Income Tax Appellate Tribunal - Jaipur
Radha Govind Lashkari, Jaipur vs Acit, Jaipur on 24 May, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SMT. DIVA SINGH, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No.141/JP/16
fu/kZkj.k o"kZ@Assessment Year : 2010-11
Sh.Radha Govind Lashkari, cuke The ACIT, Central Circle-2,
16, Shubham Enclave, Jamnalal Vs. Jaipur
Bajaj Marg, C- Scheme, Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AAHPL2851M
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrhdh vksj ls@Assessee by : Shri S. R. Sharma (C.A.)
jktLo dh vksj ls@Revenue by : Shri O.P. Bhateja (Addl.CIT)
lquokbZ dh rkjh[k@Date of Hearing : 23/03/2017
?kks"k.kk dh rkjh[k@Date of Pronouncement: 24/05/2017
vkns'k@ORDER
PER SHRI VIKRAM SINGH YADAV, A.M.
This is an appeal filed by the assessee against the order of Ld.CIT(A) - 2, Jaipur dated 11.01.2016 for A.Y. 2010-11 confirming the levy of penalty of Rs. 8,27,866/- imposed by the AO u/s 271(1)(c) of the I.T. Act,1961.
2. Briefly the facts of the case are that the assessee filed his original return of income u/s 139(1) of the Act on 30.07.2010 for A.Y. 2010-11 declaring total income of Rs. 1,22,06,480/-. Thereafter search and seizure operation u/s 132 of the Act was carried out on 30.09.2010 at the business and residential premises of the assessee. During the course of such search against the assessee, the authorized officer confronted the assessee with ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur noting of seized document identified as AS-1pg 5 found in course of search conducted against shri D.D. Modi on 24.08.2009 wherein "25,000 Govind Ji Lashkari" was noted. In its sworn statement recorded on oath, assessee has stated he does not recall any such entry or any such transaction which has been made with shri D.D. Modi. However, the assessee offered to tax Rs. 25,00,000/- on account of said entry for the financial year 2009-10 for peace of mind and avoid long litigation with the department and agree to pay self assessment tax thereon. Thereafter, on 27.12.2010, assessee revised his original return of income wherein additional income of Rs. 25,00,000/- was disclosedunder the head business income. Thereafter, the AO issued notice u/s 153A of the Act on 7.06.2011 and in compliance thereof, the assessee filed return of income on 21.06.2011 declaring total income of Rs. 1,47,06,480/- which includes the additional income of Rs. 25,00,000/- disclosed during the search operation and also in the revised return of income filed earlier on 27.12.2010. Thereafter, the AO completed the assessment u/s 143 read with section 153A of the Act making further addition of Rs. 1,79,178/- on account of estimated interest earned @ 12% from date of search till 31.03.2010 and also initiated penalty proceedings u/s 271(1)(C) of the Act.
3. Later on, in course of penalty proceedings, assessee filed his explanation in response to show cause notice dated 05.11.2012 which is reproduced in penalty order. The Ld. A.O. did not find the explanation of assessee legally tenable and as per discussion made by A.O. in penalty order, the same were rejected. The ld. A.O. levied penalty of Rs. 8,27,866/- u/s 271(1)(c) of the Act, 1961 on additional income of Rs. 25,00,000/- and also on addition of Rs. 1,79,178/- being estimated interest on said additional income of Rs. 25,00,000/-. The Ld. A.O. held that the case of assessee falls within the ambit of Explanation 5A to Section 271(1)(c) and stated that the 2 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur explanation 5A lays down additional conditions, which if met by the assessee, then the deeming provisions of section 271(1)(c) comes into play. According to this explanation, if the assessee is found to be owner of 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; where the return of income for such previous year has been furnished before the said date but such income has not been declared therein, then such income is deemed to be the income which the assessee has concealed. As per the AO, the case of the assessee false clearly within the ambit of Explanation 5A because the assessee surrendered income during the course of search on 30.05.2010 in which an amount of Rs. 25 lakhs was surrendered and the return of income disclosing such income was filed on 27.12.2010 ( revised return)/21.06.2011 (return u/s 153A after the due date of filing return of income u/s 139(1) had elapsed on 31.07.2010. Thus, it is a fact that the assessee disclosed an amount of Rs. 25 lakhs in the return filed on 27.12.2010, which is a return filed after the date of search. The search has been initiated after 1st June, 2007. Income of Rs. 25 lakhs pertains to previous year 2009-10, which has been ended before the date of search. The return of income for that previous year has been furnished before 30.09.2010 but income of Rs. 25 lakhs has not been declared in that return then, notwithstanding that income of Rs. 25 lakhs is declared by him in any return of income furnished on or after the date of search, the assessee, for the purpose of imposition of penalty under clause (c) of this section, is hereby deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. Because all the conditions laid down in Explanation 5A have been met and deeming provisions of section 271(1)(c) are clearly applicable to the assessee.
3 ITA No. 141/JP/16 Shri Radha Govind Lashkari,JaipurVs. ACIT Circle-2,Jaipur In view of above, it was held by the AO that it is established beyond doubt that assessee has furnished inaccurate and/or concealed particulars of its income to the extent of surrender and interest earned thereon for Rs. 26,79,178/- and levied penalty @ 100% of tax sought to be evaded i.e. Rs. 8,27,866/-u/s 271(1)(c) of the Act.
4. Being aggrieved, the assessee carried the matter in appeal before ld CIT (A) against the said penalty order and filed written submission reproduced in appeal order of ld CIT(A). The Ld. CIT(A) relying on provisions of section 153A, Expl. 5A to section 271(1)(c) and on judgment of Delhi High Court in case of CIT-6 vs. Usha International Ltd. 254 CTR 509 and decision of Coordinate Bench in case of Rajnish Vohra vs DCIT ITA No. 516/CHD/2012 upheld the levy of penalty. The operative part of his order reads as under:-
"3.2.3. The provisions of section 153A, 153B and 153C of the Act, are a complete code for assessment wherein search and seizure has been initiated after May 31, 2003. Thus, there is complete detachment of assessment proceedings under section 143 or 147 from search proceeding under section 153A of the Act. Therefore, all assessment proceeding in this case will be abated from the date of search i.e., 30.09.2010 and though assessee has revised his original return u/s 139(4) of the Act by offering addition income of Rs. 25 Lakhs to the total income offered earlier. In the computation sheet, assessee has mentioned "Rs. 25,00,000/- as business income offered during search".
This voluntary surrender is not suo moto act but because of search action conducted u/s 132 of the Act, assessee offered additional income of Rs. 25,00,000/- for the A.Y. 2010-11.
3.2.4 ...Therefore, after the conduct of search on 30.09.2010, there is no need for filing of belated return/revised return u/s 139(4) of the Act by offering additional undisclosed income of Rs. 25 Lakhs which is not recorded in his regular books of accounts, accordingly assessee will not be entitled for immunity prescribed in sec. 139(5) of the Act. Therefore, the said return of income filed on 27.12.2010 becomes non est. In view of these facts, AO has correctly not taken this revised return filed on 4 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur 27.12.2010 into cognizance. However, on being cornered and also contemplating future action of penalty u/s 271(1)(c) of the Act by the Dept, assessee has tried to take shelter under the garb of sec 139(4) of the Act so as to get immunity prescribed u/s 139(5) of the Act. But this act of assessee is of no use because search operation was conducted against the assessee therefore, in view of this, all proceedings of assessment/reassessment shall abate.
3.2.6 It is a fact that the satisfaction for concealment of particulars of income or furnishing of inaccurate particulars of income has to come from the assessment order passed as a consequence of the return filed under section 153A of the Act. In this case, there is no variation to the returned income filed u/s 153A of the Act except computation of interest Rs. 1,79,178/- @ 12% for the intervening period between 24.08.2009 (dt of search on D.D. Modi) till 31.03.2010 i.e., for 218 days. I do not find any infirmity in this as this is fair estimation for a loan advanced @ 12% pa. More so assessee has not preferred any appeal against the addition made in this assessment order passed u/s 153A r.w.s. 143(3) of the Act. In view of these facts, AO observed that assessee's case will be squarely fall under explanation 5A to the provision of Sec 271(1)(c) of the Act. Further, assessee has also failed to explain & substantiate particulars of undisclosed loan advanced of Rs. 25 Lakhs. Therefore, facts of case laws relied upon by the assessee, is of no use.
