Suvarna Kiran Chavan, Nashik V. Income-tax Officer,

ITA 1902/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1466 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 20-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Loose papers; Revised return
• Section: 143(3); 133A; 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO S . 1 901 & 1 902 /PN/20 1 4 / ASSESSMENT YEAR S : 200 7 - 0 8 & 20 1 0 - 1 1 SAU. SUVARNA KIRAN CHAVAN, GREEN SPACE, GREEN SPACE, YASHWANT SOCIETY, MODEL COLONY, COLLEGE ROAD, NASHIK 422005 . / APPELLANT PAN: AA YPC1139Q VS. THE INCOME T AX OFFICER (CENTRAL - 1) , NASHIK . / RESPONDENT / APPELLANT BY : S HRI KISHORE PHADKE / RESPOND ENT BY : SHRI SUHAS KULKARNI, ADDL.CIT / DATE OF HEARING : 20 .0 7 .201 6 / DATE OF PRONOUNCEMENT: 29 . 0 7 .201 6 / ORDER / ORDER PER SUSHMA CHOWLA, JM: BOTH THE APPEAL S FILED BY THE SAME ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) - I , NASHIK , DATED 19 . 0 8 .201 4 RELATING TO ASSESSMENT YEAR S 200 7 - 0 8 AND 20 1 0 - 1 1 AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 1961 (IN SHORT THE ACT) . ITA NO S. 1 901 & 1 902 /PN/201 4 S AU. SUVARNA KIRAN CHAVAN 2 2. BOTH THE APPEALS RELATING TO THE SAME ASSESSEE ON IDENTICAL ISSUE S WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS IN ITA NO.1 901 /PN/2014 TO ADJUDICATE THE ISSUE. 3 . THE ASSESSEE IN ITA NO. 1 901 /PN/201 4 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING LEVY OF PENALTY U/S. 271(1)(C) AMOUNTING TO RS.25,246/ - . 2. THE APPELLANT PRAYS THAT: I ) PENALTY OF RS.25,246/ - LEVIED U/S. 271(1)(C) MAY BE DELETED; II ) RECOVERY OF DEMAND IN DISPUTE MAY BE STAYED; III ) PERSONAL HEARING MAY BE GRANTED; IV ) ANY OTHER RELI EF YOUR HONOURS MAY DEEM FIT. 4. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CONDUCTED AT THE PREMISES OF ASSESSEE. THE RESIDENTIAL PREMISES OF THE ASSESSEE WAS SEARCHED UNDER SECTION 132 OF THE ACT ON PREMISES OF THE ASSESSEE WAS SEARCHED UNDER SECTION 132 OF THE ACT ON 17.09.2010 AND SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CARRIED OUT IN THE BUSINESS PREMISES OF ASSESSEE. THE ASSESSING OFFICER THEREAFTER, ISSUED NOTICE UNDER SECTION 153A OF THE ACT, IN RESPONSE TO WHICH, THE ASSESSEE FURNISHED THE RETURN OF INC OME DECLARING TOTAL INCOME OF RS.27,13,033/ - . THE ASSESSEE HAD ORIGINALLY FILED RETURN OF INCOME UNDER SECTION 139 OF THE ACT ON 05.12.2007 DECLARING TOTAL INCOME OF RS. 26,38,026/ - . WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE ASS ESSING OFFICER VIDE ORDER DATED 30.11.2009 HAD MADE ADDITION OF RS.75,000/ - . THE ASSESSEE WHILE FILING RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT, HAD DISCLOSED THE AFORESAID ADDITIONAL INCOME OF RS.75,000/ - . THE ASSESSING OFFIC ER WAS OF THE VIEW THAT SINCE THE ADDITIONAL INCOME OF RS.75,007/ - DECLARED BY THE ASSESSEE WAS AS A RESULT OF SEARCH ACTION, PENALTY PROCEEDINGS UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WERE INITIATED AGAINST THE SAME. THE ASSESSING OFFICER WHILE PA SSING ITA NO S. 1 901 & 1 902 /PN/201 4 S AU. SUVARNA KIRAN CHAVAN 3 PENALTY ORDER