TaxTMI 
TaxTMI 
2015 (7) TMI 323
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.... belonging to herself and her family members, and none else (in answer to Q #3). Consequently, return of income for the relevant year, i.e. A.Y. 2007-08, was filed on 12.08.2008, declaring a total income of Rs. 35,86,354/-, including Rs. 29,13,895/- on account of un-explained jewellery found and seized during the search from the assessee's possession, paying taxes thereon. The said income, offered as 'Income from Other Sources', was assessed as such vide order u/s. 143(3) dated 16.12.2008. In penalty proceedings u/s. 271(1)(c), initiated along with, the assessee, on being show-caused, invoked the immunity provided by Explanation 5 to section 271(1)(c) of the Act. The assessee had offered the excess jewellery found during search and offered it as income u/s. 132(4) for Assessment Year (AY) 2007-08. Accordingly, no penalty, it was pleaded, ought to be levied. The same did not find favour with the Assessing Officer (AO) as no such disclosure had been made u/s. 132(4), so as to attract the protection of Explanation 5 to section 271(1)(c). The same stood confirmed in appeal on the finding of the terms of the said Explanation being not satisfied, relying on the decision in the case of Aj....
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....ecorded,- (i) in a case falling under clause (a), before the date of the search; and (ii) in a case falling under clause (b), on or before such date; in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Chief Commissioner or Commissioner before the said date; or (2) he, in the course of the search, makes a statement under sub-section (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub-section (1) of section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income.' 4.2 As apparent, it (Explanation 5 to s. 271(1)(c)) provides for deeming concealment of particulars of income or furnishing inaccurate particulars of income under the condition of the assessee claiming the assets, of which it is found to be the owner of during the course of search, to represent a utiliza....
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....n the occasion of her wedding, and that of her children (in answer to Question # 4), with answer to Q. #3 clarifying the jewellery contained in the Locker as belonging to her and her family members, specifying them by name. Further, no other family member, including her son, Deepak Kumar Agarwal (whose statement is at PB pages 22-24), who were also examined, threw any light on the source of the acquisition of the said jewellery, or even otherwise toward its ownership, even as also emphasized by the AO in the remand report dated 12/1/2011 (PB 19). There is, consequentially, no surrender of any income during search, either u/s. 132(4) or even otherwise, by the assessee or any other family member in relation to the impugned jewellery, on which income penalty stands levied. Further, this is despite the assessee being specifically questioned on the source of acquisition of the impugned jewellery. In fact, the same represents only a part of the total jewellery found, so that the assessee was, as a matter of fact, able to explain the jewellery found in her possession during search in part, being unable to substantiate the same for the entire jewellery. This, then, constitutes our second p....
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....r the unexplained jewellery found with her. We state so as penalty becomes leviable in the absence of a satisfactory explanation (Chuharmal (supra); CIT v. Rattan S. Grewal [2008] 304 ITR 75 (P&H); CIT v. Loknath Chowdhary v. CIT [1985] 155 ITR 291 (Cal)). The assessee has not been able to; rather, has not even attempted to substantiate her explanation of the same having been gifted on the occasion of weddings in the family, which would in the very least require the names of the donors, besides confirmations from the donors. Rather, how could gift to another form part of her income, i.e., going by her explanation. The same is no more than a bald plea, contradicted by the assessee's own stand of returning the same as her income, albeit consequent to search. The same, however, cannot be regarded as voluntary by any stretch of imagination, being in consequence of a search and findings thereat, i.e., detection and, in fact, seizure of the relevant assets. Case law on what constitutes a voluntary action on the part of the assessee in returning income, is legion. We may, for reference, advert to CIT v. Mohd. Mohtram Farooqui [2003] 259 ITR 132 (Raj); Addl. CIT v. Radhey Shyam [1980] 123 ....