3.2.7 Now let us examine explanation 5A to sec 271(1)(C) of the Act. 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 5 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur
(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, Thus under the amended provisions of the Income-tax Act, 1961 with respect to the penalty in cases of search as applicable today, there is no immunity as such, even if the full disclosure of such income is made in the statement u/s 132(4) of the Act and also taxes has been paid thereon. The legislative language of explanation 5A to section 271(1)(c) of the Act, is such that it provides no escape route from levy of penalty.
This provision is directly applicable to this case where the assessee is duly disclosing the additional unaccounted income as admitted in statement u/s 132(4) of the Act by paying appropriate tax in the return of income filed u/s 153A of the Act and the assessment u/s 153A R.W.S. 143(3) of the Act, is made without any deviation from the returned income except interest (earned @ 12% on Rs. 25 Lakhs money advance) computed for the intervening period of 228 days.
Facts of this case are that since the assessee offered the said undisclosed income in the revised return after the search operation i.e. on being cornered by the Department, it was a deliberate act of concealment of income and assessee deemed to have concealed the particulars of income for the year under consideration, and it spoke of volumes of contrivance by the assessee with apparent element of mens rea. Thereafter, where in pursuance of search operation, assessee has filed his revised return declaring higher taxable income (Rs. 25 Lakhs as additional undisclosed income), since it is undisputed that the time of filing original return assessee was aware of concealment, it has to be concluded that there was no compliance to sec. 139(5) of the Act and therefore, revised return being filed non est, as conduct of assessee cannot be said to be bonafide, therefore, penalty order so passed has to be sustained .
6 ITA No. 141/JP/16 Shri Radha Govind Lashkari,JaipurVs. ACIT Circle-2,Jaipur On similar facts, Hon'ble Gujarat High Court has sustained penalty order passed u/s 271 (1) (c) of the Act in case of M/s Snita Transport (Pvt.) Ltd vs ACIT (2014) reported in 42 Taxmann.com 54/221 Taxman 21 (Mag) (Guj) and Bharatkumar G. Rajni Vs. DCIT (2013) reported in 40 taxmann.com 344 (Guj).
Therefore, in view of facts and circumstances of the case as discussed above, concealment of income came to be established and penalty u/s 271(1)(c) of the Act has been rightly levied upon the assessee. Accordingly AO's action is sustained. Assessee's appeal in Gr. No. 1 fails."
5. During the course of hearing, the ld AR of the assessee has submitted that in respect to income of Rs. 25.00 lacs included in revised return/return filed u/s 153A by assessee, in course of search in case of assessee, he was confronted with a paper market Ann. AS-1page-5 alleged to have been seized in course of search from Shri D.D. Modi alleging that an advance of Rs. 25.00 lac was made by assessee to him. The paper contained no date etc and simply mention "25000 Govindji Lashkari". The assessee stated that it is true I am known in market as Govind Lashkari and it is also true that D.D. Modi is my main finance broker but I did not remember any such entry and neither remember that I did any cash transaction with Shri Modi. Even, however I for my peace of mind and to save me from long departmental procedure/litigation I surrender this as my additional business income for the F.Y. 2009-10 for tax and will deposit self assessment tax thereon. The assessee thereafter filed revised return within time allowed u/s 139(5) of I.T. Act, 1961 disclosing said amount of Rs. 25.00 lac as its income from business and paid tax. In return filed u/s 153A same income was disclosed. The Ld. A.O. thus have no cogent evidence of such advance and also made no enquiry but addition got made on account of voluntarily disclosure of said business income of Rs. 25.00 lac as stated above. Thus the addition is solely on voluntary admission of assessee in good faith to buy peace and avoid litigation. In case of assessee no 7 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur material has been found corroborating the said advance. In CIT Vs. Suresh Chand Mittal (2011)251 ITR 9 (SC), the Hon'ble Supreme Court held that where the assessee filed returns showing higher income after search to purchase peace and avoid litigation and department simply rested its conclusion on the act of voluntary surrender by the assessee in good faith, High Court was justified in holding that no penalty could be levied u/s 271(1)(c).
5.1 It was further submitted that Section 153A deals with the provision of framing the assessment in the case of search and seizure action made under the Act. The section starts with a non obstante clause relating to normal assessment procedure covered by Section 139, 147, 148,149, 151 and 153 in respect of search made after May 31, 2003. The Section, so excluded relate to filing of returns, assessment and reassessment proceedings.
The provision of Section 153A, 153B and 153C are a complete code for assessment wherein search and seizure has been initiated after May 31, 2003. Thus, there is complete detachment of assessment proceedings under section 143 or 147 from search proceeding under section 153A of the Act.
For the purpose of imposition of penalty under section 271 (1)(c) resulting as a result of search assessment made under section 153A, the original return of income filed under section 139 cannot be considered. The AO has to frame an assessment on the basis of the return filed under section 153A.
5.2 It was further submitted that the penalty under section 271(1)(c) is impossible when there is variation between the assessed and returned income. If there is no variation, there will be no concealment or furnishing inaccurate particulars of income. When there is no concealment or furnishing 8 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur of inaccurate particular of income the question of levy of penalty under section 271(1)(c) of the Act will not arise. Where the returned income filed under section 153A is accepted by the AO, there will be no concealment of income or furnishing of inaccurate particulars of income and consequently penalty under section 271(1)(c) cannot be imposed.
The satisfaction for concealment of particulars of income or furnishing of inaccurate particulars of income has to come from the assessment order passed as a consequence of the return filed under section 153A.
Section 271(1)(c) does not authorize the AO to compare the return filed under section 139(1) and under section 153A to conclude that the assessee had furnished false particulars of income. When an assessment under section 143 (3) r.w.s. 153A is made, the fault had to be seen with reference to the return filed under section 153A. No penalty could be imposed under section 271 (1)
(c) of the Act as there was no variation in the income returned in response to notice under section 153A vis-a vis the assessment passed under section 143 (3) r.w.s. 153A of the Act.
The addition of Rs. 25.00 lac made by assessee in revised return/return u/s 153A was not based on any incriminating material found in case of search in his case but was included voluntarily to avoid litigation. The addition for alleged interest on alleged advance was only estimated which was also not based on any incriminating material seized in course of search.
5.3 In support, the ld AR relied on the following judicial pronouncements:
A) DCIT v. Purti Sakhar Karkhana [2013] 35 Taxmann.com 594 (Nagpur-Trib) held as under:9 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur
Vs. ACIT Circle-2,Jaipur "Search assessments made under section 153A cannot be treated as continuance of normal assessment proceedings whether abated or not and, therefore, it will not be justified to refer to returned income under section 139 for purpose of imposition of penalty under section 271 (1)©."
"Where returned income filed under section 153A is accepted by Assessing Officer and there is no variation is assessed income and returned income, penalty under section 271(1)(c) cannot be imposed."
B) The Hon'ble High Court of Madhya Pradesh in the case of CIT vs. Shyamlal M. Soni [2005] 276 ITR 156 (MP) held laid down as under:
"that no penalty under section 271(1)(c) could be levied in case, where income returned in revised returns was accepted and assessed in hands of assessee even though revised returned were filed after search and subsequent to inquiries made by department during course of assessment proceedings."
C) The Hon'ble Supreme Court in case of CIT Vs. Suresh Chand Mittal (2001) 251 ITR 9 (SC) held that where assessee filed revised returns showing higher income after search to purchase peace and to avoid litigation penalty cannot be levied under section 271(1)(c) as burden of proving concealment has not been discharged.
In above referred case, in penalty proceedings under section 271, the assessee claimed that he had offered additional income to buy peace of mind and avoid litigation. Penalty orders were passed and the Commissioner (Appeals) confirmed the orders. But the Appellate Tribunal held that the Department had not discharged its burden of proving concealment and had 10 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur simply rested its conclusion on the act of voluntary surrender done by the assessee in good faith, and that penalty could not be levied. On a reference, the MP High Court held that no penalty could be levied for concealment (see [200] 241ITR 124 (MP). The department preferred appeals to the Supreme Court. The Supreme Court dismissed the appeals holding that no interference with the order of the High Court was called for (CIT Vs. Suresh Chand Mittal ( 2001) 251 ITR 9 (SC).
