Rajesh P. Shah, Thane vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL "J" BENCH, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER

आयकर अपील सं./I.T.A. No.1852 /Mum/2011 ( नधा रण वष / Assessment Year : 2005-2006

Asstt. Commissioner of बनाम/ Shri Rajesh P. Shah, Income Tax - Central 309, Shanti Sagar, Vs. Circle -2, Narpoli Gaon, Thane Pawar Industrial Devji Nagar, Estate, Bhiwandi. Edulji Road, Charai, Thane - 400 601. थायी ले खा सं . /PAN : AVPPS2809B (अपीलाथ /Appellant) .. ( यथ / Respondent)

Appellant by Shri Akhilendra P. Yadav Respondent by : None

ु वाई क तार ख / Date of Hearing सन : 10-03-2015 घोषणा क तार ख /Date of Pronouncement : 15-05-2015 [

आदे श / O R D E R PER R.C. SHARMA, A.M. :

This is an appeal filed by the Revenue is directed against the order passed by the ld. CIT(A) - 1, Thane dated 15-11-2010 for the A.Y. 2005-06 in the matter of imposition of penalty of Rs. 5,93,473/- u/s 271(1)(c) of the Income Tax Act, 1961.

2. At the time of hearing, nobody from assessee's side has appeared instead of giving notices to the assessee. The Bench, therefore decided to dispose of the appeal after hearing the ld. D.R. and considering the material placed on record.

2 ITA 1852/M/11

3. The facts of the case are that, there was a search & seizure operation carried out in the premises of the assessee on 05/01/06. In response to the notice u/s 153C, the assessee filed a return on 05/01/07, admitting a total income of Rs. 20,25,360/-. Earlier the original return had been filed on 30/10/05, admitting a total income of Rs 2,79,776/-. The AO, then, proceeded to complete the assessment accepting the returned income at Rs 20,25,360/- and initiated penalty proceedings holding that, the additional income had been offered only as a result of search. The AO after affording opportunity to the assessee, passed order imposing a penalty of Rs 5,93,473/-. The following is the reasoning given by the AO for levy of penalty.

"It is clear that, it is only after the search that the assessee had filed income on higher side u/s 153A from 2,79,7761- u/s 139(1) to Rs 20,25,3601-.) The incriminating evidences gathered during the search and admission of the assessee during the course of search, clearly reflects that, assessee has not shown his true and correct income and that the assessee has declared additional income only since the evidences gathered during the search reflected that the assessee has concealed the particulars of his income and had furnished inaccurate particulars of such income. During the course of assessment proceedings, analysis of material showed that the assessee had earned income which was not reflected in the return of income filed by the assessee u/s 153A of the IT Act and also that the assessee filed return of higher income u/s 153A as a result of search only. Thus, it is learnt that, the assessee has concealed the particulars of his income and also furnished inaccurate particulars of his income."

By the impugned order, the ld. CIT(A) deleted the penalty after having following observation:-

"5. I find that I the income has been declared on the basis of estimate @ 8 % of the turnover in contract business. In my view, penalty cannot be levied on income which is quantified on the basis of estimate. Moreover, the appellant has made disclosure in the statement recorded u/s 132(4) to the effect that he would admit income @ 8 % of contract receipts.

6. The above submissions and the decisions relied upon are perused and considered. As stated above, the appellant has disclosed the income arising out of unaccounted turnover, admitted it duly in the return filed in response to the notice u/s 153A and paid taxes with interest and the same has been 3 ITA 1852/M/11

accepted by the AO in the assessment, hence there is no case for levy of penalty u/s 271(1)(c).

7. In this case the appellant had duly included the additional income surrendered by him in his statement on oath recorded u/s 132(4) of the IT Act , 1961 in the income disclosed in the return filed in response to notice u/s 153A of the IT Act. The AO has held that the appellant disclosed higher income in the return filed in response to notice u/s 153A only because of the search & seizure action. The AO levied penalty u/s 271(1)(c) of the IT Act, 1961 holding the appellant responsible for non disclosure of her true and full income in her original return filed u/s 139(1) of the IT Act, 1961. The action of the AO does not appear to be legally sustainable. No concealment penalty is leviable on the income disclosed in the return of income filed in response to notice u/s 153A of the IT Act, 1961. This view has been upheld by the Ld. ITAT, 'B' Bench, Pune in the case of Smt Sarala M Ahuja Vs DCIT, Central Circle, Kolhapur in ITA No 1301 to 1304/Pn/~ decided on 26/10/07. The concealment of income has to be determined with reference to the income disclosed in the return of income filed in response to notice u/s 153A of the IT Act , 1961 and not with reference to the income returned in the original return filed u/s 139(1). There is no difference in the income returned by the appellant in the return of income furnished in response to notice u/s 153A of the IT Act and the assessed income u/s 153A(b) of the IT Act and as such, there is no concealment of income in this case.

8. In view of the facts mentioned above, I find that clause '2' of explanation '5' to section 271(1)(c) is fully applicable in this case and hence the appellant is entitled for getting benefit of immunity from the levy of penalty u/s 271(1)(c). In view of the facts and legal position explained above, the penalty of Rs. 5,93,473/- levied u/s 271(1)(c) of the I.T. Act, 1961 is hereby set aside."

Aggrieved by the above order of ld. CIT(A), the Revenue is in appeal before us.

4. We have heard the ld. D.R. and gone through the orders of authorities below. From the record, we find that the penalty was imposed with respect to the disclosure in the statement recorded u/s 132(4) of the Act wherein the assessee admitted income @ 8% of the contract receipts. The ld. CIT(A) after recording the findings to the effect that the assessee has disclosed the income arising out of unaccounted turnover admitted it in the return filed in response to the notice u/s 153A of the Act and paid taxes with interest and the same has been accepted by the A.O. in the assessment framed. The ld. CIT(A) also observed that the income disclosed in the return of income filed by the 4 ITA 1852/M/11

assesseee in response to notice u/s 153A of the Act and the assessed income u/s 153A(b) of the Act were same as such there is no concealment of income in this case. The ld. CIT(A) also observed that clause '2' of Explanation 5 to section 271(1)(c) of the Act is fully applicable, therefore, the assessee is entitled for getting benefit of immunity from the levy of penalty u/s 271(1)(c) of the Act. We do not find any infirmity in the order of ld. CIT(A) for deleting the penalty as clause '2' of Explanation 5 to section 271(1)(c) was fully applicable to the case of the assessee.

5. In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on 15th March, 2015.

आदे श क घोषणा खल ु े #यायालय म% &दनांकः 15-05-2015 को क गई ।

Sd/- sd/- (I.P. BANSAL) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER मुंबई Mumbai; &दनांक Dated 15-05-2015 [ व.6न.स./ RK , Sr. PS

आदे श क! " त$ल%प अ&े%षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयु7त(अपील) / The CIT(A) -1 Thane

4. आयकर आय7 ु त / CIT -(Central), Pune

5. :वभागीय 6त6न<ध, आयकर अपील य अ<धकरण, मुंबई / DR, ITAT, Mumbai J Bench

6. गाड@ फाईल / Guard file.

ु ार/ BY ORDER, आदे शानस

स या:पत 6त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai