Case Law Details

Case Name : Nukala Ramakrishna, Eluru Vs DCIT (ITAT Visakhapatnam)
Appeal Number : I.T.A. Nos. 189 to L92/Vizag/2014
Date of Judgement/Order : 16/09/2016
Related Assessment Year : 2008-09
Courts : All ITAT (5374) ITAT Visakhapatnam (52)

CA Saurabh Chokhra

Brief of the case:

The ITAT Visakhapatnam held that the amendment in Explanation 5A to Sec 271(1)(c) even when made effective by Finance Act ,2009 with retrospective effect from 01.06.2007 cannot be made applicable to assessee’s case because both original return and the revised return u/s 153A of the Act have been filed before the amended provisions were brought into the statute (which  received assent of President on 13.8.2009).

Facts of the case:

  • A search was carried out u/s 132(4) in assessee’s residential and business premises on 16.11.2007. During the course of search proceedings, the department found incriminating materials which reveals undisclosed income of the assessee in the form of investments in immovable properties and other group companies. When the said documents were confronted to the assessee, the assessee has admitted undisclosed income of Rs.7.6 crores.
  • Consequent to search, the assessee has filed revised return of income for the assessment year 2005-06 to 2008-09 disclosing undisclosed income admitted during the course of search proceedings and paid tax before filing return of income.
  • Subsequently, the assessment was completed u/s 143(3) r.w.s. 153A of the Act determining total income on estimation basis and levied concealment penalty u/s 271(1)(c) on the ground that the assessee has deliberately concealed particulars of income or furnished inaccurate particulars of income and offered additional income only on search action.
  • CIT(A) appeal also agreed with the view taken by AO , however , provided relief on the quantum of penalty. Aggrieved assessee is in appeal before ITAT.

Contention of the Assessee:

It was contended by the assessee that explanation 5A as it stood at the time of search applies only to a non-filer assessee who was searched uls L32 of the Act, but not for the assessee’s who had filed their returns u/s 139(1) of the Act.

Question to be decided:

Whether the AO was right in levying penalty under the provisions of explanation 5A of section 271(1)(c) of the Act or the amended provisions of explanation 5A of section 271(1)(c) of the Act, by the Finance Act, 2009, with retrospective effect from 01.6.2007 is applicable to the facts of the present case?

Held by ITAT Visakhapatnam:

  • As per the pre-amended expl. 5A to Sec 271(1)(c)charge of concealment attracts to the cases where the assessee has not filed any return of income for the respective assessment years u/s 139(1) of the Act.However , the amended provisions made effective with retrospective effect from 01.06.2007 included the cases whether  the assessee has filed the return or not u/s 139(1) of the Act, if the undisclosed income found during the course of search is not disclosed in the regular return filed u/s 139(1) of the Act.
  • The court held that the pre-amended provisions of explanation 5A is applicable to a non-filerassessee’s, where the assessee’s is not filed return of income before the search and also not disclosed the undisclosed income in the return of income.The amended provision of explanation 5A, which is brought into the statute by the Finance Act 2009, (which was received ascent of President on 13.8.2009) is applicable to both filers and non-filers of returns.
  • Admittedly in this case, the searchis taken place on 16. 11.2007. The assessee has filed return of income u/s 153A of the Act u/s 30.1.2009. Both original return u/s 139(1) ofthe Act and the revised return u/s 153A of the Act have been filed before the amended provisions were brought into the statute (which was received ascent of President on 13.8.2009).
  • Therefore, tribunal held that the amended provisions of explanation 5A of section 271(1)(c) of the Act is not applicable in the instant case. Accordingly, we direct the A.O. to delete the penalty levied uls 271(1)(c) of the Act, for the assessment year 2005-06, 2006-07 & 2007-08.
  • In result the appeal of assessee was allowed.
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