D) The Hon'ble Rajkot Tribunal in the case of Shabbir Allauddin Latiwala vs. DCIT [2011] 16 Taxman.com 177 (Rajkot) held as under:
"When there was nothing placed on record which might even remotely indicate about specific nature of additional income offered by assesses while furnishing returns in response to a notice issued under section 153A, and there was no direct or indirect linkage brought on record with reference to any of specific seized materials so as to establish charge for which penalty had been levied then penalty order should be set aside."
5.4 In respect of estimated addition of Rs. 197,178/- on said alleged amount of Rs. 25.00 lacs, it was submitted that the addition is not based on any incriminate document/paper found in course of search. The assessee has not admitted or owned the alleged advance of Rs. 25.00 lakh to Shri D.D. Modi nor admitted receipt of any interest thereon. Thus the addition is merely on estimate as per own perception of Ld. A.O. and this is neither a concealment of income or furnishing of inaccurate particulars within the meaning of section 271(1)(c) or any explanation thereunder as there was no direct or indirect linkage brought or record with reference to any specific seized material from assessee and so Ld. A.O. has not established any charge for which penalty under section 271(1)(c) could be levied on assessee. In CIT 11 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur Vs. Dhiloon Rice Mills (2002) 256 ITR 447 (Punj) it was held that where additions were made on estimate basis and department failed to prove concealment of income penalty under section 271(1)(c) cannot be levied. In CIT Vs. SAS Pharmaceuticals (2011) 335 ITR 259 (Del) held that where addition on surmises, conjectures and possibilities on estimate there could be no penalty under section 271(1)(c).
5.5 It was further submitted that the Ld. CIT (A) relied on judgment in case of CIT-6 Vs. Usha International Ltd. 254 CTR 509 which is distinguishable on facts. In that case in survey discrepancy in cash, stock & renovation details found which were found which was incriminating material while in case of assessment in search no material was found regarding advance of Rs. 25.00 lac to D.D. Modi or earning of any interest thereon. The other cases cited by Ld. CIT (A) is concluding part of order also distinguishable on facts as therein also some incriminating document/material was found with assessee in search/survey proceedings which is not the case of assessee. Thus appeal order of CIT(A) is not in accordance with law.
It was further submitted that the Ld. CIT (A) in appeal order not appreciated facts of case in correct perspective. The judgment relied by Ld. CIT (A) is distinguishable on facts and do not lay down that in such case penalty is certainly leviable. The judgment of ITAT relied on by CIT (A) is also on different facts for invoking explanation 5A on account of disclosure of undisclosed income on finding of some incriminating material in course of search of assessee himself. In the search of assessee no incriminating material was found in respect of said alleged advance of Rs. 25.00 lacs but surrender was made on account of some documents alleged to have been seized from third party simply to buy peace and avoid litigation. Thus the said judgment cannot be applied in case of assessee. The original return was filed 12 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur in time and revised return was filed within time allowed u/s 139(5) so Ld. CIT (A) is not correct in law to hold revised return as non-est. 5.6 It was finally submitted that on totality of facts and in law, no penalty u/s 271 (1) (c) is leviable on assessee either on account of including of Rs. 25.00 lacs in return filed by assessee in revised return filed u/s 139 (5) of Act/ return u/s 153A or on addition of Rs. 1,79,198/- being estimated addition made by Ld A.O. on account of estimated interest on said alleged amount of Rs. 25.00 lacs. The appeal order passed by CIT (A) confirming the penalty is not correct in law and on facts and, therefore, penalty confirmed by him deserves to be deleted.
6. The ld DR is heard who has vehemently argued the matter and relied on the order of the lower authorities. He has also referred to the decision of Hon'ble Calcutta High Court in case of CIT vs Prasanna Dugar (59 Taxmann.com 99) and it was submitted that an SLP filed against the said decision has been subsequently dismissed by the Hon'ble Supreme Court.
7. We have heard the rival contentions and pursued the material available on record. The AO has invoked the deeming provisions of Explanation 5A to Section 271(1)(c) of the Act to levy penalty in the instant case. Section 271(1)(c) of the Act, being in the nature of penal provisions require a strict interpretation and it is to be seen that the instant case falls within the four corners of the said provisions and conditions laid down therein are specifically fulfilled. Therefore, it would be relevant to examine the conditions specified in Explanation 5A which 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:13 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur
Vs. ACIT Circle-2,Jaipur
(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
(b) 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 in accurate particulars of such income."
