I-T - Unaccounted money found during search and declared only in return filed pursuant to proceedings u/s 153A, is liable to penalty as per Explanation 5A of Sec 271(1)(c): ITAT
By TIOL News Service
KOCHI, OCT 08, 2018: THE ISSUE IS - Whether unaccounted money traced during search and declared only in return filed pursuant to proceedings u/s 153A, is liable to penalty pursuant to Explanation 5A of sec 271(1)(c) of the Act. YES IS THE VERDICT.
Facts of the case
The search was conducted at the business premises of the assessee, which unearthed a large amount of unaccounted money and other assets. On the basis of the findings of the search, notice u/s 153A of the Act was issued. The assessment was framed u/s 143(3) r.w.s. 153A of the Act. Finally, penalty was levied u/s 271(1)(c) of the Act. On appeal, the CIT(A) deleted the penalty, by placing reliance on Explanation 5 to section 271(1)(c) of the Act. Against this, the Revenue filed appeal before the Tribunal and submitted that assessee deliberately concealed the income and only consequent to search action, the assessee filed the return of income u/s. 153A of the Act and the return filed by the assessee u/s. 153A was not voluntary disclosure but was as a result of detection by the department. This return filed u/s. 153A could not be treated as revised return.
Tribunal held that,
++ Explanation 5 to section 271(1)(c) of the Act, provide that if the search is initiated u/s. 132 of the Act before 1st June, 2007, the immunity is available to the assessee and penalty u/s. 271(1)(c) cannot be levied. However, in the present case, the search was conducted at the business premises of the assessee on 05/08/2010. Being so, immunity under Explanation 5 to sec. 271(1)(c) cannot be made available to the assessee as given by the CIT(A) in his order;
++ for searches initiated under section 132 of the Act on or after first day of June, 2007, this Explanation 5A was applicable, which was introduced by the Finance Act, 2007 w.e.f 01.06.2007. It is noted that the person is deemed to have concealed particulars of his income or furnished inaccurate particulars of such income, which is equivalent to the value of money, bullion, jewellery, valuable articles or things from the possession of the assessee during the course of search conducted on or after first day of June, 2007. Further, where any income is based on any entry in any books of account or other documents or transactions and he claims that all the above represents his income for any previous year, then the Explanation lays down to that extent, the person would be deemed to have concealed his particulars of income or furnished inaccurate particulars of income. Applying the proposition to the facts of the present case, it was held that the income offered by the assessee in the income filed pursuant to issue of notice under section 153A of the Act, is the income detected during the course of search and seizure operation. The case of the assessee is squarely covered by the provisions of Explanation 5A to section 271(l)(c) of the Act and the assessee is exigible to levy of penalty on such income which was detected during the course of search and seizure operation, which in turn has been offered by the assessee in return of income filed pursuant to notice issued under section 153A of the Act;
++ since the assessee had not filed the returns of income before the expiry of the due date for filing the returns of income u/s. 139 of the Act in all the assessment years except AY 2010-11, the assessee is liable for levy of penalty u/s. 271(1)(c) of the Act. For assessment year 2010-11 as the assessee declared undisclosed income in the return of income filed u/s. 153A of the Act and not u/s. 139 of the Act. In the returns filed subsequent to the search, the assessee disclosed income to cover the source of various unaccounted money and other assets unearthed by search action. The amounts shown by the assessee were not part of his regular income and it is undisclosed income of the assessee. Had it been there is no search, the assessee would not have disclosed the income in respect of the undisclosed income. Hence, such amounts squarely come within the purview of penalty u/s. 271(1)(c) of the Act. In the result, the appeals filed by the Revenue are allowed.
(See 2018-TIOL-1737-ITAT-COCHIN)
