If income been disclosed by assesse after search by filing return u/s 153A then penalty u/s 271(1)(c) is imposable

Brief of the case:

ITAT Pune held in Mrs Sarita Manjeet Singh Chopra Vs ITO that if the assesse had disclosed its unaccounted income filing return u/s 153A only after it was caught in search by the income tax department then that disclosed income through return would be considered as undisclosed income and penalty u/s 271(1)(C) would be levied on the same because as per sec 271(1)(c) if the amount (cash/bullion etc) had been caught by the income tax department during search and that belong to that previous year of which due date had been expired and that particular income was not disclosed by the assesse in its return of income of that particular year then the assesse would be considered as assesse in default and penalty would be levied even though assesse had disclosed the that particular undisclosed income afterwards.

Moreover as the assesse had furnished inaccurate particulars related with the exemption u/s 54 so furnishing of inaccurate particulars also led to the penalty u/s 271(1)(c).

Facts of the case:

Search and seizure action was carried out against the assessee on 09.12.2009. The assessee was carrying cash of Rs.1,60,76,800/-, while travelling from Pune to Delhi by air. The Investigation Wing of Pune searched the assessee under section 132 of the Act on 09.12.2009. Subsequently, her residence was also searched and cash of Rs.1,60,00,000/- was seized during the course of search proceedings. The statement of assessee was recorded and she stated that she had sold ancestral propoperty at Delhi to one Mr. Sunil Nandra for Rs.3,40,00,000/-. However, the agreement was made for Rs.1,70,00,000/- only and the balance amount was accepted in cash. The assessee also submitted that she was having 50% share in the impugned property and balance 50% share was of her sister Mrs. Tripta Kaur. She further submitted that she had received entire cash element and her sister Mrs. Tripta Kaur was not concerned with the cash at all. The assessee, in response to notice under section 153A of the Act furnished return of income declaring total income of Rs.2,04,91,850/- on 13.09.2010. The assesse offered 50% share of the agreement value i.e. Rs.85,00,000/- and 100% share of cash element i.e. Rs.1,70,00,000/- in her hands and computed the capital gains accordingly.

Moreover assesse had claimed the exemption of 2 residential houses u/s 54 which was disallowed by the assesse because as per AO exemption u/s 54 was available only for 1 residential house so penalty was also levied for furnishing inaccurate particulars in return of incoeme.

Contention of the assesse:

Assessee was of the view that she had suo-moto relieved the unaccounted money by filling the return of income u/s 153A So penalty u/s 271(1)(c) should not be levied because she had offered the said income at first available opportunity, no malafide intention could be attributed to the said disclosure and since the said transaction was duly accounted for by the assessee and the income was calculated in respect of the consideration stated in the agreement.

Further assesse was of the view that all the capital gain was disclosed and capital gain tax was computed considering the whole cash and cheque transaction so penalty u/s 271(1)(c) should not be levied.

Moreover she was of the view that she had taken the exemption of 2 residential houses under the legal advice and afterwards had withdrawn exemption and claimed exemption u/s 54 only of 1 residential house on her own so penalty u/s 271(1)(c) should not be levied.

Contention of the revenue:

Revenue was of the view that the assessee had not declared the sale consideration of Rs.2,55,00,000/- in her original return of income and subsequently after the search, had declared total amount of capital gains and hence, had concealed the particulars of income. Consequently, penalty proceedings under section 271(1)(c) of the Act were initiated against the assesse.

Further assessee had not disclosed unaccounted income at her own, it only after search she had disclosed the same, if search had not been initiated she would not have disclosed the unaccounted money so she was liable for penalty u/s 271(1)(c).

Moreover taking exemption of 2 residential houses represents furnishing inaccurate particulars and as per sec 271(1)(c) furnishing inaccurate particulars would be liable for penalty u/s 271(1)(c).

Held by ITAT:

ITAT held that as per sec 271(1)(c),where the return of income for such previous year had been furnished before the date of search, but such income had not been declared therein or where the due date of filing the return of income for other previous year has expired, but the assessee had not filed the return of income, then notwithstanding the fact that the said income is declared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed the particulars of his income or furnished inaccurate particulars of his income.

Reading the above provisions as the assesse had filed its return of income but had not disclosed the above income so assesse would be liable for penalty u/s 271(1)(c).

Appeal of the assessee was dismissed.