TaxTMI 
TaxTMI 
2015 (4) TMI 914
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..../-. Thereafter the AO levied penalty u/s.271(1)(c) of the Act and had assessed undisclosed income of Rs. 14,50,000/-. As per AO the assessee was liable to penalty in view of Explanation 5 to sec.271(1)(c) of the Act. Assessee's contention regarding her case covered under Explanation 5 to Section 271(1)(c) was rejected by the AO. By the impugned order, the CIT(A) confirmed the penalty by observing that the assessee could avail the benefit of Explanation 5 to Sec.271(1)(c) only if any money, bullion, jewellery or other valuable article or thing are found in his possession or under his control during search and had been acquired out of his income which had not been disclosed so far in his Return of Income. The CIT(A) observed that undisclosed income offered for taxation comprised of investment in construction of agricultural land - Rs. 12,54,780/- and payment to VLCC - Rs. 1,95,220/- on which penalty imposed by the AO was correct. Against this order of CIT(A), the assessee is in further appeal before us. 3. We have considered rival contentions, carefully gone through the orders of the authorities below as well as judicial pronouncement cited at bar. Explanation 5 to Sec.271(1)(c) of t....
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....ed this submission. The expressions used in the Explanation 5 to section 271 (1 )(c) are "money, bullion, jewellery or other valuable article or thing. To this extent there is similarity between the Explanation cited above and the expressions found in section 132(4) because in the latter section expressions such as "books of accounts, other documents" are additionally found Further the expressions viz., "money, bullion, jewellery or other valuable article or thing" found in Explanation 5 to section 271 (1 )(c) can be construed, in view of their identical nature, in the same manner in which such expressions are construed for purposes of either section 132(1)(c) or 132(5) read with 132(4). Section 132(1)(c) empowers the authorities to conduct search if there is reason to believe "that any person is in possession of any 'money, bullion, jewellery or other valuable article or thing' and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property for the purpose of the Incometax Act, 1922 or this Act (hereinafter in this section referred to as the undisclosed income or property". Thus the power of search is based upon t....
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....upreme Court in the case of N.C. Budharaia & Co. 204 ITR 412. The Hon'ble Apex Court held that the words "article or thing" in the context of section 32A were used interchangeably. In the scheme and context of the provision it would not be right to isolate the word "thing", ascertain its meaning with reference to the Law Lexicons, and attach to it a meaning which it was never intended to bear. In the context of section 132 also keeping in mind that the High Court decisions are in favour of the view that section 132 is not applicable in respect of immovable property, the fact that Explanation 5 is only with reference to search proceedings and lastly the fact that the expression article or thing has to be read ejusdem generis with the words, money, bullion, jewellery, it is clear that the decision of the Hon'ble Apex Court in the case of Budhara'a & Co.'s case (supra) is squarely applicable and, therefore, we hold that in the present case Explanation 5 is not applicable. 6. In the instant case, in relation to the assessment year under consideration, the assessee was found to be the owner of 'construction on agriculture land (Rs.12,54,780/-) and membership of VL....
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....regate income as being offered as above will be Rs. 20 crores. The above disclosure will cover any discrepancies in hands of any of the companies/Individuals/HUF. I am making above declaration on behalf of companies and also myself and my family members and my HUF as the case may be in order to obviate undue litigation and to buy peace provided no penalty and no prosecution proceedings are initiated. " Also, Shri Purnandu Jain had further confirmed the same in his statement recorded on 03-05-2007." 8. Hon'ble Rajasthan High Court in the case of CIT Vs. (1) Kanhaiyalal (2) Kanhaiyalal Saruparia, 299 ITR 19 (Raj), has observed as under :- "Explanation 5 to section 271(1)(c) of the Income tax Act, 1961 provides that where in the course of a search initiated under section 132, the assessee is found to be the owner of any assets mentioned therein, and the assessee claims that such assets have been acquired by him by utilizing (wholly or in part) his income, for any previous year, which has ended before the date of the search, but the return of income for the said year has not been furnished before the said date, or where such return had been furnished before the said date such income....