UNDER SECTION 274 OF THE ACT NOTED THE ABOVE SAID FACTS AND OBSERVED THAT SINCE THE ASSESSEE HAD ORIGINALLY CONCEALED INCOME TO THE EXTENT OF RS.75,000/ - PENAL PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED ON FINALIZATIO N OF ASSESSMENT PROCEEDINGS. THE ASSESSEE IN RESPONSE EXPLAINED THAT THE ADDITIONAL INCOME OF RS.75,000/ - WAS NOT DUE TO SEARCH ACTION BUT WAS ALREADY ADDED IN THE ORIGINAL ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT. THIS FACT WAS ALSO MENTI ONED IN THE NOTE IN RETURN OF INCOME FILED PURSUANT TO NOTICE UNDER SECTION 153A OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT WHERE THE ORIGINAL ASSESSMENT WAS COMPLETED ON 30.11.2009 AND SEARCH WAS CARRIED OUT ON 17.09.2010, BUT THE RETURN OF INCOME U NDER SECTION 153A OF THE ACT WAS FILED ON 09.02.2012, HE WAS OF THE VIEW THAT WHERE AMPLE TIME WAS AVAILABLE AT THE DISPOSAL OF ASSESSEE FOR FILING THE REVISED RETURN, HOWEVER, WHERE THE ASSESSEE FAILED TO TAKE OPPORTUNITY AND AS A RESULT OF SEARCH, THE AS SESSEE ADMITTED THE ADDITIONAL INCOME OF RS.75,000/ - , WHILE FILING THE RETURN OF INCOME UNDER SECTION 153A OF THE ACT, WHICH WAS NOT FILED IN ORIGINAL RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE ACT. HENCE, THE ADDITIONAL INCOME WAS TREATED AS CONC EALED INCOME, IN VIEW OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT , T HUS, LEVIED PENALTY OF RS.25,246/ - . 5. THE CIT(A) UPHELD THE LEVY OF PENALTY AT RS.25,246/ - SINCE IT WAS UNDISPUTED FACT THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME IN THE RETURN OF INCOME FILED UNDER SECTION 139 (1) OF THE ACT. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD POINTED OUT THAT THE ADDITION OF RS.75,000/ - WAS MADE BY ASSESSING OFFICER WHILE COMPLETING THE SCRUTINY ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES. HOWEVER, NO PENALTY PROCEEDINGS WERE ITA NO S. 1 901 & 1 902 /PN/201 4 S AU. SUVARNA KIRAN CHAVAN 4 INITIATED UNDER SECTION 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER ON ACCOUNT OF ABOVE SAID ADDITION. THEREAFTER, SEARCH WAS CONDUCTED AT THE PREMISES OF ASSESSEE AND IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT, THE SAID ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT WAS ALSO DISCLOSED IN THE RETURN OF INCOME. THE ASSESSMENT WAS COMPLETED ON THE INCOME DECLARED BY THE ASSESSEE. HOWEVER, LEVY OF PENALTY IN SUCH CIRCUMSTANCES IS UNWARRANTED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINT ED OUT THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND HENCE, THERE WAS ABSENCE OF UNDISCLOSED INCOME, WHICH WARRANTS THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVEN UE PLACED RELIANCE ON THE ORDER OF CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAD ORIGINALLY FILED RETURN OF INCOME ON 05.12.2007 DECLARING TOTAL INCOME OF RS.26,38,026/ - ON 30.11.2009. THE SCRUTINY ASSESSMENT UN DER SECTION 143(3) OF THE ACT WAS COMPLETED BY THE ASSESSING OFFICER AND ADDITION OF RS.75,000/ - WAS MADE ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES. THE PERUSAL OF ASSESSMENT ORDER PLACED ON RECORD REFLECTS THAT