|CORAM:||G. Manjunatha (AM), V. Durga Rao (JM)|
|CATCH WORDS:||concelment Penalty|
|DATE:||September 16, 2016 (Date of pronouncement)|
|DATE:||November 12, 2016 (Date of publication)|
|AY:||2005-06 to 2008-09|
|FILE:||Click here to download the file in pdf format|
|The pre-amended Explanation 5A to s. 271(1)(c) applies to non-filer assessees where a ROI is not filed before search and undisclosed income is not offered in the ROI. The amended provision of Explanation 5A, which is applicable to both filers and non-filers of returns, does not apply to searches conducted pre 13.08.2009. Penalty levied u/s 271(1)(c) to cases which are covered by s. 271AAA is void|
(i) The provisions of explanation 5A to section 271(1)(c) as it stood as on the date of search or filing of the return u/s 153A of the Act, is important to reckon whether the deeming fiction provided in the said provisions is applicable or not. The pre-amended provisions of explanation 5A is applicable to a non filer assessees, where the assessee’s is not filed return of income before the search and also not disclosed the undisclosed income in the return of income. The amended provision of explanation 5A, which is brought into the statute by the Finance Act 2009, (which was received ascent of President on 13.8.2009) is applicable to both filers and non-filers of returns. In the present case on hand, the law applicable as on the date of search, which was pre-amended provisions of explanation 5A, as per which no penalty can be leviable, in case the assessee has filed return of income u/s 139(1) of the Act before the date of search, whether or not undisclosed income is disclosed in the said return. Admittedly in this case, the search is taken place on 16.11.2007. The assessee has filed return of income u/s 1534 of the Act u/s 30.1.2009. Both original return u/s 139(1) of the Act and the revised return u/s 153A of the Act have been filed before the amended provisions were brought into the statute (which was received ascent of President on 13.8.2009). Therefore, we are of the view that the amended provisions of explanation 5A of section 271(1)(c) of the Act is not applicable in the instant case. Accordingly, we direct the A.O. to delete the penalty levied u/s 271(1)(c) of the Act, for the assessment year 2005-06,2006-07 & 2007-08.
(ii) A plain reading of section 271AAA of the Act, makes it clear that assessing officer, not withstanding anything contained in any other provisions of this Act, direct that in a case where search has been initiated u/s 132 of the Act, on or after 1st day of June, 2007, the assessee shall pay by way of penalty in addition to tax, if any payable by him, a sum computed @ 10% of the undisclosed income of the specified previous year. For the purpose of this section, undisclosed income and specified previous year has been defined. As per the said section, ‘specified previous year’ means the previous year which is ended before the date of search, but the date of filing the return income under sub section (1) of section 139 of the Act 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 in which search was conducted. In other words, so far as penalty in respect of undisclosed income of a specified previous year is concerned, the provisions of section 271AAA of the Act would apply. In the present case on hand, on perusal of the facts available on record, we find that the search had taken place on 16.11.2007 which falls under the assessment year 2008-09 which is the year before us. The year before us was therefore, covered by the explanation of specified previous year as per explanation (b) to section 271AAA of the Act. It is not in dispute that the income in question has been assessed as income of the assessment year 2008-09 i.e. specified previous year. The assessing officer himself has treated the undisclosed income of the assessee as such. Once we come to the conclusion that the year before us is a specified previous year and the undisclosed income belongs to this year, an inevitable finding in view of the discussions above is that the provisions of section 271AAA of the Act will come into play to deal with penalty for concealment of particulars of income. It is clear from the above fact that the A.O. has not invoked correct provisions of law for levying penalty for concealment of income. Therefore, we are of the view that the A.O. was erred in levying penalty u/s 271(1)(c) of the Act, when a specific provision is provided by way of section 271AAA to deal with penalty provisions, in cases where search is took place on or after 1.6.2007.