INCOME TAX ACT, 1961

Section 271(1)(c), Expln. 5

Penalty under section 271(1)(c) - Concealment or furnishing of inaccurate particulars - No adverse finding vis-a-vis cash seized and offered in the return of income -

Assessee was apprehended by Police Thana, Sikar with cash amounting to Rs. 5 lakhs and cash was seized by police and thereafter, Income Tax Department was informed. Thereafter, Department initiated requisition proceedings under section 132A and drawing a Panchnama took possession of cash in pursuance of warrant under section 132A. Assessee surrendered the seized cash as income for financial year 1992-93 relevant to assessment year 1993-94 and offered the cash to be retained to set-off his tax liability. AO passed summary order under section 132(5) by assessing total income of assessee for the financial year 1992-93 at Rs. 5,95,340 and also imposed penalty under section 271(1)(c). Held: In absence of any specific mandate of legislature, scope of Explanation 5 to section 271(1)(c) cannot be enlarged so to read and understood the same in context of requisition proceedings under section 132A where it is specifically restricted in respect of search initiated under section 132. Seizure and requisition of cash under section 132A might have occasioned filing of return of income, however, where return of income had been filed at the beginning of assessment year itself well within time allowed under section 139(1) and had been accepted by AO and there was no adverse findings vis-a-vis cash seized and offered in the return of income, there was no basis for levy of penalty under section 271(1)(c).

Relied:CIT v. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC), Pr. CIT v. Shree Sai Developers (2019) 418 ITR 306 (Guj.) : 2019 TaxPub(DT) 5368 (Guj-HC) and CIT v. SAS Pharmaceuticals (2011) 335 ITR 259 (Del.) : 2011 TaxPub(DT) 999 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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