AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 347
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....partners Shri P.S.Talwalkar had declared an amount of Rs. 60 lakhs as undisclosed income for the A.Y. 1990-91 on account of extra money received which was not disclosed in the books of account. However, in the return filed the assessee had not disclosed such on-money but such amount was declared in the A.Y. 1991-92 and 1994-95. The assessee in his return for A.Y. 1990-91 had given the following note : "The partner has declared a sum of Rs. 60 lakhs (Rupees Sixty Lakhs) as income u/s.132(4) of the Act at the time of search and seizure conducted by the department on 31.1.90. The income so declared will be considered in the income to be computed for the A.Y. 91-92 as soon as the income in the case of the firm is to be ascertained in the completion of the project and the income so declared u/s.132(4) pertains to the said project." 4. The AO completed the assessment u/s.143(3) on 29-03-1993 determining the total income at Rs. 74,43,000/-. In the said return the AO apart from making other additions/disallowances made addition of Rs. 60 lakhs being the amount declared u/s.132(4) which was not offered by the assessee for taxation. 5. The assessee preferred an appeal against ....
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....ting on-money over & above the agreement amount, thereby wilfully evading tax. (3) The Learned Commissioner of Income-tax (Appeals) erred in not considering that even after offering the amount of Rs. 60 lacs as undisclosed income during search action, the assessee had not offered this amount for taxation in the return of income taking recourse to change in the method of accounting amounts to concealing the particulars of income. (4) The appellant craves leave to add, alter or amend any or all the grounds of appeal." 8. The Ld. Counsel for the assessee heavily relied on the order of the CIT(A). He submitted that on the date of search on 31-01-1990 the financial year order was yet to be completed. Referring to the copy of the remand report of the AO, a copy of which is placed at pages 101 to 105 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the evidence of on-money received of Rs. 43,02,900/- for different assessment years which are as under : Year Amount A.Y. 87-88 2,17,200/- A.Y.88-89 26,41,400/- A.Y.89-90 06,75,000/- A.Y.90-91 07,69,300/- Total 43,02,900/- 9. He submitted....
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....peaks of any income based on any entry in books of accounts or other documents or transactions and the assessee claimed that such entry in the books of account or other documents or transactions represents his income, (wholly or in part) for any previous year. However, as per Explanation 5, when during the course of any search, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing found from his premises during the search and the assessee has claimed that such assets have been acquired by him by utilizing his income etc. Thus, the income which was based on any entry in any books of account or other documents or transactions etc. were not earlier in the Explanation 5. Therefore, no penalty u/s. 271(1)(c) of the Act can be levied by invoking Explanation 5 to section 271(1)(c) of the I.T. Act, 1961. 12. So far as invoking of Explanation 1 to provisions of section 271(1)(c) of the Act is concerned, he submitted that the assessee has already given a bonafide reason in the return of income as well as during the course of assessment proceedings. He submitted that although the quantum addition has been confirmed by the Tribunal, howeve....
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....see had a rationale in offering the undisclosed income in A.Yrs. 91-92 and 94-95. Referring to the decision of Hon'ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. reported in 322 ITR 158 he submitted that the Hon'ble Supreme Court in the said decision has held that mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing of inaccurate particulars regarding the income of the assessee. The said claim made in the return cannot amount to furnishing of inaccurate particulars. He submitted that in any way when two views are possible the view which is favourable to the assessee has to adopted. For the above proposition he relied on the decision of Hon'ble Supreme Court in the case of CIT Vs. Vegetable Products reported in 88 ITR 192. 17. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case a search took place in the case of the assessee on 31-01-1990 during which evidence of receipt of on-money of Rs. 43.02 lakhs was found, details....
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....ly Rs. 7,69,300/-, therefore, penalty at best can be levied on this amount for the impugned assessment year and not on Rs. 60 lakhs. 19. We find force in the arguments advanced by the Ld. Counsel for the assessee. Admittedly, evidence of on-money was received for sale of flats amounting to Rs. 43,02,900/- for four assessment years. However, no flats were sold during A.Y. 1990-91 and a part of flats were sold in A.Y. 1991-92 and the remaining flats sold in A.Y. 1994- 95. The Hon'ble Bombay High Court in the case of CIT Vs. Karda Constructions Pvt. Ltd. vide ITA No.1960/2012 order dated 25-02- 2013 has held that on-money, which was part of sale consideration of flats, has to be taxed in the year in which the assessee has recorded the sale of flats. The relevant observation of the Hon'ble High Court reads as under : "P.C. : In this appeal by the revenue for assessment year 2009-10 following question of law has been framed for our consideration. Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in deleting the addition made by the Assessing Officer of Rs. 71,67,000/- being unaccounted cash receipts found during....
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.... 22. The Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (Supra) has held that a mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing of inaccurate particulars regarding the income of the assessee. The said claim made in the return cannot amount to furnishing of inaccurate particulars. The relevant observation of Hon'ble Supreme Court at pages 163 to 166 read as under : "A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the Section 271(1)(c) would embrace the....
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....went on to hold that Clause (iii) of Section 271(1) provided for a discretionary jurisdiction upon the Assessing Authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term "inaccurate particulars" was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. It was further held that the assessee must be found to have failed to prove that his explanation is not only not bona fide but all the facts relating to the same and material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The Court ultimately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. was upset. In Union of India Vs. Dharamendra....