7.1 In the instant case, in the course of search which has been initiated under Section 132 on 30.09.2010, the assessee has admitted and offered to tax Rs. 25,00,000/- for the financial year 2009-10. The said admission is based on seized document identified as AS-1pg 5 found in course of search conducted against Shri D.D. Modi on 24.08.2009 wherein "25,000 Govind Ji Lashkari" was noted. Therefore, the assessee is found to be the owner ofincome of Rs 25 lacs based on the said entry in the documents so seized and he claims that such entry represents his income for the financial year 2009-10. Further, the financial year 2009-10 has ended on 31.03.2010 much before the date of search which happened on 30.09.2010. In the return of income furnished u/s 139(1) on 31.07.2010 for the such financial year 2009- 10, such income has not been disclosed. Such income has been disclosed 14 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur subsequently in the revised return filed under section 139(5) on 27.12.2010 and thereafter, in the return filed pursuance to issuance of notice under 153A on 21.06.2011. No specific arguments have been taken by the ld AR to dispute the applicability of explanation 5A in the instant case. In light of these undisputed facts, the provisions of Explanation 5A are clearly attracted in the instant case.
7.2 Now coming to the other contentions raised by the ld AR. Firstly, the ld AR has placed reliance on the Hon'ble Supreme Court decision in case of CIT vs Suresh Chand Mittal (Supra) for the proposition that there was voluntary disclosure in good faith to buy piece and avoid litigation and the same should not be a basis for levy of penalty. The said decision was rendered by the Hon'ble Supreme Court much prior to insertion of explanation 5A by the legislature in the statue books and hence, didn't consider the explanation 5A and doesn't help the case of the assessee in the instant case. Recently, in the context of explanation 5 to section 271(1)(c) of the Act, similar contention came up for consideration before the Hon'ble Delhi High Court in case of Pr CIT vs Neeraj Jindal 393 ITR 1 and it was held that explanation 5 was specifically inserted to deal with such situations where higher income was disclosed in the return filed consequent to search operation, and the assessee but for such explanation, can contend that addition made to his income in the return filed after the search operations were only to buy peace and did not tantamount to concealment. Here it would be relevant to refer to para 24 of the said decision of Hon'ble Delhi High Court which reads as under:
"The purpose of inserting Explanation 5 in the statute books was explained by the Supreme Court in K.P. Madhusudhanan v. CIT [2001]251 ITR 99 (SC), wherein the court held (page 104):
"Learned counsel for the assessee then drew our attention to the judgment of this court in Sir Shadilal sugar and General Mills Ltd. v. CIT 15 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur [1987] 168 ITR 705 (SC). He submitted that the assessee had agreed to the additions to his income referred to hereinabove to buy peace and it did not follow therefrom that the amount that was agreed to he added was concealed income. That it did not follow that the amount agreed to be added was concealed income is undoubtedly what was laid down by this court in the case of Sir Shadilal sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC) and that therefore, the Revenue was required to prove the mens rea of a quasi-criminal offence. But it was because of the view taken in this and other judgments that the explanation to section 271 was added."
This shows that explanation 5 was specifically inserted to deal with the situation where higher income was disclosed in the return filed consequent to a search operation, and the assessee claimed that such addition of income did not imply that there was concealment. In other words, but for the insertion of explanation 5, it would be open to the assessee to contend that additions made to his income in the return filed after the search operation, were only to buy peace and did not tantamount to concealment. This also flows from the language of explanation 5 itself, wherein the words used by the Legislature are "be deemed to have concealed the particulars of his income", which shows that there is a deeming fiction by virtue of which such additional income is considered as concealment. It such additions in the income in the return filed consequent to a search, were to automatically evidence concealment under section 271(1)(c), there would be no need for Parliament to enact a deeming fiction in the form of explanation; such a reading would render explanation 5 otiose and without any purpose."
7.3 Further, the ld DR has drawn our attention to the decision of Hon'ble Calcutta High Court in case of CIT vs Prasanna Dugar (supra) which was rendered in the context of explanation 5A to section 271(1)(c) of the Act. In that decision, the Hon'ble High Court has held that the term "voluntary" has to seen in the context of statement not been recorded by applying force. It is in that sense a voluntary disclosure and it has been clarified by the assessee that he had not given any statement under pressure and he didn't want to rectify or modify the statement made by him.
