(ु ता, लेखा सद!य
BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA Nos.874 to 877/Chd/2017
िनधा रण वष / Assessment Years : 2003-04 to 2006-07
M/s H.R. Narrow Fabrics, बनाम The D.C.I.T.,
C.I. Jain Colony, Sharman Central Circle-II,
Enclave, Bahadurke Road, Ludhiana.
Lludhiana.
थायी लेखा सं./PAN NO: A A B F H 3 6 4 5 R
नधा रती क ओर से/Assessee by : Shri Sudhir Sehgal, Adv.
राज व क ओर से/ Revenue by : Smt.Chanderkanta, Sr. DR
सन
ु वाई क तार ख/Date of Hearing : 03.12.2019
उदघोषणा क तार ख/Date of Pronouncement: 28.02.2019
आदे श/ORDER
PER BENCH:
Al l the above ap peal s have been preferred by the same assessee agai nst separate orders, al l dated 6.2.2017 of the Commi ssi oner of I ncome Ta x ( App eal s) , Bathi nda [ herei nafter referred to as CI T( A) ] , passed u/ s 250( 6) of the I ncome Ta x Act,1961( herei nafter referred to as "Act") .
Si nce the i ssue i nvol ved i n al l the appeal s i s i denti cal , the y were heard together and are bei ng di sposed off by thi s common order. The sol e i ssue i nvol ved in these appeal s rel ates to l ev y of penal t y u/s 271( 1) ( c) of the Act. We shal l be deal i ng wi th the facts i n the case of the assessees appeal i n I TA No.874/Chd/2017 and our deci si on rendered therei n wi l l appl y mutati s mundi s to the rest of the appeals al so.2
3. Bri ef facts rel ati ng to the case are that the assessee, a partnershi p fi rm was subjected to surve y operati on under the provi si ons of secti on 133A of the Act on 20.7.2007 al ong wi th search and sei zure ope rati on under the provi si ons of secti on 132( 1) i n the case of t he partner of the assessee fi rm, Shri B.K. Jai n and Shri Vi na y Jai n. Duri ng the course of search conducted at the premi ses of the partners, books of account and other documents were found and sei zed. Out of the sei zed documents some were stated to be bel ongi ng to the assessee fi rm. The Assessi ng Offi cer( A.O) , on bei ng sati sfi ed that the books of account or documents sei zed had a beari ng on th e determi nati on of the total i nco me of the assessee fi rm for the year under consi derati on, assumed juri sdi cti on to assess the i ncome i n accordance with the provi si ons of secti on 153A of the Act. Accordingl y noti ce u/s153C of the Act was i ssued, i n response to whi ch, return of i ncome was fi l ed by the assess ee fi rm decl ari ng a ta xabl e i ncome of Rs.5,71,620/-, whi ch incl uded a sum of Rs.4 l acs on account of mi scel l aneous i ncome surre ndered. The ori gi nal return f or the i mpugned assessment yea r was fi l ed u/s 139( 1) declari ng an i ncome of Rs.1,71,620/-. I n the assessment proceedi ngs, the assessee was asked to expl ain the entri es i n th e sei zed docume nts and records, i n response to whi ch it was submi tted that the same pertai ned to undi scl osed out of the books sal e of hosi er y goods amounti ng to R s.7,01,699/-. On such sal es, undi scl osed profi t was worked out by the assessee at Rs..4 l acs whi ch was decl ared i n the return fi l ed i n response to noti ce u/s 3 153C of the Act . The A.O. note d i n the assess ment order passed u/s 153C r. w.s. 143( 3) of the Act, that di s cl osure of profi ts from out of books sal e was over and above the amount arri ved at by appl yi ng GP rate of 20% on undi scl osed sal es and account for the capi tal empl o yed for such sal es.
