KISHAN KUMAR AGARWAL, SECUNDERABAD V. ACIT., CENTRAL CIRCLE 2(4), HYDERABAD

ITA 573/Hyd/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 4266 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 09-01-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 21-11-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Search and seizure; Salary income; Revised return
• Section: 132; 271(1)(c); 139; 153A; 13; 153C

Judgement Text

ITA 573 of 2023 Kishan Kumar Agarwal Page 1 of 14 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B‘ Bench, Hyderabad Before Shri R.K. Panda, Vice-President AND Shri Laliet Kumar, Judicial Member आ.अपी.सं /ITA No.573/Hyd/2023 (िनधाŊरण वषŊ/Assessment Year: 2016-17) Shri Kishan Kumar Agarwal Secunderabad PAN:ABLPA3923C Vs. Asstt. C. I. T. Central Circle 2(4) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Shri A. Srinivas, CA राज̾ व Ȫारा/Revenue by: : Smt. Sheetal Sarin, DR सुनवाई की तारीख/Date of hearing: 10/01/2024 घोषणा की तारीख/Pronouncement: 18/01/2024 ORDER Per R.K. Panda, Vice-President This appeal filed by the assessee is directed against the order dated 2.12.2022 of the learned CIT(A)-12, Hyderabad relating to A.Y.2016-17. 2. Although a number of grounds have been raised by the assessee, however, these all relate to the order of the learned CIT (A) in confirming the penalty of Rs.17,05,680/- levied by the Assessing Officer u/s 271(1)(c) of the I.T. Act. 3. Facts of the case, in brief, are that the assessee is an individual and derives income from salary. He filed his return of income on 30.05.2016 declaring total income of Rs.15,58,070/-. A ITA 573 of 2023 Kishan Kumar Agarwal Page 2 of 14 search and seizure action u/s 132 of the I.T. Act was conducted in the case of M/s. Aurora Educational Society & Others group in which the assessee was also covered. In response to notice u/s 153A, the assessee filed his return of income admitting total income of Rs.70,78,070/-. 4. The Assessing Officer observed that during the course of search & seizure in the residential premises of the assessee, a red diary (Mahavir Collection Book) was found and seized vide Annexure A/KKA/RES/02. At page 89 of this annexure, certain amounts were written and the page was titled as “Chit A/c". When the assessee was asked to explain the contents and the amounts written on this page, the assessee stated that the amounts mentioned in page no. 89 reflect the chit contributions made by family members of the assessee, which are amounting to Rs. 72,61,750/-. But it is replied that the amount of Rs.17,41,150/- mentioned against date 27/10, reflects the prize money of the chit. The balance amount of Rs. 55,20,600/- is the chit contributions made by the assessee and his family members. Then the assessee was given an opportunity to produce the evidences for sources of these chit contributions. Since the assessee could not produce any evidence to substantiate the sources of money for the contributions made to the chits, the assessee had agreed to own up the complete liability in his hands and accordingly admitted an additional income of Rs.55,20,600/- in the hands of the assessee for FY 2015-16 over and above the returned income. The assessment was accordingly completed on a total income of Rs.70,78,070/-. 5. Subsequently, the Assessing Officer initiated penalty proceedings u/s 271(1)(c). Rejecting the various explanations ITA 573 of 2023 Kishan Kumar Agarwal Page 3 of 14 given by the assessee and invoking the provisions of Explanation 5A to section 271(1)(c) of the Act, the Assessing Officer levied penalty of Rs.17,05,680/- being 100% of the tax sought to be evaded. 6. In appeal, the learned CIT (A) confirmed the penalty so levied by the Assessing Officer by observing as under: ITA 573 of 2023 Kishan Kumar Agarwal Page 4 of 14 ITA 573 of 2023 Kishan Kumar Agarwal Page 5 of 14 7. Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal. 8. The learned Counsel for the assessee submitted that pursuant to the search & seizure operation conducted u/s 132 of the I.T. Act, the assessee was given notice u/s 153A in response to which the assessee filed the return of income which was accepted as such by the Assessing Officer and therefore, no ITA 573 of 2023 Kishan Kumar Agarwal Page 6 of 14 penalty is leviable since the returned income has been accepted. Referring to the provisions of section 153A/153C of the Act the learned Counsel for the assessee submitted that the return of income filed in response to notice u/s 153C of the Act is to be considered as return filed u/s 139 of the I.T. Act. He submitted that since the Assessing Officer has made the assessment on the basis of the return filed in response to notice u/s 153A, therefore, this return is to be considered for the purpose of penalty and the penalty is to be levied on the income assessed over and above the income that has been returned in the return filed in response to notice u/s 153A/153C of the Act, if any. 8. Referring to the following decision, the learned Counsel for the assessee submitted that when the assessee has filed revised return after the search has been conducted and such return has been accepted by the Assessing Officer, then merely by virtue of the Act that such return showed a higher income, penalty u/s 271(1)(c) cannot automatically be