THE ASSESSING OFFICER HAD ASSESS ED THE INCOME UNDER SECTION 143(3) OF THE ACT AND HAD DIRECTED THAT INTEREST UNDER SECTION 234A, 234B, 234C AND 234D OF THE ACT SHOULD BE CHARGED AND DUE CREDIT FOR PREPAID TAXES SHOULD BE ALLOWED. NO PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED IN RESPECT OF AFORESAID ADDITION OF RS.75,000/ - . THEREAFTER, SEARCH ON THE PREMISES OF ASSESSEE WAS CONDUCTED ON 17.09.2010. IN RESPONSE TO THE NOTICE UNDER SECTION 153A OF THE ACT, THE ASSESSEE FURNISHED RETURN OF INCOME ON 09.02.2012 DE CLARING TOTAL INCOME OF RS.27,13,033/ - , WHICH INCLUDED THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT . IN THE COMPUTATION OF INCOME ITSELF, THE ITA NO S. 1 901 & 1 902 /PN/201 4 S AU. SUVARNA KIRAN CHAVAN 5 ASSESSEE IN NOTE HAD MENTIONED THE REASONS FOR ADOPTING THE INCOME AT RS.27,13,033/ - . THE AFORESAID ADDITION OF RS.75,000/ - WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOW WITHDRAWALS MUCH BEFORE THE DATE OF SEARCH. IT IS ALSO A FACT THAT DURING THE COURSE OF SEARCH, NO ADDITIONAL INCOME WAS OFFERED BY THE ASSESSEE NOR ANY EVIDENCE WAS FOUND IN RESPECT OF ANY ADDITIONAL INCOME. THEREAFTER, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 153A OF THE ACT R.W.S. 143(3) OF THE ACT ON 21.03.2013 AFTER COMPLETING THE ASSESSMENT I.E. ACCEPTING THE INCOME DECLARED BY THE ASSES SEE IN THE RETURN OF INCOME FILED PURSUANT TO NOTICE UNDER SECTION 153A OF THE ACT. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ON THE PREMISE THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME IN RESPECT OF RS.75,000/ - . THEREAFTER, PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED ON 02.08.2013 AT RS.25,246/ - . 10. THE ISSUE WHICH ARISES BEFORE US IS AGAINST THE AFORESAID LEVY OF PENALTY 10. THE ISSUE WHICH ARISES BEFORE US IS AGAINST THE AFORESAID LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THE FACTS OF THE CASE, WHERE THE ADDITION OF RS.75,000/ - ON ACCOUNT OF LOW WITHDRAW A LS FOR HOUSEHOLD EXPENSES WAS MADE DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS COMPLETED UNDER SECTION 143(3) OF THE ACT AND WHERE THE ASSESSING OFFICER HA D NOT INITIATE D ANY PENALTY PR OCEEDINGS AGAINST THE ASSESSEE ON THE AFORESAID ADDITION OF RS.75,000/ - , CAN THE REVENUE THEREAFTER WHILE ASSESSING THE INCOME UNDER SECTION 153A R.W.S. 143(3) OF THE ACT , ON THE SAME ADDITIONAL INCOME OF RS.75,000/ - INITIATE PENALTY PROCEEDINGS FOR CONCEA LMENT. THE ANSWER TO THAT IS NO. THE ADDITION IN THE FIRST INSTANCE WAS MADE IN THE CASE OF ASSESSEE WHILE PASSING ORIGINAL ORDER OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 30.11.2009 . THE ADDITION WAS MADE ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEH OLD EXPENSES. THE ASSESSING OFFICER WHILE COMPLETING THE AFORESAID ASSESSMENT DID NOT INITIATE ANY PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, THOUGH ADDITION OF RS.75,000/ - WAS ITA NO S. 1 901 & 1 902 /PN/201 4 S AU. SUVARNA KIRAN CHAVAN 6 MADE IN THE HANDS OF ASSESSEE. NOW, WHERE THE ASSESSEE IN THE RE TURN OF INCOME FILED PURSUANT TO ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT, DECLARED THE SAID ADDITIONAL INCOME AND FULL EXPLANATION IN RESPECT OF SAID INCOME HAS BEEN PROVIDED IN THE NOTE UNDER THE COMPUTATION OF INCOME, WE FIND NO MERIT IN HOLDING TH E ASSESSEE TO HAVE CONCEALED PARTICULARS OF INCOME BY WAY OF NOT FURNISHING THE INCOME OF RS. 75,000/ - . ADMITTEDLY, DURING THE COURSE OF SEARCH, NO INCRIMINATING DOCUMENTS RELATING TO THE AFORESAID ADDITION OF RS.75,000/ - WERE FOUND. IN SUCH SCENARIO ALSO , THERE IS NO MERIT IN LEVY OF ANY PENALTY UNDER SECTION 271(1)(C) OF THE ACT AGAINST THE ASSESSEE. WHERE THE ASSESSMENT MAKING ADDITION WAS COMPLETED UNDER SECTION 143(3) OF THE ACT BEFORE THE SEARCH AND NO PENALTY PROCEEDINGS WERE INITIATED WHILE PASSIN G ORIGINAL ASSESSMENT ORDER AND MERELY BECAUSE THE SAID ADDITIONAL INCOME HAS BEEN DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED PURSUANT TO NOTICE UNDER SECTION 153A OF THE ACT, THERE IS NO JUSTIFICATION FOR HOLDING THE ASSESSEE TO HAVE CONCEALED THE PARTICULARS OF INCOME AND IN LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY OF RS.25,246/ - IN THE HANDS OF ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOW ED. 11. NOW, COMING TO TH E APPEAL IN ITA NO.1902/PN/2014. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING LEVY OF PENALTY U/S. 271(1)(C) AMOUNTING TO RS. 3,98,277/ - . 2. THE APPELLANT PRAYS THAT: I ) PENALTY OF RS. 3,97,277 / - LEVIED U/S. 271(1)(C) MAY BE DELETED; II ) RECOVERY OF DEMAND IN DISPUTE MAY BE STAYED; III ) PERSONAL HEARING MAY BE GRANTED; IV ) ANY OTHER RELIEF YOUR HONOURS MAY DEEM FIT. 12. IN THE FACTS OF THE PRESENT CASE, SEARCH U NDER SECTION 132 OF THE ACT WAS CARRIED OUT ON 17.09.2010. THE DUE DATE FOR FILING THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT HAD NOT EXPIRED AND WAS TO EXPIRE ON 30.09.2010. THE ITA NO S. 1 901 & 1 902 /PN/201 4 S AU. SUVARNA KIRAN CHAVAN 7 ASSESSEE IN RESPONSE TO NOTICE ISSUE D UNDER SECTION 153A OF THE A CT FURNISHED RETURN OF INCOME ON 08.02.2012 DECLARING TOTAL INCOME OF RS.15,86,924/ - . THEREAFTER, ASSESSMENT UNDER SECTION 153A R.W.S. 143(3) OF THE ACT WAS COMPLETED BY THE ASSESSING OFFICER ON THE DECLARED INCOME OF RS.15,86,924/ - . PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED UNDER SECTION 271(1)(C) OF THE ACT BY THE ORDER DATED 21.03.2013. THE CASE OF THE ASSESSEE DURING THE COURSE OF PENALTY PROCEEDINGS WAS THAT SINCE THE DUE DATE FOR FILING THE RETURN OF INCOME HAD NOT EXPIR ED BEFORE THE DATE OF SEARCH, THEREFORE THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT WERE NOT APPLICABLE AND HENCE, THE SAME SHOULD BE DROPPED. THE ASSESSEE ALSO EXPLAINED THE MERITS OF INCOME DECLARED IN THE RETURN OF INCOME FURNISHED IN RESPONSE TO NO TICE ISSUED UNDER SECTION 153A OF THE ACT AND POINTED OUT THAT ALL SUCH INFORMATION WAS PART OF ITS ENTRIES IN THE BOOKS OF ACCOUNT. SHE ALSO EXPLAINED THAT THE ADDITIONAL INCOME WAS OFFERED BY HER HUSBAND. THE ASSESSING OFFICER REJECTING THE CLAIM OF TH E ASSESSEE O N ALL ACCOUNTS OBSERVED THAT OTHER INCRIMINATING DOCUMENTS / LOOSE PAPERS WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH AND ON THE BASIS OF WHICH, THE ASSESSEE HAD ADMITTED THE ADDITIONAL INCOME, WHICH WAS DISCLOSED SUBSEQUENTLY IN HER RETU RN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT. THE CLAIM OF ASSESSEE THAT THE INCOME OFFERED DID NOT BELONG TO HER BUT WAS OFFERED MERELY TO BUY PEACE AND TO AVOID LITIGATION. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INCOME RETURNED BY THE ASSESSEE UNDER SECTION 153A OF THE ACT WAS TO BE TREATED AS CONCEALED, IN VIEW OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER THUS, LEVIED PENALTY OF RS. 3,98,277/ - , WHICH WAS CONFIRMED BY THE CIT(A). 13. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) . IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE RETURN OF INCOME FILED BY THE ASSESSEE AFTER THE DATE OF SEARCH WAS ACCEPTED AND HENCE, ITA NO S. 1 901 & 1 902 /PN/201 4 S AU. SUVARNA KIRAN CHAVAN 8 THERE WAS NO CONCEALMENT I N RETURN OF INCOME. FURTHER, THERE WAS NO UNDISCLOSED INCOME SINCE ALL SALES WERE BY REGISTERED DOCUMENTS. HE FURTHER CLARIFIED THAT DECLARATION OF RS.2.50 CRORES MADE IN THE COURSE OF SEARCH WAS DULY ADDED IN THE HANDS OF HUSBAND OF ASSESSEE IN THE RESP ECTIVE YEARS AND NO INCRIMINATING MATERIAL WAS FOUND IN THE COURSE OF SEARCH RELATING TO THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND AS SUCH, THERE WAS ABSENCE OF ANY UNDISCLOSED INCOME. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSE D THAT THERE IS NO REASON FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND AT BEST PENALTY, IF ANY, COULD BE LEVIED UNDER SECTION 271AAA OF THE ACT. 14. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUT HORITIES BELOW. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT AT THE PREMISES OF ASSESSEE UNDER SECTION 132 SEIZURE OPERATIONS WERE CARRIED OUT AT THE PREMISES OF ASSESSEE UNDER SECTION 132 OF THE ACT ON 17.09.2010. THE YEAR UNDER APPEAL IS ASSESSMENT YEAR 2010 - 11 AND T HE DUE DATE FOR FILING THE RETURN OF INCOME FOR THE INSTANT ASSESSMENT YEAR UNDER SECTION 139(1) OF THE ACT WAS TO EXPIRE ON 30.09.2010 AND AS THE DATE OF SEARCH WAS 17.09.2010, THE ASSESSEE WAS NOT IN DEFAULT IN NOT FURNISHING THE RETURN OF INCOME BEFORE THE DATE OF SEARCH . THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153A OF THE ACT AND IN RESPONSE, THE ASSESSEE DECLARED TOTAL INCOME OF RS. 15,86,924/ - , WHICH WAS ACCEPTED IN ENTIRETY BY THE ASSESSING OFFICER. THE QUESTION WHICH ARISES BEFORE US IS W HETHER IN SUCH CIRCUMSTANCES, THE ASSESSEE IS LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE CASE OF THE ASSESSEE BEFORE US WAS THAT THE INCOME DECLARED IN THE RETURN OF INCOME WAS BASED ON THE ENTRIES IN THE BOOKS OF ACCOUNT AND NO AD DITIONAL INCOME ON ACCOUNT OF ANY MONEY, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND DURING THE COURSE OF SEARCH, WAS DECLARED BY THE ASSESSEE. THE DECLARATION MADE BY THE HUSBAND OF ASSESSEE WAS ADMITTED AND DECLARED BY HIM AND HAD NO CONNECTION W ITH HER. ITA NO S. 1 901 & 1 902 /PN/201 4 S AU. SUVARNA KIRAN CHAVAN 9 THE ASSESSING OFFICER HAD APPLIED THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT AND LEVIED PENALTY AT RS. 3,98,277/ - . UNDER THE AFORESAID EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT, IT IS PROVIDED THAT WHERE IN THE COURSE O F SEARCH INITIATED ON OR AFTER FIRST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR ANY VALUABLE ARTICLE OR THING AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING HIS INCOME FOR ANY P REVIOUS YEAR ; OR ANY INCOME IS BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR DOCUMENTS AND HE CLAIMS THAT THE SAID ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS REPRESENT HIS INCOME FOR ANY PREVIOUS YEAR, WHICH HAD ENDED BEFORE THE DATE OF SEARCH AND TH EREAFTER, THERE ARE TWO MORE CONDITIONS TO BE SPECIFIED. THE FIRST CONDITION AS PER CLAUSE (A) IS WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SAID DATE, BUT SUCH INCOME HAD NOT BEEN DECLARED THEREIN ; OR CLAUSE (B) THE D UE DATE FOR FILING THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAD EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN. THE SECTION FURTHER PROVIDES THAT THEN NOTWITHSTANDING THAT ANY SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AF TER THE DATE OF SEARCH, HE SHALL BE HELD LIABLE FOR IMPOSITION OF PENALTY AS HE WOULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AS PER CLAUSE (C) TO SUB - SECTION (1) OF SECTION 271(1)(C) OF THE A CT. THE PERUSAL OF THE ABOVE SAID CONDITIONS LAID DOWN IN EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT REFLECTS THAT THE PROVISIONS OF THIS EXPLANATION ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. AS POINTED OUT BY US IN THE PARAS HEREINABOVE, THE DUE DATE FOR FILING THE RETURN OF INCOME FOR THE INSTANT ASSESSMENT YEAR HAD NOT EXPIRED ON THE DATE OF SEARCH AND CONSEQUENTLY, CLAUSE (B) UNDER EXPLANATION 5A IS NOT ATTRACTED. ADMITTEDLY, THE ASSESSEE HAD NOT FURNISHED ANY RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION BEFORE THE DATE OF SEARCH. CONSEQUENTLY, THERE IS NO MERIT IN INVOKING THE PROVISIONS OF EXPLANATION 5A TO ITA NO S. 1 901 & 1 902 /PN/201 4 S AU. SUVARNA KIRAN CHAVAN 10 SECTION 271(1)(C) OF THE ACT AND CONSEQUENTLY, LEVYING PENALTY AT RS. 3,98,277/ - UNDER SECTION 271(1)(C) OF THE ACT. 16. ANOTHER POINT FOR CONSIDERATION BEFORE THE ASSESSING OFFICER WAS THAT THE INCRIMINATING DOCUMENTS / LOOSE PAPERS WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH, ON WHICH BASIS THE ASSESSEE HAD ADMITTED THE ADDITIONAL INCOME. EVEN IF THIS ASPECT IS CORR ECT, BUT SINCE THE ASSESSEE WAS DUE TO FILE THE RETURN OF INCOME, THE PRESUMPTION IS IN FAVOUR OF THE ASSESSEE AND EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS NOT ATTRACTED. CONSEQUENTLY, WE DELETE THE PENALTY LEVIED AT RS. 3,98,277/ - UNDER SECTION 2 71(1)(C) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 7 . IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 29 TH DAY OF JU LY , 201 6 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 29 TH JU LY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I , NASHIK ; 4. / THE CIT (CENTRAL) , NAGPUR ; 5 . , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE