IN INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI Before Shri A. Mohan Alankamony, Accountant Member & Shri Duvvuru RL Reddy, Judicial Member I T.A. No. 1112/Mds/2015 Assessment Year :2009-10 Shri S.N. Vadivelu, Assistant Commissioner of No. 4, Vedavalli Street, Vs. Income Tax, Saligramam, Chennai 600 093. Media Circle II, Chennai. [PAN:AABPV6001H] (Appellant) (Respondent) Appellant by : Shri S. Sridhar, Advocate Respondent by : Shri Supriyo Pal, JCIT Date of hearing : 26.07.2016 Date of Pronounce ment : 23.09.2016 O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: This appeal filed by assessee is directed against order of ld. Commissioner of Income Tax (Appeals) IV, Chennai, dated 30.10.2014 relevant to assessment year 2009-10. only effective ground raised in appeal of assessee is that ld. CIT(A) has erred in confirming levy of penalty under section 271(1)(c) of Income Tax Act, 1961 [ Act in short]. 2 I.T.A. No.1112/M/15 2. appeal of assessee is found to have been filed late by 92 days. ld. Counsel for assessee has filed petition for condonation of delay in support of affidavit of assessee. By referring to petition filed, ld. Counsel for assessee has submitted that petitioner s C.A. fell ill in month of January, 2015 and could able to recover from his illness only in month of May, 2015 and due to this reason, filing of appeal before Tribunal against first appellate order was escaped his attention and thereafter, immediately appeal was filed on 12.05.2015. Therefore, he has pleaded that delay in filing appeal is neither wanton nor wilful and prayed that delay may be condoned and appeal is admitted for hearing. On other hand, ld. DR did not seriously object to above submissions of ld. Counsel for assessee. We are of considered opinion that since assessee has sufficient cause for not filing appeal within stipulated time, delay in filing appeal is condoned and admitted appeal for hearing. 3. Brief facts of case are that assessee is film actor. search under section 132 of Act was conducted on 19.10.2010 in assessee s residential premises at Chennai and Madurai. During course of search, cash to tune of .1.3 lakhs found at residential premises of assessee at Madurai which was not reflected in books of accounts and same was treated as unaccounted income. From materials collected 3 I.T.A. No.1112/M/15 during course of search, assessment was reopened from assessment years 2004-05 to 2010-11 and consequently notice under section 153A of Act was issued to assessee. In response to notice, assessee filed his return of income under section 153A on 30.09.2011 admitting income of .1,19,45,089/- belatedly after search operations. Further notices under section 143(2) and 142(1) of Act dated 21.11.2011 were issued to assessee. After considering details and verifying records, Assessing Officer has completed assessment under section 153A r.w.s. 143(3) of Act on 30.12.2011 by making addition of .60,00,000/- on account of undisclosed investment in property, .54,000/- on account of disallowance on salaries and wages and .3,32,150/- on account of disallowance of expenses incurred on story writing. In view of above, Assessing Officer has initiated penalty proceedings under section 271(1)(c) of Act. 3.1 During course of penalty proceedings, assessee has filed his submissions dated 18.06.2012 on 21.06.2012. In his reply, assessee has submitted that out of three additions made, assessee has agreed for addition made on unexplained investment to tune of .60 lakhs to have amicably settled with Department. It was further submitted before Assessing Officer that salary and wages and story discussion 4 I.T.A. No.1112/M/15 expenses are inevitable expenses to be incurred by leading comedian in cine field. 3.2 After considering submissions of assessee, Assessing Officer has observed that assessee has filed his return of income for assessment year 2009-10 only after search operation and also not gone on appeal before first appellate authority on additions made by Assessing Officer. submission of inaccurate particulars by assessee would not have been detected at all if search had not been conducted and not taken up for further scrutiny and therefore, he held that in case of assessee, penalty is clearly attracted under section 271)(1)(c) of Act and levied minimum penalty of .61,23,153/-. 4. Against penalty order, assessee carried matter in appeal before ld. CIT(A). After considering submissions of assessee, ld. CIT(A) has observed that there was nothing voluntary on part of assessee to disclose his true income which he was compelled to admit following search action on him. assessee did not offer any credible and cogent explanation for not offering income in form of unexplained investment in property pertaining to previous years ending before search and brought to light only during search which would therefore be deemed to be concealment of particulars of income within meaning of Explanation 5 to section 271(1)(c) of Act. However, ld. CIT(A) has 5 I.T.A. No.1112/M/15 observed that Assessing Officer has included disallowances made on account of salaries and wages of .54,000/- and .3,32,150/- on account of story writing expenses to undisclosed investment in property of .60 lakhs for levy of penalty which was un justified since it is settled law that merely because assessee raised claims which were eventually disallowed in instant case, in adhoc manner by Assessing Officer does not mean that ingredients of clause (c) to section 271(1) were satisfied so as to justify imposition of penalty. Therefore, by sustaining penalty levied towards undisclosed investments, ld. CIT(A) has deleted penalty levied with regard to expenses towards salaries and wages and story writing and partly allowed appeal filed by assessee. 5. On being aggrieved, assessee is in appeal before Tribunal and ld. Counsel for assessee has submitted that disclosure of investment in property in search assessment proceedings was explained on acceptable legal terms/perception before ld. CIT(A) and therefore, ld. CIT(A) was not right in sustaining penalty levied under section 271(1)(c) of Act on account of undisclosed investments. Therefore, ld. Counsel for assessee has pleaded that penalty sustained by ld. CIT(A) should be deleted. On other hand, ld. DR strongly supported orders of authorities below. 6 I.T.A. No.1112/M/15 6. We have heard both sides, perused materials on record and gone through orders of authorities below. It is admitted fact that assessee has not voluntarily admitted his true particulars of income. Even, assessee has not filed his return of income under section 139 of Act. Only after conduct of search operation under section 132 of Act and after issuing notice under section 153A of Act, assessee has come forward to file his belated return of income. After scrutiny of seized materials and verification of particulars filed by assessee, Assessing Officer found that assessee has made undisclosed investments. During course of penalty proceedings, assessee has simply stated that out of three additions made, assessee has agreed for addition made on unexplained investment to tune of .60 lakhs to have amicably settled with Department. assessee did not have any credible and cogent explanation for not offering income in form of unexplained investment in property before search operation; he was bound to agree for quantum addition and not preferred any appeal before first appellate authority against various additions made by Assessing Officer. Just because assessee has agreed for addition of undisclosed investment in property, he cannot be escaped from levy of penalty. Factually, assessee has no valid reason for concealment and furnishing inaccurate particulars in belated return filed against notice under section 153A of Act. In this case, neither assessee filed his return before due date 7 I.T.A. No.1112/M/15 of filing of return of income nor furnished complete particulars of income or even after service of notice under section 153A of Act, assessee has furnished complete and true particulars of income. Furnishing of inaccurate particulars by assessee would not have detected at all if search operation had not been conducted by Department and case not taken up subsequently for further scrutiny. Since assessee has no valid reason for concealment of income and furnishing of inaccurate particulars, penalty under section 271(1)(c) of Act clearly attracts in this case. Therefore, we are of opinion that penalty levied by Assessing Officer was rightly confirmed by ld. CIT(A) and we find no reason to interfere with orders of ld. CIT(A). Thus, ground raised by assessee is dismissed. 7. In result, appeal filed by assessee is dismissed. Order pronounced on 23rd September, 2016 at Chennai. Sd/- Sd/- (A. MOHAN ALANKAMONY) (DUVVURU RL REDDY) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, 23.09.2016 Vm/- Copy to: 1. Appellant, 2. Respondent, 3. CIT(A), 4. CIT, 5. DR & 6. GF. S.N. Vadivelu v. Assistant Commissioner of Income Tax, Media Circle II, Chennai