imposed: i) CIT v. Suraj Bhan (2007) 294 ITR 481 ii) Bhadra Advancing (P) Ltd v. ACIT (2008) 175 Taxmann 551 iii) CIT vs. Suresh Chand Bansal (2010) 329 ITR 330 iv) S.M.J Housing vs. CIT (2013) 357 ITR 698/38 Taxmann.com 203 8.1 He accordingly submitted that no penalty u/s 271(1)(c) of the I.T. Act is leviable. ITA 573 of 2023 Kishan Kumar Agarwal Page 7 of 14 9. The learned Counsel for the assessee without prejudice to the above submission referring to various decisions submitted that in view of the Explanation 5A to section 271(1) which is a deeming provision, no penalty is leviable u/s 271(1)(c) of the Act since the assessee has declared such income explaining the manner in which the income was derived and paid the taxes thereon. He accordingly submitted that the penalty levied by the Assessing Officer and sustained by the learned CIT (A) is not in accordance with law and therefore, the same should be deleted. 10. The learned DR, on the other hand, strongly supported the order of the learned CIT (A). Referring to the decision of the Pune Bench of the Tribunal in the case of Sarita Kaur Manjeet Singh Chopra vs. Income Tax Officer reported in 174 TTJ 516 (Pune Trib.) and the decision of the Chennai Bench of the Tribunal in the case of ACIT vs. J. Mythili reported in (2014) 149 ITD 275 (Chennai Trib.) she submitted that in view of the specific provision of Explanation 5A to section 271(1)(c) of the Act, penalty was rightly levied by the Assessing Officer and rightly sustained by the learned CIT (A). She submitted that the assessee in the instant case has filed a return in response to notice u/s 153A declaring higher income on the basis of the seized material found during the course of search. Since the explanation 5A to section 271(1)(c) categorically mentions that notwithstanding such income is declared by the assessee in any return of income furnished on or after the date of search, he shall for the purpose of imposition of penalty under Cl.(c) of sub-section 271(1)(c) be deemed to have furnished inaccurate particulars of such income. She also relied on a series of decisions to support her case. ITA 573 of 2023 Kishan Kumar Agarwal Page 8 of 14 11. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the assessee in the instant case in response to notice u/s 153A of the Act filed return of income declaring total income of Rs.70,78,070/- as against the original return of income of Rs.15,58,070/- filed on 30.05.2016. In the instant case, the assessee on the basis of various entries mentioned in the seized diary admitted additional income of Rs. 55,20,600/- over and above the returned income which was accepted by the Assessing Officer. We find the Assessing Officer thereafter initiated penalty proceedings u/s 271(1)(c) of the Act and rejecting the various explanation given by the assessee and applying the provisions of Explanation 5A to section 271(1)(c) of the I.T. Act levied penalty of Rs.17,056,680/- which has been upheld by the learned CIT (A). 12. We do not find any infirmity in the order of the learned CIT (A) on this issue. The provisions of Explanation 5A to section 271(1)(c) of the I.T. Act have already been reproduced by the learned CIT (A), therefore, we are not reproducing the same. The above provisions are squarely applicable to the facts of the instant case. We find an identical issue has been considered by the Pune Bench of the Tribunal in the case of Sarita Kaur Manjeet Singh Chopra vs. Income Tax Officer (Supra) wherein the Tribunal after considering the various decisions has held as under: ITA 573 of 2023 Kishan Kumar Agarwal Page 9 of 14 ITA 573 of 2023 Kishan Kumar Agarwal Page 10 of 14 ITA 573 of 2023 Kishan Kumar Agarwal Page 11 of 14 ITA 573 of 2023 Kishan Kumar Agarwal Page 12 of 14 ITA 573 of 2023 Kishan Kumar Agarwal Page 13 of 14 13. Similar view has been taken in the various other decisions relied on by the learned DR. So far as the various decisions relied on by the learned Counsel for the assessee are concerned, these all relate to the searches that have taken place before the first day of June, 2007 and therefore, are not applicable to the facts of the present case. In view of the above discussion and in absence of any decision brought to our notice by the learned Counsel for the assessee to the proposition that penalty cannot be levied u/s 271 (1)(c) of the Act in a case where search has taken place after 1.7.2007 and the assessee has declared the additional income in the return filed in response to notice u/s 153A/153C, we do not find any infirmity in the order of the learned CIT (A) in confirming the penalty levied by the ITA 573 of 2023 Kishan Kumar Agarwal Page 14 of 14 Assessing Officer. Accordingly, the grounds raised by the assessee are dismissed. 14. In the result, appeal filed by the assessee is dismissed. Order pronounced in the Open Court on 18 th January, 2024 Sd/- Sd/- (LALIET KUMAR) JUDICIAL MEMBER (R.K. PANDA) VICE-PRESIDENT Hyderabad, dated 18 th January, 2024 Vinodan/sps Copy to: S.No Addresses 1 Shri Kishan Kumar Agarwal, 7-1-235/9 Balkampet, Prashant Nagar Colony, Secunderabad 500016, Telangana 2 ACIT, Central Circle 2(4) Aayakar Bhavan, Opp: LB Stadium, Basheerbagh, Hyderabad 500004 3 Pr. CIT – Central, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order