Gujarat High Court
Pr.Commissioner Of Income Tax-3 ... vs Shree Ram Corporation....Opponent(S) on 19 July, 2016
Author: Akil Kureshi
Bench: Akil Kureshi, A.J. Shastri
O/TAXAP/77/2016 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 77 of 2016
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PR.COMMISSIONER OF INCOME TAX-3 AHMEDABAD....Appellant(s)
Versus
SHREE RAM CORPORATION....Opponent(s)
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Appearance:
MR NITIN K MEHTA, ADVOCATE for the Appellant(s) No. 1
MR B S SOPARKAR, CAVEATOR for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE A.J. SHASTRI
Date : 19/07/2016
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Leave to place correct annexures on record.
2. Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 9.6.2015 raising the following questions for our consideration :
"(A) Whether the Hon'ble ITAT has erred in law and on facts in deleting the penalty of Rs.77,25,000/ levied u/s.
271(1)(c) of the Act?
(B) Whether the Hon'ble ITAT has erred in law and on facts by not appreciating the facts that the Assessing Officer had levied penalty under specific clause (c) of explanation 4 of section 271(1)(c) of the Act?"
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3. It can be seen that the question pertains to penalty of Rs.77.25 lacs levied by Assessing Officer under section 271(1)(c) of the Act which came to be deleted by the Tribunal. The Tribunal made the following observations :
"4. We have heard both sides and persued the case file. There isno factual dispute involved in this case. The Revenue seeks to treat the impugned onmoney receipts of Rs.2.5 crores admitting in the course of search and declared in the return (supra) as concealment and furnishing of inaccurate particulars of income. We reiterate that the 'search' is dated 06012011 i.e. within the relevant accounting period. And the assessee's returns has come on 1392011. The same stands accepted in the assessment framed therein. In these facts we quote latest decision of Hon'ble jurisdictional High Court in Kirit Dayabhai Patel v ACIT case Tax appeal no.1181 of 2010 with 1182 of 2010 to 1185 of 2010 decided on 3122014 holding that if no addition is made in furtherance to the post search return, the same has to be treated as the one filed u/s139 and no penalty levied in such a case. We deem it proper to observe that the section271(1)(c) explanation 5A instead of explanation 5 applies to search conducted on or after 162007. Be that as it may, the assessee has filed return admitting onmoney receipts as its income. The deeming fiction of concealment stipulated therein is not attracted accordingly. We follow the hon'ble jurisdictional high court's view and delete the impugned penalty. The assessee's arguments on merits succeed."
4. Having heard learned counsel for the parties it now emerges that the assessee was not subjected to search/survey operations. Instead a search action was undertaken under section 132 of the Act in group cases of Savalia group, one of them being at the residential Page 2 of 4 HC-NIC Page 2 of 4 Created On Mon Jul 25 06:22:00 IST 2016 O/TAXAP/77/2016 ORDER premises of Shri Paresh Gajera during which it appears that some incriminating materials regarding the business activity of the assessee was found.
5. For the assessment year 20112012, the assessee had filed return of income declaring total income of Rs.2.74 crores. The Assessing Officer while accepting such income without any additions, decided to initiate penalty proceedings under section 271(1)(c) of the Act on the ground that the assessee failed to submit accurate particulars of the income. It was in this background the Tribunal quashed the penalty observing that when the return ncome was accepted as it is, there was no question of thereafter, imposing the penalty.
6. In view of above noted facts, that the assessee itself was never subjected to search or survey, Revenue could also have relied on explanation 5 or 5A as the case may be of section 271 to levy penalty. Even though the income has been disclosed in the return filed subsequently, section 271(1)(c) would permit the Assessing Officer to levy penalty equal to or not exceeding three times the amount of tax sought to be evaded by reason of concealment of particulars of income or furnishing of inaccurate particulars of such income. In the present case, when the assessee had declared certain income which was accepted by the Assessing Officer, it would not be even the case of the Revenue that any income was sought to be evaded. The Tribunal therefore, in the facts of the case, committed no error.
Page 3 of 4 HC-NIC Page 3 of 4 Created On Mon Jul 25 06:22:00 IST 2016 O/TAXAP/77/2016 ORDER 7. Tax appeal is dismissed. (AKIL KURESHI, J.) (A.J. SHASTRI, J.) raghu Page 4 of 4 HC-NIC Page 4 of 4 Created On Mon Jul 25 06:22:00 IST 2016