I-T - Assessee is deemed to have concealed particulars of income if additional income surrendered during search was not declared in normal return: ITAT
By TIOL News Service
CHANDIGARH, DECEMBER 11, 2018: THE ISSUE IS - Whether assessee is deemed to have concealed the particulars of his income or furnished inaccurate particulars of income to justify penalty u/s 271(1)(c), if additional income surrendered during search is included in the return filed in response to notice u/s 153A but is not declared in the return filed u/s 139 before the search. YES IS THE VERDICT.
Facts of the case
The assessee an Individual, had filed return for relevant AY. Thereafter search u/s 132 of the Act was conducted at the residence of the assessee, during the course of which income of Rs. 41 lacs was surrendered. In response to notice issued u/s 153A, return was filed by the assessee, which included the surrendered income of Rs. 41 lacs. Subsequently during assessment proceedings the AO noted that during the year under consideration the assessee had purchased two plots situated at Ludhiana. The source of investment in these properties was stated by the assessee as being out of the surrendered income of Rs. 41 lacs. The AO noted that the surrender was made after detection of concealment by the Department by way of search u/s 132 of the Act and therefore initiated penalty proceedings on the same u/s 271(1)(c) of the Act. The AO levied penalty, stating that the assessee having not disclosed the surrendered income in the original return of income filed, the disclosure in the return filed subsequent to search was only after detection of concealment and the assessee's contention that no penalty was leviable since returned income had been accepted, was not acceptable. On appeal, CIT(A) upheld the order of AO.
Tribunal held that,
++ the issue involved were identical to that in the case of Munish Jain and the decision rendered therein by the ITAT, dismissing all the grounds raised by the assessee,thereby upholding the levy of penalty,therefore squarely applied in the present case. The AO in the said case also had levied penalty on the surrendered income, which in turn was upheld by the CIT(A) holding that penalty was leviable as per the provisions of Explanation 5A to section 271(1)(c), as in the case of the assessee. In that case also, assessee had raised additional ground challenging the validity of the penalty levied u/s 271(1)(c) of the Act. The additional ground was dismissed by the ITAT and held that the provisions of Explanation 5A to section 271(1)(c) were applicable in the present case since search was initiated after 1st June 2007, as prescribed for the applicability of the Explanation, and the assessee having not disclosed the surrendered income in the original return of income filed, the assessee fulfilled the condition prescribed for applicability of the Explanation, thereby deeming the assessee to have concealed the particulars of his income or furnished inaccurate particulars of his income for levying penalty. The ITAT also rejected the contention of the assessee that no incriminating material was found during search so as to attract Explanation 5A to section 271(1)©, holding that the surrender made by the assessee was suo moto and remained unretracted throughout and the same was attributed during assessment proceedings as source of investment in properties,which tantamounted to the assessee himself coming clean before the Revenue about the fact of earning such income and investing it in assets, which in turn met the requirement of Explanation 5A of the assessee being found during search to be the owner of assets acquired out of earlier undisclosed income;
++ since admittedly the facts in the present case are identical to that in the case of Munish Jain the decision rendered by the ITAT in the said case squarely applies to the present case following which it was decided to uphold the levy of penalty u/s 271(1)© of the Act of Rs. 11,68,020/-. The ground of appeal raised by the assessee in this regard is also therefore dismissed. In the result, the appeal of the assessee is dismissed.
(See 2018-TIOL-2376-ITAT-CHD)