Therefore, no ad di ti on was made to the returned i ncome on account of undiscl osed profi ts from out of books sal es. Ho wever penal t y u/s 271( 1) ( c) of the Act was i ni ti ated for conceal ment of income i n respect of Rs.4 l acs, whi ch was decl ared i n the r eturn fi l ed i n co mpl i ance to noti ce u/s 153C and not i n the ori gi nal return u/s 139( 1) of the Act fi l ed much earl i er than the date of search. Noti ce u/s 274 of the Act was i ssued t o the assessee s eeki ng to sho w c ause as to why penal t y be not i mposed u/s 271 of the Act. Thereafter after consi deri ng the submi ssi ons of the assessee fi rm the A.O. came to the concl usi on that the conceal ment penal t y was e xi gi bl e i n t he facts and ci rc umstances of the case and penal t y of Rs.1,47,000/- was i mposed.
4. The matter was carri ed i n appeal before the Ld.CI T( A) where the asse ssee agi tated a gai nst the l ev y of penal t y stati ng that si nce the undi scl osed i ncome was vol untari l y di scl osed i n the return fi l ed i n re sponse to noti ce u/s 153C whi ch was accepted by the A.O. al so wi thout maki ng any addi ti on and the provi si ons of secti on 153A, 153B and 153C bei ng a compl ete code i n themsel ves, no reference coul d be made u/s 139 of the Act for the purpose i mposi ti on of penal t y. Besi des, i t was al so argued that the Expl anati on 5A 4 to secti on 271( 1 ) ( c) of the Act was al so not ap pl i cabl e i n assessee's case because as the pri mar y condi ti on for appl i cabi l i t y of the same was that the search action shoul d have been carri e d out on the ass essee whi ch was not there i n the case of the assessee, si nce i t was onl y subjected to surve y. It was al so emphasi zed that the A.O. had not speci fi cal l y set out in the ass essment order that such proceedi ngs were i ni ti ated for the offence of conceal ment of i ncome, whereas when the penal t y was i mposed it was justi fi ed on the s trength of the pr ovi si ons of Expla nati on-5A to secti on 271( 1) ( c) of the Act, thus maki ng the i mposi ti on of penal t y bad i n l a w. The Ld.CI T( A) re jected the contenti ons of the assessee sta ti ng that when the return of i n come was fi l ed vol untari l y u/s 139( 1) of the Act, the sai d profi ts from out of books sal e had not been di scl osed and di scl osure of the same on subsequent s earch acti on, when the i ncri mi nati ng materi al was foun d, coul d not be consi dered as vol untari l y di scl osure of i ncome. Further the Ld.CI T( A) hel d that for the Expl anati on-5A to secti on 271( 1) (c) to be attracted, i t was not necessar y that the search acti on be carri ed out on the assessee and the onl y requi rement was search and sei zure operati ons reveal i ng the i nformati on about any assessee bei ng the o wner of any i ncome whi ch has not been decl ared i n the return fi l ed for such year. The Ld.CI T( A) al so hel d that the A.O. al l al ong found the assessee fi rm gu i l t y of conceal m ent of i ncome p oi nti ng out the sai d facts i n the sho w cause noti ce i ssued u/s 274 of the Act and al so i nformi ng the assessee about the provisi ons 5 contai ned i n Ex pl anati on-5A to secti on 271( 1) ( c) of the Act before i mposi ng penal t y. The Ld. CI T( A) stated tha t the noti ce for i mposi ti on of penal t y menti oned the offence of conceal ment of i ncome and penal t y was subsequentl y i mposed for conceal ment of i ncome and, therefore, the acti on of the A.O. i n i mposi ng the penal t y coul d not be faul ted. Accordi ngl y, the order of the A.O. l ev yi ng penal t y was uphel d.
5. Aggri eved by the same, the assessee has come up i n appeal before us rai si ng the fol l o wi ng grounds:
"1. That the Worthy Commissioner of Income Tax (Appeals) has erred in d is miss ing the appe al of the appel l an t f il ed ag ains t the order u/s 271(1)(c) of the DOT, Central Circle-lI, Ludhiana.
2. That the Ld. CIT (A) has erred in not considering the fact that in this case, the assessment was completed on the basis of returned income f iled u/s 153C and no addition was made and, hence, there was no concealment u/s 271 (1)(c) of the Income Tax Act.
