Jayant B Patel HUF Vs DCIT (ITAT Mumbai)
(a) No penalty under Explanation-5 to Section 271(1)(c) of the Act could be levied in respect of undisclosed income found in the course of search but which were duly returned by the assessee in the return filed u/s.153A of the Act together with compliance of other conditions submitted in Clause-2 of Explanation-5 to Section 271(1)(c) of the Act which provides immunity to the assessee from levy of penalty. By this, the penalty levied for all the assessment years in the total sum of Rs.17,39,035/- is deleted.
(b) In respect of penalty on additions made during the course of assessments framed u/s.153A of the Act for three assessment years i.e. A.Yrs 2001-02, 2003-04 and 2007-08, we hold that the same is deleted for recording improper satisfaction on the part of the ld. AO by not mentioning the specific offence committed by the assessee in the quantum assessment order and also for initiating penalty on one limb and levying penalty on the other limb of the alleged offence. By this, the penalty levied for three assessment years in the sum of Rs.3,03,339/- is deleted.
FULL TEXT OF THE ITAT JUDGEMENT
These appeals in ITA No.4619/Mum/2018, ITA No.4620/Mum/2018, ITA No.4621/Mum/2018, ITA No.4622/Mum/2018, 4623/Mum/2018 & 4624/Mum/2018 & 4625/Mum/2018 for A.Y.2001-02,2002-03,2003-04,2004-05, 2005-06, 2006-07 & 2007-08 respectively arise out of the order by the ld. Commissioner of Income Tax (Appeals)-48, Mumbai in appeal Nos. CIT(A)-48/I.T-42,44 & 48/DC CC2(3)/2017-18, CIT(A)-48/I.T-43,45,46 & 47/DC CC2(3)/2017-18 dated 14/06/2018, 31/05/2018 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271(1)(c) r.w.s. 274 & 271(1)(c) respectively of the Income Tax Act, 1961. Also include the details of Asst Year 2007-08.
2. At the outset, the ld. AR submitted that the only effective issue involved in all these appeals is as to whether the ld. CIT(A) was justified in confirming the levy of penalty u/s.271(1)(c) of the Act in the facts and circumstances of the case. He also submitted that A.Y.2001-02 being the first year in search assessment be taken up as the lead case. The ld. DR also agreed for the same. Hence, with the consent of both the parties, appeal for the A.Y.2001-02 is taken as the lead case and taken up for adjudication.
3. We have heard rival submissions and perused the materials available on record. We find that there was a search u/s.132 of the Act in the case of Shri Jayant B Patel and persons connected with him on 10/01/2007 in the premises of Cliffton society, Juhu. Pursuant to the search, notices u/s.153A of the Act were issued to the assessee for all the assessments years commencing from A.Y.2001-02 onwards. It is not in dispute that at the time of search, certain dairies numbered as A-1 to A-6 in the panchanama dated 10/01/2007 were found which admittedly contained certain transactions of undisclosed income. The assessee during the course of search had given a declaration statement u/s.132(4) of the Act accepting to the contents of the dairies and the related undisclosed income reflected thereon by duly substantiating the manner in which such undisclosed income was derived by him. It is not in dispute that the assessee had duly disclosed the transactions reflected in the said dairies in the returns filed pursuant to notice u/s.153A of the Act and paid taxes thereon. Hence, all the three conditions for claiming immunity from levy of penalty viz. declaration made u/s.132(4) of the Act by duly substantiating manner in which such undisclosed income was derived; including those undisclosed income in the return filed u/s.153A of the Act and the payment of taxes thereon were duly complied with by the assessee in the instant case. Hence, the case of the assessee falls within the Explanation-5, Clause-2 of Section 271(1)(c) of the Act wherein immunity from levy of penalty is squarely provided in the statute itself. We find that the ld. AO had levied the penalty as under for various assessment years:-
