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«,, IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ...»

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IN THE INCOME TAX APPELLATE TRIBUNAL

“B” BENCH, AHMEDABAD

BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER

AND

SHRI MANISH BORAD, ACCOUNTANT MEMBER

IT(SS)A.No.179 to 184/Ahd/2014

(Asstt.Years : 2005-06 to 2010-11

Shri Dilip H. Agrawal DCIT, Cent.Cir.2

A/2, Sevashram Society Baroda.

Vs Ellorapark Nr.Atma Jyoti Asham Baroda.

PAN : ABMPA 5734 C.

/ (Appellant) / (Respondent) Assessee by : Shri Mukund Bakshi, AR Revenue by : Shri Jamesh Kurian, Sr.DR S / Date of Hearing : 30/09/2016 /D ate of Pronouncement: /10/2016 /O RDER

PER BENCH :

Present six appeals are directed at the instance of the assessee against orders of the ld.Commissioner of Income-tax (Appeals)-IV, Ahmedabad dated 24.2.2014 for the Asstt.years 2005-06 to 2010-11.

2. Solitary grievance of the assessee is that the ld.CIT(A)has erred in confirming penalty under section 271(1)(c) of the Income Tax Act, 1961.

3. Facts in all these assessment years are common, therefore for facility of reference, we take up facts primarily from the Asstt.Year 2005-06.

4. Brief facts of the case are that search and seizure operation was carried out at Darshanam Group cases under section 132 of the Income Tax Act on IT(SS)A No.179 to 184/Ahd/2014 2 25.10.2010. Premises of the assessee was also covered under search operation, and consequently in order to give a logical end to the proceedings, notice under section 153A was issued to the assessee in all these assessment years requiring him to furnish return of income within 45 days from the service of notice. It emerges out that the assessee has filed his returns of income on 24.5.2011 under section 153A of the Income Tax Act. In his return, he has disclosed certain additional income. For the purpose of these penalty matters, we would like to make reference of the details compiled by the ld.CIT(A) in tabular form on page no.3 of the impugned order, which will exhibit additions made by the AO as well as additional income disclosed by the assessee. It will also indicate penalty imposed upon the assessee by the

AO. It reads as under:

“ A.Y. Penalty levied 2005-06 Rs.24,100/- 2006-07 Rs.63,000/- 2007-08 Rs.59,200/- 2008-09 Rs.2,68,700/- 2009-10 Rs.3,51,400/- 2010-11 Rs.3,90,300/- AY AdditionDisallowa Additional Addition Addition of cash nce of

–  –  –

5. Dissatisfied with the levy of above penalty, the assessee carried the matter in appeal before the ld.CIT(A). The ld.First Appellate Authority has deleted penalty with regard to the additions made by the AO for low household withdrawals. As far as other additions are concerned, penalty has been confirmed.

6. Before us, the ld.counsel for the assessee submitted that as far as additional income declared by the assessee in the return filed under section 153A for the Asstt.Years 2007-08 to 2010-11 is concerned, this was offered by the assessee at his own will and no incriminating material was found, which can demonstrate that money, bullion jewellery etc. were detected during the course of search. Therefore, with the help of Explanation 5A attached to section 271(1)(c) of the Act, the ld. Revenue authorities cannot deem this disclosure as concealed income. For buttressing his contentions, he relied upon the order of the ITAT, Rajkot Bench in the case of Shri Kiritkumar C. Thacker in IT(SS)A.No.16 to 20/RJT/2013. He pointed out that the Tribunal has considered this aspect elaborately in the case of Mansukhbhai R. Sorathia Vs. JCIT, IT(SS) No.46/RJT/2012 and has reproduced the discussion made therein.

7. With regard to the addition on account of unexplained cash credit, the ld.counsel for the assessee contended that the assessee has agreed for the above additions in order to avoid litigation with the Department. Otherwise, he has confirmation and other supporting evidences. Therefore, penalty ought to have not imposed upon the assessee.

–  –  –

which has persuaded the assessee to declare additional income. He relied upon the order of the ld.CIT(A).