3. That the Worthy CIT (A) has also erred in not considering that explanation-5 A to section 271(1)(c) is not applicable in this case as no search operations were conducted on the assessee.
4. That the Worthy CIT(A) has also erred in not considering that neither the particulars of income were concealed and nor inaccurate particulars of income were furnished.
5. That even otherwise, on merits of the case, the CVT(A) has erred in not considering that no penalty u/s 271(1)(c) is applicable when addition has been made/income has been returned on estimated basis.
6. That the detailed submissions filed during the course of hearing before the Assessing Officer and also before the Ld. CIT (A), has not been considered properly.
7. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off."6
6. Duri ng the course of heari ng before us the Ld. counsel for assessee rei te rated the content i ons made before the l o wer authori ti es. We shal l be taki ng up each contenti on separatel y.
7. The Fi rst conte nti on rai sed by the Ld. counsel for assessee was that the assessee had been subjected to assessment as pe r the provi si ons of secti on 153A/ B/C of the Act whi ch were a compl ete code i n themsel ves and the y e xcl uded the normal assessment procedure as covered u/s 139/147/148/149/151 and 153 o f the Act. I t was, the refore, contended that there was no nee d to make any r eference to the provi si ons of secti on 139 of the Act for the purpose of determi ni ng whether there was any conceal ment of i ncome and the assessee havi ng di scl osed the i ncome i n the return fi l ed i n response to noti ce u/s 153A of the Act, whi ch stood accepted by the A.O. al so, i t coul d not be said that the assessee had conceal ed any parti cul ars of i ncome. The Ld. counsel for assessee heavi l y rel i ed upon the deci sion of the Hon'bl e Del hi Hi gh Court i n th e case of Pr.CI T Vs. S hri Neera j Ji ndal i n I TA No.463 of 2016 and dre w our attenti on to the fi ndi ngs of the Hon'bl e Hi gh Court at paras 19 to 21 of hi s order as under:
"19. The whole matter can be examined from a different perspective as well. A provides the procedure for completion of assessment where a search is initiated under Section 132 or books of account, or other documents or any assets are requisitioned under Section 132A after 31.05.2003. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was 7 conducted under Section 132 or requisition was made under Section 132A. The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or requisition under Section 132A, as the case may be, shall abate. [Ref to Memorandum accompanying the Finance Bill, 2003] Section 153A opens with a non- obstante clause relating to normal assessment procedure covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after May 31, 2003. The sections, so excluded, relate to returns, assessment and reassessment provisions. However, the provisions that are saved are those under Section 153 B and 153C, so that these three Sections 153 A, 153B and 153C are intended to be a complete code for post- search assessments. Considering that the non-obstante clause under Section 153A excludes the application of, inter alia, Section 139, it is clear that the revised return filed under Section 153A takes the place of the original return under Section 139, for the purposes of all other provisions of the Act. This is further buttressed by Section 153A (1)(a) which reads:
"Notwithstanding anything contained in section 139, section 147, section 148, section 149, and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132, 132 A after the 31st day of May, 2003, the Assessing Officer shall-
a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139.
20. Therefore, the position that emerges from the above- mentioned provision is that once the assessee files a revised return under Section 153 A, for all other provisions of the Act, the revised return will be treated as the original return filed under Section 139. On similar lines, the Gujarat High Court in the case of Kirit Dahyabhai Patel v. Assistant Commissioner of Income Tax, (2015) 280 CTR (Guj) 216, held that: "In view of specific provision of s. 153 A of the I.T. Act. the return of income filed in response to notice under s. 153 A of the I.T. Act is to be considered as return filed under s. 139 of the Act, as the AO has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under s. 271(1)(c) of the I.T. Act and the penalty is to be levied on the income assessed over and above the income returned under s. 153 A, if any."
