No Penalty 271(1)(c) if income offered u/s 132(2) is accepted by Assessing Officer u/s 153A and assessed

No Penalty 271(1)(c) if income offered u/s 132(2) is accepted by Assessing Officer u/s 153A and assessed

INCOME TAX APPELLATE TRIBUNAL, KOLKATA ‘A’ BENCH, KOLKATA

I.T.A. No. 622/KOL/ 2008 Assessment Year: 2003-2004

Smt. Sarita Mohta……Appellant vs. Deputy Commissioner of Income Tax……..Respondent

Date of Order: 04-03-2016

ORDER

Per Shri P.M. Jagtap :-

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), Central-II, Kolkata dated 13.03.2008 for the assessment year 2003-04, whereby he partly sustained the penalty of Rs.1,26,305/- imposed by the Assessing Officer under section 271(1)(c).

2. The assessee in the present case is an individual, who is engaged, inter alia, in the business of trading of embroidery sarees. A search and seizure action under section 132 was conducted in her case on 02.09.2004. Consequently notice under section 153A was issued by the Assessing Officer, in response to which the return of income for the year under consideration was filed by the assessee on 13.06.2006 declaring total income of Rs.5,01,420/- as against the income of Rs.2,20,736/- declared in the return originally filed. In the said return, additional income of Rs.1,50,000/- was declared by the assessee on account of undisclosed stock of sarees lying with job workers as on 31.03.2003, as surrendered during the course of search. Further, a sum of Rs.1,30,679/- was also offered to tax by the assessee being net profit at 17% on the undisclosed sales as declared during the course of search. In the assessment completed under section 153A/143(3) vide an order dated 05.12.2006, the total income as declared by the assesese at Rs.5,01,420/- was accepted by the Assessing Officer. He also initiated penalty proceedings under section 271(1)(c) and since the explanation offered by the assessee in response to the show-cause notice issued by him was not found satisfactory, the Assessing Officer imposed a penalty of Rs.1,26,305/- under section 271(1)(c) being 150% of the tax allegedly sought to be evaded by the assessee on the additional income of Rs.2,80,679/- offered in the return of income filed in response to notice under section 153A as a result of search.

3. On appeal, the ld. CIT(Appeals) upheld the action of the Assessing Officer in imposing penalty under section 271(1)(c) holding that the assessee was not entitled for the immunity under Explanation 5 to section 271(1)(c). He, however, restricted the penalty imposed by the Assessing Officer under section 271(1)(c) to the extent of 100% of the tax sought to be evaded by the assessee. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.

4. We have heard the arguments of both the sides and also perused the relevant material available on record. As agreed by the ld. Representatives of both the sides, the issue involved in this appeal of the assesese is squarely covered in favour of the assessee by the decision of the Hon’ble Calcutta High Court in the case of CIT –vs.- Brijendra Gupta reported in 234 Taxman 51, wherein it was held that the additional income offered under section 132(2) and assessed income under section 153A being identical with the income returned by the assessee under section 153A, no penalty under section 271(1)(c) was leviable. Respectfully following the decision of the Hon’ble Jurisdictional High Court, which is squarely applicable in the present case, we cancel the penalty imposed by the Assessing Officer and partly sustained by the ld. CIT(Appeals) under section 271(1)(c) and allow this appeal of the assessee.

5. In the result, the appeal of the assessee is allowed.

Order pronounced in the open Court on March 04, 2016.

(S.S. Viswanethra Ravi) Judicial Member  (P.M. Jagtap)  Accountant Member

• Notice issued u/s 143(2) prior to filing of return of income assessee is invalid
• Order u/s 148A(d) passed against non-existent entity is bad in eyes of law – High Court
• Tax authorities not bound with provisions of section 44AE once assessee waived option
• Whether seized document is incriminating or not is a findings of fact – High Court
• Interest earned on borrowed funds/unutilized capital subsidy is capital receipts – High Court