Sarita Milind Davare v. ACIT, CC-40, Mumbai
[Citation -2016-LL-1005-114]

Citation 2016-LL-1005-114
Appellant Name Sarita Milind Davare
Respondent Name ACIT, CC-40, Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 05/10/2016
Assessment Year 2004-05
Judgment View Judgment
Keyword Tags search and seizure operation • national savings certificate • deeming provision • imposition of penalty • waiver of penalty
Bot Summary: PAN No.AHVPD8632R Assessee by Shri Vijay Kothari Department by Capt. Pradeep Arya Date of Hearing 29.9.2016 Date of Pronouncement 05.10.2016 ORDER Per B.R. Baskaran :- Both the appeals have been filed by the assessee challenging the orders passed by learned CIT(A)-38, Mumbai and they relate to A.Ys. The assessee has offered the above said amount as her income in the return of income filed u/s. Learned AR submitted that explanation 5A to section 271(1)(c) shall be applicable only if the assessee is found to be the owner of the asset and the assessee claims that the same has been acquired by him by utilizing his income for any previous year. 271(1)(c) has been wrongly invoked by the AO. He further submitted that Explanation 5 and Explanation 5A has been brought into section 271(1)(c) as deeming provision where the assessee claims that undisclosed assets have been acquired by him out of his income. Learned AR further submitted that the assessee has offered an amount of 3,50,000/- as her income in the return of income filed by her and hence the impugned penalty is liable to be deleted. On the contrary learned Departmental Representative submitted that the assessee did not file her return of income for the year under consideration prior to the date of search and the assessee has filed her return of income for the first time u/s. Further the fact that the NSC was held in the joint name of the assessee and her father/grandfather, in a way supports the case of the assessee that the investments were made by them.


IN INCOME TAX APPELLATE TRIBUNAL E Bench, Mumbai Before Shri B.R. Baskaran (AM)& Ramlal Negi (JM) I.T.A. No. 2182/Mum/2014 (Assessment Year 2004-05) I.T.A. No. 2186/Mum/2014 (Assessment Year 2008-09) Dr. Sarita Milind Davare ACIT CC-40 Flat No. 501, Swapna Vs. Mumbai Apartment, Paranjpe Scheme B, Vile Parle (East) Mumbai-400 057. (Appellant) (Respondent) PAN No.AHVPD8632R Assessee by Shri Vijay Kothari Department by Capt. Pradeep Arya Date of Hearing 29.9.2016 Date of Pronouncement 05.10.2016 ORDER Per B.R. Baskaran (AM) :- Both appeals have been filed by assessee challenging orders passed by learned CIT(A)-38, Mumbai and they relate to A.Ys. 2004-05 & 2008-09 confirming penalty levied u/s. 271(1)(c) of Act. 2. First we shall take up appeal filed for A.Y. 2004-05. assessee was subjected to search and seizure operation u/s. 132(1) of Act. During course of search, national saving certificates worth ` 3,50,000/- was found in joint name of assessee and her father/grandfather. Before search officials, assessee agreed to offer above said sum of ` 3,50,000/- as her income. Accordingly she filed return of income u/s. 153A of Act declaring amount of ` 3,50,000/- for year under consideration. Assessing Officer accepted return and thereafter levied penalty u/s. 271(1)(c) of Act by invoking Explanation 5A to sec.271(1)(c). Learned CIT(A) 2 Dr.Sarita Milind Davare also confirmed same and hence assessee has filed this appeal before us. 3. Learned AR submitted that assessee did not invest amount of ` 3,50,000/- in National Savings Certificate out of her own income and has received same as gift/inheritance from her father and grandfather. assessee has offered above said amount as her income in return of income filed u/s. 153A of Act, since she has agreed to offer same in statement taken from her during course of search. Learned AR submitted that explanation 5A to section 271(1)(c) shall be applicable only if assessee is found to be owner of asset and assessee claims that same has been acquired by him by utilizing (wholly or in part) his income for any previous year. Learned AR submitted that assessee did not have any other income in year under consideration and Assessing Officer has recorded said fact in para 3 of assessment order. In absence of own income, question of invoking Explanation 5A does not arise. He submitted that assessee has acquired these national saving certificates by way of inheriting/gift from her father/grandfather. Accordingly he submitted that provisions of Explanation 5A to sec. 271(1)(c) has been wrongly invoked by AO. He further submitted that Explanation 5 and Explanation 5A has been brought into section 271(1)(c) as deeming provision where assessee claims that undisclosed assets have been acquired by him out of his income. Intention for inserting Explanation 5 has been explained by Hon'ble Bombay High Court in case of Sheraton Apparels Vs. ACIT (2002) 256 ITR 20. Learned AR further submitted that assessee has offered amount of ` 3,50,000/- as her income in return of income filed by her and hence impugned penalty is liable to be deleted. 4. On contrary learned Departmental Representative submitted that assessee did not file her return of income for year under consideration prior to date of search and assessee has filed her return of income for first time u/s. 153A for year under consideration, as she agreed to offer 3 Dr.Sarita Milind Davare value of National saving certificates as her income in statement recorded from her during course of search. Accordingly learned Departmental Representative submitted that impugned investment has been detected by Assessing Officer during course of search and hence Assessing Officer has rightly levied penalty u/s. 271(1)(c) of Act. 5. We have heard rival contentions and perused record. We notice that AO has invoked provisions of Explanation 5A to sec. 271(1)(c) to impose penalty. We notice that AO himself has observed in assessment order that assessee did not derive any income during year under consideration. Further fact that NSC was held in joint name of assessee and her father/grandfather, in way supports case of assessee that investments were made by them. Hence we are of view that Explanation 5A would not apply to facts of present case. In this view of matter and in facts and circumstances of case, return of income filed by assessee offering amount of Rs.3,50,000/- as agreed in statement cannot be considered to be case of concealment of particulars of income. Accordingly we set aside order passed by Ld CIT(A) and direct AO to delete penalty. 6. We shall now take up appeal filed for AY 2008-09. assessee claimed sum of Rs.48,500/- as rent expenditure and same was disallowed by AO by treating same as not related to business. AO later levied penalty on above said disallowance and same was also confirmed by Ld CIT(A). 7. We heard parties on this issue and perused record. We notice that penalty has been levied on disallowance of rental expenditure on presumption that same does not relate to business. fact whether premises was used or not used for professional purposes is debatable one and hence above said disallowance should also be considered to be debatable one, in which case penalty u/s 271(1)(c) will not lie. Accordingly 4 Dr.Sarita Milind Davare we set aside order passed by Ld CIT(A) and direct AO to delete penalty. 8. In result, both appeals of assessee are allowed. Order has been pronounced in Court on 5.10.2016 Sd/- Sd/- (RAMLAL NEGI) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated : 05/10/2016 Copy of Order forwarded to : 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Dy./Asstt. Registrar) PS ITAT, Mumbai Sarita Milind Davare v. ACIT, CC-40, Mumbai
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