TaxTMI 
TaxTMI 
2016 (9) TMI 643
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....0/- . Thus, an addition of only Rs. 49,250/- was made as against the returned income and it is the assessee's claim that this addition of Rs. 49,250/- pertains to an arithmetical error in calculation. During the course of the search, the statement of the assessee was recorded u/s 132(4) of the Act. In the statement u/s 132(4) of the Act, the assessee surrendered a sum of Rs. 65,000,000/- as his undisclosed income in the form of following undisclosed assets found during the search - i. Unaccounted cash Rs. 2,600,000/- ii. Unaccounted investment in jewellery Rs. 3,200,000/- iii. Unaccounted income under miscellaneous income Rs. 1,200,000/- iv. Advance for land Rs. 45,500,000/- v. On a/c of share capital Rs. 12549250/- Total Rs. 65,049,250/- 2.1 While completing the assessment u/s 153B (i)(b) of the Act, the AO also initiated penalty proceedings u/s 271AAA of the Act in respect of item nos. (iv) and (v) above i.e. on advance for land and share capital. 2.2 In response to the show cause notices u/s 271AAA, the assessee made five fold contentions before the AO as under: i. That the undisclosed income w....
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.... deals and in property business was too general an explanation to be accepted. The ld. CIT (Appeals) relied on the decision of the Kolkata Bench of the ITAT in DCIT vs. Pioneer Marbles and Interiors Pvt. Ltd., 144 TTJ (Kol.) 663 and confirmed the imposition of penalty by holding that the assessee had failed to discharge the onus of substantiating the manner in which the income was derived as the condition laid down in section 271AAA (2)(ii) remained unfulfilled. 2.5 Aggrieved the assessee has preferred an appeal before the Tribunal and has challenged the confirmation of the penalty by the ld. CIT (Appeals). 3. The ld. AR drew our attention to question nos. 23, 24 & 25 of the statement recorded and the answer thereto which read as under: "Question 23 : I am showing you annexure A2 which is a pocket notebook with no. 24 and the name 'Neel Gagan' printed on it onm page no. 2 of this annexure A2. There are certain details of transaction relating to each payment of share application. Please state in whose hand these entries are written and explain the entries involved? Answer: These entries are written in my own hand and these relate to cheque received against the cash pa....
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....properties. I promise to pay the taxes on additional income subject to the condition that no penalty or prosecution proceedings are initiated against me. The surrender has been made by me in terms of Section 271AAA of the Income Tax Act, 1961." 3.1 The ld. AR submitted that the assessee's statement u/s 132(4) of the Act was recorded by the Authorized Officer in question and answer form. Thus, any question regarding the specification and manner in which such income has been derived has to be raised by the Authorized Officer recording the statement. The person searched cannot on his own put words in the mouth of the Authorized Officer to elicit the explanation envisaged in the provisions contained in section 271AAA which would satisfy the Department. It was submitted that u/s 132(4) of the Act, the statement is recorded by the Officers and the assessee only states what the officer asks or puts the query. It was submitted that a perusal of the above questions and answers will show that wherever and whenever a question was put to the assessee regarding the source and substantiation thereof, the assessee has categorically replied to them. Where the Authorized Officer did not raise an....
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....pecified 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, then the assessee for such income will not be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income to attract the penalty therein. Similarly under the provisions of section 271 AAA of the Act penalty is not leviable where search has been initiated u/s 132 on or after 1.6.2007 but before 1.7.2012, and the assessee in the course of search, in a statement under the sub section 4 of section 132,(i), admits the undisclosed income (ii) specifies and substantiates the manner in which such income has been derived, and (iiii) pays the tax together with interest, if any, in respect of the undisclosed income. From the reading of both these penal provisions we find that one requirement is common for non attraction of the penal provisions under both the sections i.e. if the assessee in his statements recorded u/s 132(4) of the Act admits the undisclosed income and specifies in the statement the manner in which such income has been derived an....
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....ere reason relied upon by the department to deny to the assessee the benefit of immunity under clause (2) of Explanation 5 to section 271(1)(c) of the Act. According to the department the assessee had complied with all the conditions of clause 2 of Explanation 5 except payment of tax in time. Hon'ble Supreme Court pleased to hold that no time limit has been prescribed for payment of tax under clause 2 of Explanation 5 and the assessee having paid tax upto the date of payment in respect of the undisclosed income surrendered by it in the course of search, all the three conditions laid down in clause 2 of Explanation 5 to section 271(1)(c) stood fulfilled and therefore the assessee is entitled to immunity under clause (2) of Explanation 5 to section 271(1)(c) of the Act. In the case of CIT vs. Radha Kishan Goel (supra) before the Hon'ble Allahabad High Court the issue raised was as to whether mere non-statement of manner in which undisclosed income was derived would make Explanation 5 (2) to section 271(1)(c) inapplicable. The further question raised was as to whether in a case manner in which income has been derived has not been stated in the statement u/s 132(4) but is stated subseq....
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....le. The penalty was accordingly deleted. In the case of Shri Pramod Kumar Jain and another vs. JCIT (supra) before the Cuttak Bench of the Tribunal, the assesee had disclosed the unaccounted income but had failed to specify the manner in which such income had been derived. The department accordingly levied penalty u/s 271 AAA of the Act. The same was upheld by the first appellate authority. The Tribunal has however deleted the penalty on the basis that there is no prescribed method to indicate the manner in which income was generated where the definition of "undisclosed income" has been defined in the Act itself when no income of the specified previous year represented "either wholly or partly" which onus lay upon the assessee stood discharged. The Delhi Bench of the Tribunal in its recent decision in the case of Mother Pride Education Personna Pvt. Ltd,.vs. DCIT (supra) while placing reliance on its earlier decision in the case of Smt. Raj Rani Gupta (supra) and following the ratio of the decision of Hon'ble High Courts in the case of CIT vs. Radhi Kishan Goel (supra) (All) and CIT vs. Mahendra C. Shah (supra) (Guj) has deleted the penalty. The Hon'ble Allahabad High Court in the ....
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....Radha Kishan Goel (2005) 278 ITR 454. Secondly, considering the illiterate, to be specific and to the point regarding the conditions stipulated by exception no.2 while making statement u/s 132(4) of the Income tax Act, 1961. The view taken by the Tribunal as well as the Allahabad High Court to the effect that even if the statement does not specify the manner in which the income is derived, if the income is declared and tax thereon paid, there would be substantial compliance not warranting any further denial of the benefit under exception no.2 in Explanation 5 is commendable." 5.1 In the present appeal before us, it is seen that the Department has accepted the quantum of surrender made by the assessee in his statement recorded u/s 132(4) of the Act. The taxes due thereon have also been paid. On having gone through the queries raised while recording the statement of the assessee u/s 132(4) of the Act, it is evident that nowhere has the Authorized Officer asked a specific question with regard to the manner in which the undisclosed income has been derived. Respectfully following the ratio of the above cited decisions of Hon'ble Allahabad High Court and Hon'ble Gujarat Hi....