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21. Thus, it is clear that when the A.O. has accepted the revised return filed by the assessee under Section 153 A, no occasion arises to refer to the previous return filed under Section 139 of the Act. For all purposes, including for the purpose of levying penalty under Section 271 (1) (c) of the Act, the return that has to be looked at is the one filed under Section 153 A. In fact, the second proviso to Section 153A(1) provides that "assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate." What is clear from this is that Section 153 A is in the nature of a second chance given to the assessee, which incidentally gives him an opportunity to make good omission, if any, in the original return. Once the A.O. accepts the revised return filed under Section 153A, the original return under Section 139 abates and becomes non-est. Now, it is trite to say that the "concealment" has to be seen with reference to the return that it is filed by the assessee. Thus, for the purpose of levying penalty under Section 271 (1)(c), what has to be seen is whether there is any concealment in the return filed by the assessee under Section 153A, and not vis-a vis the original return under Section 139."
8. The Ld. DR, on t he other hand, h eavi l y rel i ed upo n the fi ndi ngs of the Ld.CI T( A) in thi s regard. Dra wi ng our attenti on to para 7 wherei n the L d.CI T( A) had di smissed thi s contenti on of the assessee as under:
"7. The submissions of the appellant have been considered. It is a fact on record that the appellant firm had indulged in undisclosed sales outside the regular books of accounts, which fact was unearthed pursuant to the search and seizure action at the residential premises of the partners of the appellant firm. Needless to say that such out of books sales and profits thereon were not disclosed to the Department till the date of search and return filed in response to notice under the provisions of section 153C. That there was concealment of income over a period of time by way of undisclosed sales was not only admitted by the appellant firm but also proved on the basis of the seized documents and records. The said admittance was also not in the nature of accepting concealment to avoid protracted litigation or to bring about a closure of the matter. On the contrary, it is noted from the assessment order that the seized documents have been properly appraised and the entries in depressed figures have been explained to represent the actual figures of sales, purchases and other petty expenditure. It is, thus, certain that there was concealment of income and that is 9 easily discernible from the assessment order. Had it not been for the search and seizure operation, there would not have been a disclosure of the hitherto undisclosed profits. When the return of income was filed voluntarily under the provisions of section 139(1) on 29/10/2005 prior to the date of search, the appellant firm never disclosed the said profits from out of books sales. In this view of the matter, the appellant firm's action of incorporating the undisclosed profits in the return of income filed in response to notice under section 153C cannot possibly be considered as voluntary action of disclosure. The decision of the Hon'ble Supreme Court in the case of Sir Shadilal Sugar & General Mills Ltd. has, therefore, no application in the facts and circumstances of this case. While recording the initiation of penalty proceedings in the assessment order, the AO is seen to have categorically and specifically noted the following: "Penalty proceedings u/s 271(1)(c) have been initiated separately for concealment of particulars of income iroo income of Rs.4,00,000/- declared in the return filed in compliance to notice u/s 153C of the I.T. Act, 1961."
9. I t was poi nted out that i n vi e w of the fact that the i mpugned i ncome had not been di scl osed i n the ori ginal return of i ncome and i t was onl y when search was conducted and i ncri mi nati ng documents found that the assessee had di scl osed the same i n hi s return fi l ed i n response to noti ce u/s 153C of the Act. Therefore, the di scl osure by any count coul d not be s ai d to be vol u ntari l y di scl osure and th e assessee was l i abl e to penal t y o n the same u/s 271(1) ( c) of the Act.
10. We have heard the ri val contenti ons. We are not i n agreement wi th the contenti on of the Ld.Counsel for the assessee that si nce the surrendered i ncome stood discl osed i n the return fi led u/s 153A of the Act, the assessee coul d not be charged wi th havi ng conceal ed any parti cul ars of i ncome. The reas oni ng bei ng that penal t y has bee n levi ed i n 10 the present case by appl yi ng Expl anati on 5A to secti on 271( 1) ( c) of the Act. The sai d e xpl anati on reads 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
(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."
11. I t i s cl ear from a bare readi ng of the above that even i f the surrendered i ncome i s di scl osed i n the return fi l ed after the search, the assessee shal l be deemed to have conceal ed parti cul ars of i ncome where i n the course of search he i s found to be the o wner of any mo ne y, bul l i on, je w el ler y, etc. whi ch he cl ai ms to have acqui red by uti l i zi ng the income of previ ous years whi ch has not bee n the decl ared i n the return fi l ed for those years. Thus cl ear l y the act of di scl osure of i ncome i n hi s return fi l ed i n response to noti ce u/s 153C of 11 the Act by i tsel f does not save the assessee from the i mposi ti on of penal t y u/s 271( 1) ( c) of the Act i n vi e w of Expl anati on-5A to the same. The rel i ance pl aced by the Ld. counsel for asse ssee on the dec i si on of the Ho n'bl e Del hi Hi gh Court i n the case of Shri Neera j Ji ndal ( supra) i s mi spl aced si nce the fi ndi ngs of the Hon'bl e High Court, whi ch has been poi nted out to u s by the Ld.Cou nsel for the assessee, were i n the conte xt of a speci fi c questi on rai sed before i t and were dehors the appl i cabi l i t y of Explanati on- 5/5A of secti on 271( 1) ( c) of the Act. The Hon 'bl e Hi gh Court whi l e ans weri ng the questi on rai sed before i t as under:
"( i) Whe ther under sec tion 271( 1)( c ) as i t s too d pr ior to the ins er tion of Ex pl an ation 5, l ev y of pen al ty is au to matic if return f il e d by the assesse e under Sec tio n 1 53A of the Ac t d iscl oses h ighe r inco me th an in the re turn f il e d under Sec tion 139( 1)?"
hel d that the assessee coul d not be sai d to have conceal ed the parti cul ars of i ncome i f the same stood decl ared i n the return fi l ed i n re sponse to noti ce u/s 153A/153C of the Act. And i n the l ater part of the order i t was cl ari fi ed that the sai d cases were to be covered under Expl anati on-5/5A to secti on 271( 1) ( c) of the Act. Th e rel evant fi ndi ngs of the Hon'bl e Hi gh Court i n thi s regard are as under:
"23. Explanation-5 to Section 271(1) was inserted by the Taxation Laws (Amendment) Act, 1984, with effect from 1 October, 1984. The Explanation is applicable to cases where in the course of a search under Section 132 of the Act, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing. In such cases, if the assessee claims that these assets have been acquired by him by utilizing (wholly or in part) his income for any previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date, or where such return has been furnished before 12 the said date, such income has not been declared in the return, or such previous year is to end on or after the date of the search, the assessee shall, for the purposes of imposition of penalty under Section 271(1)(c) of the Act, be deemed to have concealed the particulars of his income. This Explanation has been inserted to address situations where consequent to a search, assets and valuables are discovered to be in the possession of the assessee, and thereafter the assessee files return of income after the date of search. In such cases, even if the assessee includes the amounts utilized by him in acquiring the assets found in his possession during the search operations as his income in the return filed after the search, the assessee would be deemed to have concealed his income. Thus, Parliament has created a deeming fiction by virtue of which in such cases, even if the assessee includes such income (which represents the value of the assets found in his possession during the search) in his return filed after the search, it will be deemed that such return disclosing higher income was filed only because the assets were found in his possession during the search. Put differently, if not for the search, the Legislature deems that the assessee would not have disclosed such income in the return filed subsequently. Explanation-5 also contains two exceptions, where the assessee would not be deemed to have concealed his income and would gain immunity from levy of penalty- first, if such income is or the transactions resulting in such income are recorded in the books of account maintained by the assessee for any source of income or such income was otherwise disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of the search;
second, in the course of the search, the assessee makes a statement under Section 132(4) that the assets found in his possession have been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of the time specified in Section 139(1), and also specifies in the statement the manner in which such income has been derived and pays the tax together with interest, if any, in respect of such income."
12. I n vi e w of the above we di smi ss the contenti on of the assessee that si nce the surrendered i ncome stood discl osed i n the return fi l ed u/s 153C of the Act, the ass essee coul d not be charged wi th havi ng conceal ed any parti cul ars of i ncome.
