TaxTMI 
TaxTMI 
2016 (3) TMI 149
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....estions of law:- (i) Whether, the decision of ITAT and authorities below is perverse in view of the facts and circumstances of the case being that the seized assets were far more in value as compared to the tax liability due on returned income and the appellant had offered adjustment of those assets against his taxes due vide a note appended to return of income, thus the appellant cannot be penalized on the ground of non payment of taxes? (ii) Whether, the decision of ITAT and authorities below is perverse in holding that the return of income has not been furnished in time while in fact it has been furnished on 23.5.1994 for the A.Y. 1994-95? (iii) Whether, on the facts and circumstances of the case the ITAT was justified in law that the return of income should have been filed by the appellant within time limit specified u/s 139(1) in order to get the benefit of explanation 5 of Section 271(1)(c) of the Income Tax Act, 1961? 3. A few facts necessary for adjudication of the instant appeal as narrated therein may be noticed. A search and seizure operation was carried out on 30.8.1993 by the Income Tax Department at the residential as well as business pre....
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....before the Tribunal. The Tribunal vide order dated 31.8.2004 (Annexure A-1) upheld the order of the CIT(A) and dismissed the appeal. Hence, the present appeals. 4. Learned counsel for the assessee-appellant submitted that the Tribunal had decided the cases of the assessee whereby the relief under Explanation 5 to Section 271(1)(c) of the Act has been denied by treating all the returns to have been filed under Section 139(4) of the Act whereas the return in the present case was filed under Section 139(1) of the Act. A distinction was sought to be made in respect of applicability of Explanation 5 to Section 271(1)(c) of the Act in respect of return filed under Section 139(1) of the Act and Section 139(4) of the Act. On that premises, it was submitted that the Tribunal had failed to grant benefit under Explanation 5 to Section 271(1)(c) of the Act to the assessee and deleted the penalty levied under Section 271(1)(c) of the Act. Relying upon the judgment of the Apex Court in Assistant Commissioner of Income Tax v. Gebilal Kanhaialal, HUF, (2012) 348 ITR 561 (SC), learned counsel contended that the assessee could deposit the tax along with interest at any time when no time limit for....
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.... laid down as under:- "Explanation 5 is a deeming provision. It provides that where, in the course of search under Section 132, the assessee is found to be the owner of unaccounted assets and the assessee claims that such assets have been acquired by him by utilizing, wholly or partly, his income for any previous year which has ended before the date of search or which is to end on or after the date of search, then, in such a situation, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed the particulars of his income for the purposes of imposition of penalty under Section 271(1)(c). The only exceptions to such a deeming provision or to such a presumption of concealment are given in subclauses (1) and (2) of Explanation 5. In this case, we are concerned with interpretation of clause (2) of Explanation 5, which has been quoted above. Three conditions have got to be satisfied by the assessee for claiming immunity from payment of penalty under clause (2) of Explanation 5 to Section 271(1)(c). The first condition was that the assessee must make a statement under Section 132(4) ....
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.... his possession during the search have been acquired out of his income, which has not been disclosed in the return of income to be furnished before expiry of time specified in Section 139(1). (ii) that the assessee should specify, in his statement under Section 132(4), the manner in which such income stood derived. (iii) that the assessee had to pay the tax together with interest, if any, in respect of such undisclosed income. However, no time limit for payment of such tax stood prescribed under clause (2). The only requirement stipulated in the third condition was for the assessee to "pay tax together with interest". 10. Delving into the controversy raised herein, it would be expedient to notice that the assessee filed his income tax return for the assessment year 1994-95 on 23.5.1994 declaring the income at Rs. 4,70,000/- inclusive of surrender under Section 132(4) of the Act. The Assessing Officer vide order dated 31.1.2000 (Annexure A-2) framed the assessment accepting the returned/surrendered income at Rs. 4,70,000/-. The Deputy Commissioner of Income Tax, Investigation Circle 2(1), vide order dated 27.7.2000 (Annexure A-4) levied penalty of Rs. 1,87,040/-....