|CORAM:||Pradip Kumar Kedia (AM), Sushma Chowla (JM)|
|CATCH WORDS:||concealment of income, furnishing inaccurate particulars of income, penalty|
|DATE:||October 30, 2015 (Date of pronouncement)|
|DATE:||November 4, 2015 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|Scope of Explanation 5A to S. 271(1)(c) on deemed concealment despite income having been offered in the search return explained|
Search and seizure action was carried out against the assessee on 09.12.2009. While travelling from Pune to Delhi by air, the assessee was found to be in possession of cash of Rs.1,60,76,800/-. The assessee was searched by the Investigation Wing under section 132 of the Act on 09.12.2009 and residence was also searched and cash of Rs.1.60 crores was seized during the search proceedings. In the course of recording of statement during the search proceedings, the assessee admitted that she had sold her ancestral property at Delhi for Rs.3.40 crores, for which the Agreement was made for Rs.1.70 crores and the balance amount was received in cash. The claim of the assessee was that though she had 50% share in the impugned property and the balance 50% share was owned by her sister Mrs. Tripta Kaur, but she had received the entire cash consideration and the cheque consideration was divided 50:50. In response to notice issued under section 153A of the Act, the assessee offered 50% of the Agreement value i.e. Rs.85 lakhs and 100% of the cash element i.e. Rs.1.70 crores in her hand and computed the income from capital gains and declared total income of Rs.2,04,91,850/- on 13.09.2010. Against the income from capital gains computed at Rs.2,41,17,168/-, the assessee also claimed exemption under section 54 of the Act at Rs.38,40,098/-, on account of investment in Mega Polis property. The Assessing Officer while completing assessment, noted that the assessee had not declared the sale consideration of Rs.2.55 crores in the original return of income filed and subsequently after the search, the declaration was made on account of total amount of capital gains. The Assessing Officer rejecting the claim of the assessee that it had suo motu offered the income from long term capital gains, and no malafide intention could be attributed to the said disclosure, hence, there was no merit in levy of penalty, held the assessee exigible to levy of penalty under section 271(1)(c) of the Act and levied penalty of Rs.47,11,104/-. This was confirmed by the CIT(A). On appeal by the assessee to the Tribunal HELD dismissing the appeal:
(i) The deeming provisions of Explanation 5A under section 271(1)(c) of the Act are applicable to all the searches initiated under section 132 of the Act on or after first day of June, 2007. Reading the said provisions of the Explanation 5A to section 271(1)(c) of the Act, 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 said 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.
(ii) Now, coming to the main provisions which constitute two portions i.e. what is concealment and quantum of penalty to be levied. The question is quantum of income on which penalty is to be levied. The said issue was before the Pune Bench of Tribunal in ACIT Vs. Mulay Construction P. Ltd. & Ors in ITA Nos.116 to 119/PN/2012 & Ors. Applying the said proposition to the facts of the present case, we hold that the income offered by the assessee pertaining to the cash seized from the assessee and the declaration of the assessee that the said cash relates to the unaccounted cash received vide the sale transaction entered into by the assessee, which in turn, was declared by the assessee in the return of 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(1)(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.
(ACIT Vs. Mulay Construction P. Ltd. & Ors. in ITA Nos.116 to 119/PN/2012 & Ors, DCIT Vs. Purti Sakhar Karkhana (2013) 23 ITR (Trib) 667 (Nagpur), Smt. Pramila D. Ashtekar Vs. ITO (2013) 39 taxmann.com 103 (Pune – Trib.), PV Ramana Reddy Vs. ITO in ITA Nos.1852 to 1857/Hyd/2011 & CIT Vs. Continental Warehousing Corporation (NHAVA Sheva ) Ltd. & Anr. (2015) 374 ITR 645 (Bom) considered.