13. The ne xt content i on rai sed by Ld. counsel for assessee was that the Exp l anati on-5A to se cti on 271( 1) ( c) i n any case 13 was not appl i ca bl e si nce no sea rch was conduct ed on the assessee who was i n fact subjected to surve y acti on onl y and for the appl i cabi l i t y Expl anati on-5A it was essential perqui si te that t he search be co nducted on the assessee i n the course of wh i ch asset, bul l i o n, etc. are found whi ch are cl ai med by the assessee to have been acqui red out of earl i er undi scl osed i ncomes.
14. The Ld. DR, on t he other hand, h eavi l y rel i ed upo n the fi ndi ngs of the Ld.CI T( A) at para 8 of hi s order as under:
"8. Now the question which arises for consideration is whether the undisclosed income declared by the appellant firm in pursuance to notice under section 153C is subject to penalty under Explanation 5A to section 271(1)(c) in the aforesaid facts and circumstances. It is a fact on record that the appellant firm was not subjected to search and seizure action under section 132(1) of the Act. However, this does not in anyway attenuate the act of concealment on the part of the appellant from. Besides, a bare reading of the provisions contained in explanation 5A, as extracted above, shows no requirement of the penalised assessee to have been subjected to search and seizure operation prior to the imposition of concealment penalty. For the Explanation 5A to become applicable, the only requirement is the conduct of search and seizure operation on or after the first day of June, 2007, which search reveals information about any assessee being the owner of any income which has not been declared in the return filed for such year or the due date for filing the return of income for such year has expired and no return has been filed. In such a situation, any declaration of such income on or after the date of search shall be considered to be concealment for the purposes of imposition of penalty. Earlier, for the search and seizure operations having been conducted before the first day of June, 2007, there was an immunity provision by way of Explanation 5, whereby if there was a declaration/statement of undisclosed income during the course of the search under the provisions of section 132(4) and tax and interest on such income stood paid, then concealment penalty was not leviable. Such an immunity stands withdrawn with the insertion of Explanation 5A w.e.f. 01/06/2007 for search & seizure operations conducted on or after the said date. In the appellant's case, a search and seizure operation had been conducted on 20/07/2007 at the residential premises of the partners of the appellant firm.14
The said search revealed information, by way of seized records & documents, about the undisclosed income of the appellant firm, pursuant to which proceedings under the provisions of section 153C was initiated. Thereafter, the appellant firm filed the return of income for the year under consideration in which the said undisclosed income was incorporated. Thus, all the ingredients of Explanation 5A are met in the instant case, making the said Explanation applicable for imposition of penalty."
15. Referri ng to the same, he stated that a bare readi ng of the provi si ons of Expl anati on-5A sho ws there is no requi rement that the assessee bei ng penal i zed oug ht to have been subjected to search pri or to the i mposi ti on of penal t y. The Ld. DR furt her stated that t he I . T.A. T. i n a number of deci si ons has affi rmed the vi e w of the Ld.CI T( A) . Our attenti on was dra wn to the deci si on of the I . T.A. T. Mumbai Bench i n the c ase of M/s Ra j esh D.Dedhi a V s. ACI T in M.A.No.217/Mum/2017 dated 24.7.2018.
16. The Ld. counsel for assessee, on the other hand, rel i ed upon the deci si on of the I . T.A. T. H yderabad Bench in the case of Raghuveer Si ngh Vs. DCI T in I TA No.522 & 523/HYD/2015 dated 18.11.2015.
17. We have heard the ri val submi ssi ons. We do not fi nd any meri t in thi s contenti on of the Ld.Counsel for the assessee al so that no penal t y as per Expl anati on 5A to secti on 271( 1) ( c) of the Act was levi abl e i n the present case si nce the assessee was not subjected to search proceedi ngs as per secti on 132 of the Act. Undi sputedl y assessment i n the present case was framed on the assessee u/s 153C of the Act ,on account of i ncri mi nati ng documents pertai ning to i t found duri ng search conducted on other persons. A b are 15 perusal of the pr ovi si ons of the s ai d secti on reveal s that the such assesses,though not actual l y subjected to se arch acti on u/s 132 of the A ct,are to be treat ed/deemed as s ubjected to the same. Secti on 153C i s reproduced hereunder for cl ari t y:
"153C. Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,-
(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
(b) Any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person, other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if the Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A]:
Provided that in the case of such other person, the reference to the date of initiation of the search under section 132 or making or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the assessing officer having jurisdiction over such other person."
