No income concealment us 271(1(c) on gift under explanation 5A. NSC declared us 153A was received as inheriting, gift from father, grandfather-ITAT

No income concealment us 271(1(c) on gift under explanation 5A. NSC declared us 153A was received as inheriting, gift from father, grandfather-ITAT

ABCAUS Case Law Citation:
1032 (2016) (10) ITAT 

Important case law cited:
Sheraton Apparels Vs. ACIT (2002) 256 ITR 20

Brief Facts of the Case:
The appellant assessee was subjected to search and seizure operation u/s 132(1) of the Income Tax Act, 1961. During the course of the search, National Saving Certificates (NSCs) amounting to Rs. 3,50,000/- were found in the joint name of the assessee and her father/grandfather. During the search proceedings, the assessee agreed to offer the above said sum of 3.50 lacs as her income. Accordingly in the return of income filed u/s 153A the assessee declared the said amount for the relevanr assessment year under. The Assessing Officer accepted the return and thereafter levied penalty u/s  271(1)(c) of the Act by invoking Explanation 5A to sec.271(1)(c).

The CIT(A) also confirmed the same and aggrieved with the order of the Commissioner Appeals, the assessee had filed the present appeal before the Tribunal.

Contentions of the assessee:
The prime contention of the assessee was that she did not invest amount of Rs. 3.50 lakhs in NSCs out of her own income but she had received the same by way of inheriting/gift from her father/grandfather.

It was submitted that explanation 5A to section 271(1)(c) shall be applicable only if the assessee is found to be the owner of the asset and the assessee claims that the same has been acquired by him by utilizing (wholly or in part) his income for any previous year.

It was further submitted that she did not have any other income in the year under consideration and the Assessing Officer has himself recorded the said fact in the assessment order. In the absence of own income, the question of invoking Explanation 5A did not arise.

Observations made by the ITAT:
The Tribunal observed that the Assessing Officer (AO) himself had observed in the assessment order that the assessee did not derive any income during the year under consideration. Further it was a fact that the NSCs were held in the joint name of the assessee and her father/grandfather, which supported the case of the assessee that the investments were made by her father/grandfather.

The Tribunal opined that the Explanation 5A was not applicable to the facts of the present case. Therefore, in this view of matter and in the facts and circumstances of the case, the return of income filed by the assessee offering the amount of NSCS as agreed in the statement could not be considered to be a case of concealment of particulars of income.

Held:
The order of CIT(A) was set aside and the AO was directed to delete the penalty.