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5. The order of Ld. CIT(A) may be vacated and that of the Assessing Officer be restored.

3. The issue arising in the present appeal filed by the Revenue is against deletion of penalty levied under section 271AAA of the Act.

4. Briefly, in the facts of the case, search action under section 132 of the Act was conducted in the Palresha Group of cases on 10.02.2011. Search warrant was also issued in the case of assessee. The assessee filed the return of income on 05.03.2012 disclosing total income of Rs.1,01,47,990/-. Subsequently, the assessee filed one more return for assessment year 2011-12 on 14.03.2013 declaring total income of Rs.1,25,19,991/-. During the course of search action, the assessee had offered for taxation certain amounts of income in respect of various assessment years as tabulated under para 3 at page 2 of the assessment order. The income declared for the year under consideration was Rs.1,02,47,991/- and the total income declared was Rs.2,39,16,863/-. The Assessing Officer noted that the additional / total income was offered for taxation only as a result of search action in the case of assessee, then penalty proceedings under section 271AAA of the Act were separately initiated in the Shri Shailesh Gopal Mhaske case for concealing income and furnishing inaccurate particulars of income. The Assessing Officer thereafter, in the order levying penalty under section 271AAA of the Act, noted the contentions of assessee to have admitted and voluntarily declared the undisclosed income of Rs.1.25 crores in his statement recorded under section 132(4) of the Act. The assessee was of the view that the conditions provided in sub-section (2) to section 271AAA of the Act were complied with since the amount of undisclosed income was assessed as part of the said disclosure only. In the written submissions filed before the Assessing Officer reproduced at page 4 of the penalty order, the assessee claims that he had already made part payment of assessment dues and was ready to pay the balance tax as early as possible. He then, requested that levy of penalty in addition to the above said tax / interest shall certainly over burden the assessee and cause great hardship and injustice on the taxpayer. The assessee thereafter, has pointed out that he was an uneducated person and did not have any income tax knowledge. Further, there was no conscious breach of law. The assessee thus, claimed that he did not conceal any income or facts and neither functionally furnished any inaccurate particulars of income. In view of the said facts and circumstances, he requested that penalty proceedings initiated under section 271(1)(c) of the Act be dropped. It may be pointed out herein that at the start of letter, he had referred to the provisions of section 271AAA of the Act and had also reproduced the said section. However, at the close, he requested for dropping the penalty proceedings initiated under section 271(1)(c) of the Act.

5. The Assessing Officer however, took note of the conditions laid down in section 271AAA of the Act and noted that the assessee had not filed the return of income till the date of search i.e. 10.02.2011 starting from assessment year 2005-06 onwards. The assessee also did not pay any taxes. For the year under consideration, the return of income was due on 30.09.2011 and though the Shri Shailesh Gopal Mhaske assessee filed the same on 30.09.2011 but he did not pay taxes due on the income disclosed by him. Therefore, the Assessing Officer held that the contentions of assessee that he had complied with the entire conditions provided in sub-section (2) of section 271AAA of the Act was factually incorrect. Reference was made to questions and answers raised during the course of recording of statement under section 132(4) of the Act, under which he made declaration of Rs.2.30 crores on account of investment in movable and immovable properties, land, plots and unexplained expenditure. The Assessing Officer further held that where the assessee had failed to pay taxes on the total income offered at Rs.1.25 crores, then the said income was the undisclosed income for the purpose of levy of penalty under section 271AAA of the Act. The Assessing Officer vide para 8 held that as per provisions of section 271AAA of the Act, immunity was available to the assessee if the conditions as mentioned in section 271AAA(2) of the Act were satisfied. However, in the case, the assessee had disclosed income in the statement recorded under section 132(4) of the Act but taxes on the undisclosed income were not paid. Thus, the assessee was held to have not fulfilled the conditions in clause (ii) of sub-section (2) of section 271AAA of the Act. The Assessing Officer thus, was satisfied that the assessee had defaulted as per provisions of section 271AAA of the Act and penalty of Rs.12,53,999/- was levied.