18. The fi rst provi s o to the secti on speci fi cal l y pro vi des that the reference to the date of search i n such cases i s to be the date of recei vi ng the books of accounts or documents or assets sei zed or requi si ti oned by the assessi ng offi cer havi ng juri sdi cti on over the person searched. Thi s reference to the date of search provi ded i n these cases makes i t ampl y 16 cl ear that assessees subjected to assessment u/s 153C of the Act are to be treated as searched u/s 132 of the Act. Our vi e w i s strengthened by the i ncl usi on of the provi si ons of secti on 153C i n Chapter XI V of the Act under the speci fi c headi ng "Assessment i n case of search or requi si ti on". The Ld.Counsel for t he assessee was confronted wi th t his duri ng the course of heari ng, to whi ch no rebuttal was gi ven. Further i t i s because persons assessed u/s 153C of the Act are treated as deemed to be searched, that the provi si ons of Expl anati on-5A to secti on 271( 1) © ,l ev yi ng penal t y i n search cases,are so worded so as to penal i ze al l assesses rel ati ng to whom mone y,bul l i on , je wel er y,or documents etc. are found duri ng search,i rrespecti ve of the fact that the person was actual l y searched or not. The Ld.CI T( A) ,has we hol d,ri ghtl y hel d that the onl y requi rement for the appl icabi l i ty of Expl anati on-5A i s the conduct of search after the fi rst da y of June, 2007 reveal i ng i nformati on about any assessee bei ng the o wner of any i ncome whi ch has not been decl ared i n the return fi l ed for that year and i t therefore covers assesses assessed u/s 153C of the Act. The I . T.A. T. i n the case of M/s Ra jesh D.Dedhi a ( supra) has held so whi l e addressi ng the i ssue rai sed in the Mi scel l aneous Appl i cati on before i t, whether the pen al t y under the p rovi si ons of Expl anati on-5A to secti on 271( 1) ( c) of the Act coul d be i mposed where the assessee was covered by surve y u /s 133A and not by search acti on u/s 132 of the Act. The I TAT i n the sai d deci si on had referred to the d eci si on of the I . T.A. T. Kol kata Be nch i n the case of DCI T Vs. Sri Shyam Sunder Dhanka i n I TA No.1869 17 & 1870/Kol /2013 wherei n i t was hel d that there i s no requi rement for l ev y of penal t y under the provi si ons of Expl anati on-5A to secti on 271( 1) ( c) of the Act that the part y shoul d be searc hed u/s 132 of the Act. The rel evant fi ndi ngs of the I .T.A. T. at paras 4 .2 to 4.3 of the order are as under:
"4.2 The issue raised in this MA is whether penalty under provisions of Explanation 5A to section 271(l)(c) can be imposed in the present case where the assessee-HUF was covered by survey u/s 133A and not by search and seizure action u/s 132 of the Act and consequently assessment was made u/s 153C and not u/s 153A . For clarity, the provisions of Explanation 5A to section 271(l)(c) are extracted below.
"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
(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."