9. We have duly considered rival contentions and gone through the record carefully. As far as penalty imposed qua additions made on account of additional income declared by the assessee is concerned, we find this issue is squarely covered in favour of the assessee by the discussion made by the Tribunal in the case of Shri Kiritkumar C. Thacker (supra). The discussion

made therein reads as under:

“8. With the assistance of the ld.representatives, we have gone through the record carefully. The sole issue requires to be adjudicated by us is whether the additional income disclosed in the return filed in response to the notice under section 153A of the Act was a voluntary disclosure of income with a view to buy peace, and therefore, the alleged voluntary disclosure of income does not form within the mischief of deemed concealment provided in Explanation 5A of Section 271(1)(c) of the Act. This identical issue was considered by the Tribunal in the case of Shri Mansukhbhai R.

Sorathia (supra). The discussion made by the Tribunal from para 6





to 17 is worth to note. It reads as under:

–  –  –

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,— (a) 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 the said date, such income has not been declared therein ; or (b) for any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the 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, unless,— (1) such income is, or the transactions resulting in such income are recorded,— (i) in a case falling under clause (a), before the date of the search ; and (ii) in a case falling under clause (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the 85[Principal Chief Commissioner or] Chief Commissioner or 85[Principal Commissioner or] Commissioner before the said date ; or (2) he, in the course of the search, makes a statement under subsection (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has 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 time specified in sub-section (1) of section 139, 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.”

7. The ld. Counsel for the assessee relied upon the judgment of the Hon’ble Gujarat High Court in Income Tax Appeal IT(SS)A No.179 to 184/Ahd/2014 6 No.1181 to 1185 of 2010 in the case of Kirit Dayabhai Patel Vs.

ACIT. Copy of this decision has been placed on the record. The Hon’ble Court while construing the meaning of Explanation 5 has put reliance upon the decision of the Hon’ble Supreme Court in the case of ACIT Vs. Gebilal Kanbhaialal (HUF), 348 ITR 561 (SC). According to this decision, the Explanation 5 is deeming provision. It provides where in the course of search under section 132, the assessee is found to be owner of unaccounted asset and he claims that such assets have been acquired by him by utilizing whole or part of his income from any previous year, which has ended before the date of search or which is to end on or after the date of search, then in such a situation, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed the particulars of his income for the purpose of imposition of penalty under section 271(1)(c) of the Act. The Hon’ble Court, thereafter, propounded that subclause (1) and (2) Explanation 5 provides exceptions for deeming the concealment of particulars of income. In that case, the Hon’ble Court was dealing in sub-clause (2) of Explanationand observed that in order to claim immunity as per sub-clause (2), three conditions have to be satisfied by the assessee. These three conditions are (a) that the assessee himself makes a statement under section 132(4) of the Act in the course of search stating that the unaccounted assets and incriminating documents found from his possession during the search have been acquired out of his income which has not been disclosed in the returns of income to be furnished before the expiry of time specified in section 139(1); (b) that the assessee should specify in his statement under section 132(4) of the Act, the manner in which the income stood derived, and (c) the assessee has to pay tax together with interest, if any, in response to such undisclosed income. According to the assessees present before us, they have made voluntary disclosure, filed returns and paid taxes. Their explanation for availing the benefit of judgment of the Hon’ble Gujarat High Court in the case of Kirit Dahyabhai Patel (supra) has been rejected by the ld.First Appellate Authority on the ground that the Explanation 5 is applicable on the cases where the search was initiated on or before the 1st June, 2007. After 1st July, 2007, the Explanation 5A to sub-section (1) of Section 271(1)(c) has been inserted vide Finance Act, 2007. Along with this Explanation, Section 271AAA has also been inserted by IT(SS)A No.179 to 184/Ahd/2014 7 Finance Act, 2007. The Explanation 5A and Section 271AAA

read as under:

“Explanation 5A.— Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of— (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year; or (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 subsection (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income.

271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132on or after the 1st day of June, 2007 but before the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year.

(2) Nothing contained in sub-section (1) shall apply if the assessee,— IT(SS)A No.179 to 184/Ahd/2014 8 (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived;

(ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income.

(3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1).

(4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section.

Explanation.—For the purposes of this section,—

–  –  –

(i) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted”.



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