15. Coming to the order levying penalty under section 271AAA of the Act. Vide para 8, it is clearly mentioned that where the assessee had disclosed the income in the statement recorded under section 132(4) of the Act but taxes on the undisclosed income were not paid, that the assessee had not fulfilled the Shri Shailesh Gopal Mhaske conditions of clause (iii) of sub-section (2) of section 271AAA of the Act. Hence, the Assessing Officer talks about the 'undisclosed income' which was basis for levying penalty under section 271AAA of the Act. Hence, the order levying penalty merits to be upheld in case the assessee has not fulfilled the conditions laid down in sub-section (2) of said section. In this regard, reliance was placed upon by the assessee on the Pune Bench of Tribunal in ACIT Vs. Shri Vikas Bapurao Takawane (supra) is misplaced, where satisfaction was for initiating penalty for concealment of income and furnishing of inaccurate particulars of income and the order levying penalty was also for concealment of income. The Tribunal notes that there was no reference of undisclosed income either in the assessment order or the order levying penalty under section 271AAA of the Act and where the Assessing Officer had failed to specify undisclosed income unearthed during the course of search as envisaged under the provisions of section 271AAA of the Act, penalty levied under the said section was deleted. We have already referred to the facts of the present case and order of Assessing Officer while recording satisfaction, wherein he talks about the income unearthed during the course of search and order levying penalty under section 271AAA of the Act, which specifically talks about undisclosed income and consequently, we find no merit in the reliance placed upon by the learned Authorized Representative for the assessee in ACIT Vs. Shri Vikas Bapurao Takawane (supra).

19. Now, coming to the last clause of immunity under sub-section (2) of said section, wherein it is provided that the assessee is to pay taxes together with interest, if any, in respect of undisclosed income immediately preceding the assessment year relating to previous year in which search is conducted or any requisition is made. In the facts of present case, search action under section 132 of the Act on 10.02.2011 i.e. in the financial year under consideration. The assessee furnished the return of income on 05.03.2012 disclosing total income of Shri Shailesh Gopal Mhaske Rs.1.01 crores. Subsequently, he filed the revised return on 14.03.2013 declaring income of Rs.1.25 crores. The assessment in the case was completed on 28.03.2013 and the order levying penalty under section 271AAA of the Act was passed on 20.09.2013. The assessee till the date of passing of penalty order under section 271AAA of the Act had not deposited the taxes due on the return of income. Even in the written submissions filed before the Assessing Officer in penalty proceedings under section 271AAA of the Act, the assessee has pointed out that he had only made part payment of taxes due. The assessee having defaulted to make the payment of taxes which were due, cannot be said to have fulfilled the conditions laid down in clause (iii) of sub-section (2) of section 271AAA of the Act. The learned Authorized Representative for the assessee had placed reliance on the ratio laid down by the Hon'ble Supreme Court in ACIT Vs. Gebilal Kanhaialal HUF (supra), wherein it has been held that while levying penalty under section 271(1)(c) of the Act, Explanation 5 is attracted in cases of search proceedings. The Hon'ble Supreme Court held that to grant immunity from payment of penalty, no time limit for payment of taxes is prescribed under clause (ii) of Explanation 5 to section 271(1)(c) of the Act. In the facts of said case, the apex court noted that the assessee had paid taxes with interest upto the date of payment and hence, three conditions stood fulfilled. The issue before the Hon'ble Supreme Court was with regard to return filed in response to notice under section 158BC of the Act, which was in addition to the regular returns of income for respective years of search period. On the other hand, penalty under section 271AAA of the Act is leviable in respect of regular return of income of search year. In the facts of present case before us, the assessee has not paid the taxes due on returned income (not additional income under section 158BC of the Act) till the date of passing the assessment order and even till date of passing the order levying penalty. The assessee claims to have paid the taxes thereafter, but such payment of taxes which does not accompany Shri Shailesh Gopal Mhaske the return of income, cannot be held to be compliance to the conditions laid down in sub-section (2) to section 271AAA of the Act. It may be pointed out that major portion of taxes have been paid after September, 2013 and consequently, we find no merit in the plea of assessee in this regard and the same is rejected. Accordingly, we reverse the findings of CIT(A) and uphold the levy of penalty under section 271AAA of the Act. The application moved under Rule 27 of the Rules is thus, dismissed and the grounds of appeal raised by the Revenue are allowed.