Prakash Samant, Mumbai vs Department Of Income Tax

सव ी जोगीं संह, या यक सद य एवं नरे कुमार ब लै या, लेखा सद य के सम

BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND

SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER

आयकर अपील सं/ I.T.A. No. 1681 & 1682/Mum/2012 ( नधारण वष / Assessment Years : 2003-04 & 2004-05 The ACIT, बनाम/ Shri Prakash Samant, Central Circle-20, Sundara Narayan Niwas, Vs. Aayakar Bhavan, Opp.IIT Main Gate No. 2, Mumbai-400 020 Powai, Mumbai-400 076 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAEPS 0065P (अपीलाथ /Appellant) .. ( यथ / Respondent) अपीलाथ ओर से/ Appellant by: Shri Neil Philip यथ क ओर से/Respondent by: Shri Hari S. Raheja

सन ु वाई क तार ख / Date of Hearing :21.05.2015 घोषणा क तार ख /Date of Pronouncement :29.05.2015

आदे श / O R D E R

PER N.K. BILLAIYA, AM:

These two appeals by the Revenue are directed against two separate orders of the Ld. CIT(A)-39, Mumbai dt. 26.12.2011 pertaining to assessment years 2003-04 and 2004-05. Common grievances are involved in both these appeals, therefore they were heard together and disposed of by this common order for the sake of convenience.

2 ITA. Nos.1681 & 1682/M/2012 2. The sole grievance of the Revenue is that the Ld. CIT(A) erred in deleting the penalty levied u/s. 271(1)(c) of the Act by not appreciating the fact that the assessee is not entitled to benefit of Explanation 5(2) to Section 271(1)(c) of the Act for the earlier assessment years for which the due date for filing the return of income is over.

3. The factual matrix can be well understood by the following chart.

S. A.Y Due date Filed on Search 153A Income as Income as on per per return No. original u/s. 153A return 1 2003-04 30.11.03 28.11.03 29.7.07 1.11.07 10,74,062 30,74,062 2. 2004-05 31.10.2004 31.10.04 29.7.07 1.11.07 9,33,720 22,83,723

3. For A.Y. 2003-04, it can be seen that additional income declared is Rs. 20 lakhs as against specific material found at Rs. 6,07,032/- which means that the additional declaration without reference to any material was Rs. 13,92,968/-. Similarly for A.Y. 2004-05, additional income declared is Rs. 13.50 lakhs. The undisputed fact is that no other additions have been made by the AO while completing the assessment on respective years which means that the difference between the return income and assessed income is Nil. A further perusal of the fact shows on record that the assessee has complied with all the requirements of Explanation 5(2) to Sec. 271(1)(c) of the Act which means that the assessee has disclosed additional income in his statement recorded u/s. 132(4) of the Act, as explained the manner by which it has earned the undisclosed income and has also paid the taxes thereon.

3.1. We find that the only reason given by the AO while levying penalty u/s. 271(1)(c) of the Act is that the assessee is not entitled to the benefit of Explanation-5 for earlier years. In support of his contention, the AO heavily relied upon the decision of the Hon'ble Bombay High 3 ITA. Nos.1681 & 1682/M/2012

Court in the case of Sheraton Apparels Vs ACIT 256 ITR 20. The Revenue further relied upon the decision in the case of Shri Kirit Dahyabhai Patel 125 TTJ 145.

4. We have carefully gone through the orders of the authorities below. In our considered opinion, the decision relied upon by the AO in the case of Sheraton Apparels (supra) is misplaced inasmuch as in that case the issue before the Hon'ble Court was to decide whether a diary could be treated as books of account for the purpose of Explanation 5(1)(II) to Sec. 271(1)(c) of the Act. Such is not the case in hand therefore this decision of the Hon'ble Bombay High Court cannot support the AO. Further, the decision in the case of Shri Kirit Dahyabhai Patel has been over ruled by the Hon'ble High Court of Gujarat vide its judgement dt. 3.12.2014 in ITA Nos. 1181, 1182 & 1185 of 2010. The decision of the Hon'ble Madras High Court in the case of CIT Vs S.D.V. Chandru 266 ITR 175 squarely apply on the facts of the case. The facts in that case are as under:

"Explanation 5 to section 271(1)(c) of the Income-tax Act, 1961, provides that in the circumstances set out in paras.

(1) and (2) of that Explanation, the assessee is not to be regarded as having concealed his income. While clauses (a) and (b) make a clear distinction between the previous year which has ended before the date of the search and a previous year which is to end on or after the date of the search, para. (2) in Explanation 5 does not make any such distinction. It refers to the statement given by the assessee at the time of the search under section 132(4) with regard to the assets found at the time of search being the statement to the effect that such assets have been acquired out of his undisclosed income and the specification by the assessee in such statement with regard to the manner in which such income had been derived, and the subsequent payment by the assessee of the tax on such undisclosed income together with interest. The words in para. (2), ". . . has been acquired out of his income which has not been disclosed in his return of income to be furnished before the expiry of time specified in 4 ITA. Nos.1681 & 1682/M/2012

sub-section (1) of section 139 ", is not to be read as referring to income so far not disclosed in respect of the previous year which is to end after the date of the search. The words used are "income which has not been so far disclosed in his return of income". The additional words which refer to the time specified in section 139(1) are only a reiteration of the legal requirement regarding the time within which returns should normally be filed. In cases where the assessee had not disclosed his income in the returns filed for the previous year which had ended prior to the date of the search and in the statement given under section 132(4) , the assessee admits the receipt of undisclosed income for those years and also specifies the manner in which such income had been derived, and thereafter pays the tax on that undisclosed income with interest, such undisclosed income would get immunised from the levy of penalty.

There was a search in the premises of the assessee on February 13, 1990. A statement of the assessee was recorded, under section 132(4) of the Act, at the time of search. Thereafter, the assessee filed his returns for the earlier years and admitted a larger income and also paid the tax together with interest. The Assessing Officer levied penalty. The Tribunal cancelled the penalty. On a reference :"

and on these facts it was held that the Tribunal was right in holding that the penalty was not leviable. The Ld. CIT(A) has very rightly and correctly followed this decision of the Hon'ble Madras High Court. We, therefore decline to interfere with the decision of the Ld. CIT(A).

5. In the result, the appeal filed by the Revenue for both the years under consideration are dismissed.

Order pronounced in the open court on 29th May, 2015

Sd/- Sd/-

(JOGINDER SING ) (N.K. BILLAIYA) या यक सद य/JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER मंब ु ई Mumbai; दनांक Dated : 29 May , 2015 th

व. न.स./ RJ , Sr. PS 5 ITA. Nos.1681 & 1682/M/2012

आदे श क त ल प अ े षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयु त(अपील) / The CIT(A)-

4. आयकर आयु त / CIT

5. वभागीय त न ध, आयकर अपील य अ धकरण, मंब ु ई / DR, ITAT, Mumbai

6. गाड फाईल / Guard file.

आदे शानस ु ार/ BY ORDER, स या पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मंब ु ई / ITAT, Mumbai