16 ITA No. 141/JP/16 Shri Radha Govind Lashkari,JaipurVs. ACIT Circle-2,Jaipur 7.4 In view of the above legal proposition laid down by the Hon'ble Delhi High Court as well as Hon'ble Calcutta High Court, we are unable to subscribe to the view that in the instant case, since there was voluntary disclosure in good faith to buy piece and avoid litigation, the same should not be a basis for levy of penalty as subscribing to such a view would make explanation 5A otiose which has been specifically invoked in the instant case.
7.5 Now, coming to another contention of the ld AR that for the purpose of imposition of penalty under section 271 (1)(c) resulting as a result of search assessment made under section 153A, the original return of income filed under section 139 cannot be considered. In our view, the said issue is no more rest integra. Considering the non-obstante clause under section 153A which excludes the application of section 139, the return filed pursuant to notice under section 153A takes the place of the original return for the purposes of all the provisions of the Act including levy of penalty under section 271(1)(c) of the Act. In the instant case, there is no dispute in this regard as the AO has not compared the income returned under section 139(1) and income returned under section 153A. Even the ld CIT(A) has accepted the same where he states that the provisions of section 153A, 153B and 153C are a complete code for assessment wherein the search and seizure has been initiated after May 31, 2003 and complete detachment of assessment proceedings under section 143 or 147 from search proceedings under section 153A of the Act. The said contention therefore doesn't support the case of the assessee.
7.6 Now, coming to another contention of the ld AR that the penalty under section 271(1)(c) is impossible only where there is variation between the assessed and returned income. Where the returned income filed under section 17 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur 153A is accepted by the AO, there will be no concealment of income or furnishing of inaccurate particulars of income and consequently penalty under section 271(1)(c) cannot be imposed. To appreciate this contention, it would be relevant to refer to explanation 4 to section 271(1)(c) which defines the term "tax sought to be evaded". It contains three clauses which are applicable in different situation. In the case of the assessee, the clause (c) is clearly attracted which provides that "in any other case, means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished."
7.7 In the instant case, it is no doubt true that the returned income under section 153A has been accepted (except for an amount of Rs 197,178) and assessed as such by the AO. What is however relevant to examine is the difference between the amount of income assessed and amount of income in respect of which particulars have been deemed to have been concealed invoking the provisions of explanation 5A. In the instant case, the particulars which have been deemed to have been concealed amounts to Rs 25 lacs and on such amount, the penalty has been rightly levied by the AO. Therefore, this contention of the ld AR doesn't support the assessee.
7.8 Now coming to levy of penalty on addition of Rs 197,178 is concerned, we find that the AO has applied the same analogy as applied in case of surrender of Rs 25 lacs and invoked explanation 5A to levy the penalty. We are of the view that the addition is based on purely estimated basis where the AO has worked out interest income on said loan amount of Rs 25 lacs advanced to Shri D.D. Modi, and there is no material to support either the charging of interest or the rate at which such interest has been charged which 18 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur has been found during the course of search. In the result, it cannot be said to be case of concealment of income and the penalty to this extent stand deleted.
7.9 We may add that we have also gone through the other decisions relied upon by the ld AR. In our view, the said decisions are clearly distinguishable on facts and doesn't the support the case of the assessee.
7.10 In light of above discussions and in the entirety of facts and circumstances of the case, we hereby upheld the levy of penalty on Rs 25 lacs under the deeming provisions of explanation 5A to section 271(1)(c) of the Act. The appellant therefore gets partial relief on Rs 197,178 and ground of appeal taken by the appellant is thus partly allowed.
In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 24/05/2017.
Sd/- Sd/-
(Diva Singh) (VIKRAM SINGH YADAV)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Jaipur
Dated:- 24/05/2017
Santosh*
vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Radha Govind Lashkari, Jaipur.
2. izR;FkhZ@ The Respondent- The ACIT,Central Circle-2, Jaipur
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, 19 ITA No. 141/JP/16 Shri Radha Govind Lashkari,Jaipur Vs. ACIT Circle-2,Jaipur
6. xkMZ QkbZy@ Guard File (ITA No.141/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar.20