TaxTMI 
TaxTMI 
2005 (4) TMI 47
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....re fulfilled and no penalty was leviable under section 271(1)(c)?" The brief facts of the case are follows: A search was conducted at the residential as well as business premises of the assessee opposite party on August 30, 1988, during the course of which cash, jewellery and other valuable articles and things were found and seized. It appears that during the course of the assessment proceedings to settle the dispute on agreed basis the assessee moved an application before the Commissioner of Income-tax on which direction was issued by the Commissioner of Income-tax, Kanpur, in which it was remarked that penalty proceedings under section 271(1)(c) of the Act may not be applicable where additional income is covered by Explanation 5 to ....
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.... cases of search. He submitted that under Explanation 5 any money, bullion, jewellery or other valuable article or thing which are found at the time of search are deemed to be concealed income unless such income is recorded in the books of account or declared or disclosed to the Chief Commissioner or Commissioner before the date of search or during the course of search makes a statement under sub-section (4) of section 132 of the Act that any money, bullion, jewellery or other valuable articles or things found in his possession or in 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 the time specified in sub-section (1) of section 139 of the Act a....
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....sclosed income. He submitted that the manner in which such income has been derived may not be given much importance. He further submitted that under section 132(4) of the Act statement is being recorded by the officers and the assessee only states what the officer asks or puts a query. In case the officer did not put any question with regard to the manner in which such income has been derived, it was not expected from the assessee to state the manner in which such income has been derived and in case manner has been disclosed subsequently during the course of assessment it should be considered for the purpose of Explanation 5(2). He submitted that in the return and during the course of assessment proceedings it was disclosed that the income ....
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....sactions resulting in such income are recorded,- (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 subsection (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-sectio....
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....statement under sub-section (4) of section 132 of the Act that the money, bullion, jewellery, etc., found in his possession 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 section 139 of the Act 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. The exception appears to be to provide an opportunity to the assessee to make a clean and fair confession and to surrender his income and also to deposit the tax and interest thereon which may result in an agreed assessment. The paramount intention appears to be that in the case of fair and....