TaxTMI 
TaxTMI 
2010 (6) TMI 641
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.... Gupta is one of the assessees in this group. In the order passed under section 271(1)(c) of the Act, the Assessing Officer contended that the original return was filed on 30-7-2005 declaring a total income of Rs. 9,52,738. In response to notice under section 153A, the assessee filed his return of income on 13-3-2007 declaring a total income of Rs. 17,98,360 which includes an undisclosed income of Rs. 8,45,625. The assessment in this case was completed under section 153A on 10-12-2007 on a total income of Rs. 18,05,390. The Assessing Officer, therefore, observed that the assessee concealed an income of Rs. 8,45,625 which was detected due to search and seizure operation. Hence, penalty proceedings under section 271(1)(c) of the Act were initiated and notice issued under section 274 on 10-12-2007. In reply, the assessee submitted as under : "The facts of the case are that during the course of search, a disclosure under section 132(4) was made. Subsequently, returns of income were filed offering the additional income as per the disclosure made. The return of income for the assessment year 2005-06 was filed by me under section 153A declaring a taxable income of Rs. 17,98,360. This f....
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....ion 132 of the Act was conducted in Shricon Group of cases on 16-11-2005 at the residential and business premises of the assessee. Shri Avinash Ch. Gupta is one of the assessees of this group. The assessee filed his return of income on 13-3-2007 under section 139 of the Act on a total income of Rs. 4,41,22,830. The assessment in this case was completed under section 143(3) on 10-12-2007 on a total income of Rs. 4,51,30,890. During the course of search at various premises of the group jewellery was found for a sum of Rs. 2,60,75,498 and jewellery seized of Rs. 1,41,61,371, a chart of which was given by the Assessing Officer in the order passed under section 271(1)(c) of the Act. Out of the jewellery of Rs. 2,60,75,498 the assessee has explained jewellery items amounting to Rs. 1,14,37,416 to be belonging to various family members. The assessee filed a reconciliation chart matching the jewellery found with the wealth-tax/VDIS records/balance-sheets of various assessees in the family. The assessee filed a reconciliation chart of jewellery wherein he has claimed that jewellery valued at Rs. 1,14,36,416 were tallying with the declared records. But it was seen that certain items of inven....
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.... or description are not discussed. Nothing is stated about the extent of variation. The items existed but the weight or description varied. This aspect also does not indicate concealment of any item of jewellery. There might be many reason for variation in the description. Each valuer may describe an item of jewellery differently. Regarding the variation in weight, without referring to the extent of variation, allowance must be made for variation on account of different scale and different weighing condition. It is rightly argued that these are debatable matters. If the appellant did not challenge it, it was rightly attributed the desire to put an end to dispute and litigation. In my opinion, in the facts and circumstances of the case, the levy of penalty is not justified. The order of penalty is passed only because the assessed income is higher than the returned income. However, penalty cannot be treated as a mandatory act in consequence of such difference. Another way of looking at it is that the statement under section 132(4) made the disclosure with reference to all the items of jewellery. Any variation in the value, etc., can be accepted as a continuation of the statement unde....
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....e the date of search as per Explanation 5 to section 271(1)(c) of the Act the assessee has concealed the particulars of income and furnished inaccurate particulars of such income and it was due to search and seizure action that the assessee had made a disclosure of Rs. 8,45,625 and otherwise the assessee would not have disclosed this undisclosed income. He, therefore, imposed a minimum penalty equal to the amount of tax sought to be evaded under section 271(1)(c) of the Income-tax Act. The learned Commissioner of Income-tax (Appeals), however, was of the opinion that the second exception to Explanation 5 to section 271(1)(c) clearly helps the assessee against the levy of penalty. Explanation 5 is a deeming provision according to which unexplained investment, expenses, money, etc., would be deemed to be concealed unless admitted with proper explanation about the manner of acquisition in a statement under section 132(4). Since in the present case admission under section 132(4) was not in dispute the learned Commissioner of Income-tax (Appeals) placing reliance on the case of Chhabra Emporium's (supra), the Madras High Court judgment in the case of S.D.V. Chandru ( supra), the Rajasth....