4.3 A similar issue arose before the ITAT 'C' Bench Kolkata in the case of DCIT v. Sri Shy am Sunder Dhanka (ITA No. 1869-1870/Kol/2013) for AY 2006-07. In that case there was a search operation conducted in the premises of SALTEE Group and during the course of search certain documents were impounded with regard to some transaction for the 18 purchase of land. On query by the AO, the assessee submitted that these are the papers belonging to M/s Mayur Sales Pvt. Ltd. and Kamal Gandhi. The Tribunal found that, as such there was no role of the search party. Accordingly, the AO issued notice to the assessee who voluntarily admitted the undisclosed income and revised income tax return and paid tax thereon by filing revised return which was accepted by the AO. The AO also initiated the penalty which was subsequently deleted by the Ld. CIT(A) in appellate stage on the ground that there was no mismatch in the income of the assessee which was declared u/s 153C and the assessee was not search party u/s 132 of the Act. Therefore, the Ld. CIT(A) held that the undisclosed income is out of the purview of the provisions under Explanation 5A to section 271(l)(c] of the Act. A question was raised before the Tribunal by the revenue to adjudicate as to whether the undisclosed income declared by the assessee in pursuance to notice u/s 153C of the Act is subject to penalty under Explanation 5A to section 271(l)(c) of the Act in the aforesaid facts and circumstances. The Tribunal found that the name of the assessee was nowhere recorded in seized documents but assessee himself came forward and offered the undisclosed income u/s 147 of the Act. The Tribunal did not agree with the findings of the Ld. CIT(A) that the assessee was not searched u/s 132 of the Act, therefore, the provisions of Explanation 5A to section 271(l)(c] of the Act is not applicable to the assessee. The Tribunal vide ordered 20.07.2016 referring to the provision of Explanation 5A to section 271(l)(c) held as under:
"From a bare reading, we find that it is clear that there is no requirement for levying the penalty under Explanation 5A to Sec. 271(l)(c) that the party to whom the assessment proceedings initiated u/s 153C of the Act should be searched u/s. 132 of the Act. Therefore, we reject the finding of Ld CIT(A). We also do not agree with the finding of Ld CIT(A) that the income furnished in response to notice u/s. 153C of the Act was accepted by AO in assessment proceedings framed u/s. 153C of the Act without making any such addition. In the instant case, it is pertinent to note that the assessee offered its undisclosed income only after initiation of search u/s 132 of the Act on M/s SALTEE Group and after issuing the notice u/s 153C of the Act. So in our view, it is not the case that assessee has voluntarily offered the undisclosed income to tax. Therefore the reasons given by the Id. CIT(A) with regard to the deletion of penalty are not tenable."
19. I n vi e w of the above we fi nd that the i ssue i s squ arel y covered by the deci si on of the I . T.A. T. i n the afor esai d case and the Ld.CI T( A) , therefore, has ri ghtl y hel d that the search acti on on the assessee i s not a necessar y condi ti on for 19 attracti ng penal t y as per Expl anati on-5A to secti on 271( 1) ( c) of the Act. Rel i a nce pl aced by th e Ld. counsel fo r assessee on the deci si on o f the Raghuveer Si ngh ( supra) i s mi spl aced. I n that case the I . T.A. T. had recorded fi ndi ngs that no i ncri mi nati ng materi al was found, whi l e i n the pre sent case, there i s no deni a l of the fact that i ncri mi nati ng materi al was found. Therefore , the sai d deci sion woul d not appl y to the present case. I n vi e w of the same, we di smi ss thi s contenti on of the Ld. counsel for assessee al so.
No other argume nts were rai sed before us. Al l gr ounds rai sed by the assessee are therefore di smi ssed .
We therefore uphol d the order of the Ld.CI T( A) in confi rmi ng the l ev y of penal t y u/s 271( 1) ( c) of the Act.
The appeal fi l ed by the assessee i s therefore di smissed.
20. I n the resul t, al l the appeal s fi l e d by the assesse e are, therefore, di smi ssed.
O r d e r p r on o u n c ed i n t h e O p e n Cou r t .
Sd/- Sd/-
संजय गग अ नपणू ा ग(ु ता
(SANJAY GARG) (ANNAPURNA GUPTA)
याय क सद!य/Judicial Member लेखा सद!य/Accountant
Member
िदनांक /Dated: 28th February, 2019
*रती*
आदेश क ितिलिप अ ेिषत/ Copy of the order forwarded to :
• अपीलाथ / The Appellant • !यथ / The Respondent • आयकर आयु#/ CIT • आयकर आयु# (अपील)/ The CIT(A) • िवभागीय ितिनिध, आयकर अपीलीय आिधकरण, च'डीगढ़/ DR, ITAT, CHANDIGARH • गाड फाईल/ Guard File आदे शानुसार/ By order, सहायक पंजीकार/ Assistant Registrar p