TaxTMI 
TaxTMI 
2018 (10) TMI 1117
X X X X Extracts X X X X
X X X X Extracts X X X X
....ome from business. A search and seizure action u/s 132(1) of the I.T. Act, 1961 was carried out at the residential as well as office premises of the assessee on 28.01.2011. In response to notice u/s 153A, the assessee filed his return of income for the impugned assessment year declaring total income of Rs. 23,22,78,376/- on 30.10.2012. During the course of assessment proceedings the Assessing Officer observed that that during the course of search conducted at the residential premises of the assessee certain documents were found and seized. On the basis of these documents, the assessee, in his statement recorded u/s 132(4), had surrendered a sum of Rs. 21,00,00,000/- over and above his normal income. He further noted that during the course of search action a sum of Rs. 16,46,300/- in cash as well as jewellery valued at Rs. 50,00,000/- was found from the residential premises which has also been surrendered by the assessee in the instant assessment year. Further, the assessee had also surrendered an amount of Rs. 1,33,53,700/- on account of other discrepancies either in personal income or in group companies. Thus, the total surrender made by the assessee is Rs. 23,00,00,000/- which wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Rs. 50,00,000/- on account of excess jewellery found. (iii) Rs. 7,73,300/- on account of Cash found. (iv) Rs. 42,26,700/- on account of other discrepancies. It is however the case of the AO that the manner in which the income was derived was neither specified nor substantiated in as much as the methodology with documentary evidence were not furnished by the assessee. This persuaded the AO hold that the assessee did not fulfill all the conditions as laid down in section 271AAA and proceeded to levy the penalty of Rs. 2,20,00,000/-. Before me, the assessee reiterated that the surrendered amount was admitted u/s 132(4) and that the same, as disclosed in the return filed, was also accepted by the AO. He further stated that the due taxes also stood paid. He also stressed that the aforesaid surrender was to buy peace and to avoid litigation, apart from iterating that no such specific question about substantiation was asked of him in the course of search. In other words, it is assessee's contention that he fulfilled all three conditions as laid down in sub section (2) of section 271AAA. He has also relied on various judgment including that of the Hon'ble ITAT Chandigar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has declared the income in the return filed as per due taxes thereon. 9. The ld. counsel for the assessee on the other hand heavily relied on the order of the ld. CIT(A). Referring to the statement recorded u/s 132(4) during the course of search, he submitted that vide Question No.5, the assessee was asked to explain the entries made on page no.4 against dated 13.12.2010 of Annexure-A-1 found and seized at the residential premises of the assessee. The assessee in his reply had submitted that these pages were a summary of various payments as advance towards purchase of agricultural land as advance for the land located in District Indore (MP) for 48 acres against 50% of his share. Due to some unavoidable reasons the said deal was cancelled and the money shall be received back in the coming six months time. The investment of Rs. 21 crores was made out of current year income and the same income is now offered to tax as current year additional income. 10. Referring to question no.7 of the said statement, the ld. counsel for the assessee submitted that the assessee in his reply to question no.7 offered for taxation the undisclosed income of Rs. 22 crores as additional income over and a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the instant case levied penalty of Rs. 2,20,00,000/- being 10% of the undisclosed income surrendered during the course of search on the ground that the assessee has not substantiated the manner of earning of such undisclosed income. We find the ld. CIT(A) cancelled such penalty on the ground that the assessee had declared the income during the course of search and paid the taxes thereon and no specific query was raised by the search party during the course of recording statement u/s 132(4) to substantiate the manner of earning of such income. Further, according to the ld. CIT(A), the income returned by the assessee was accepted by the Assessing Officer and no adverse inference was drawn except for holding that the same was not substantiated by the assessee. We find no infirmity in the order of the ld. CIT(A) in deleting the penalty of Rs. 2,20,00,000/- levied by the Assessing Officer. It is an admitted fact that the assessee had declared such income in the return of income which was surrendered during the search action and paid the due taxes thereon. The assessee, during the course of search, in his statement u/s 132(4) has explained such income in reply to question no.5 which re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pect to disclosure of the manner in which the income was earned, the said authorities were of the opinion that while recording the statement of the assessee during search, no question regarding this issue was put by the Revenue officer. Reliance was placed on the decision of this Court in case of Commissioner of Income Tax v. Mahendra C. Shah reported in [2008] 299 ITR 305 (Guj). 4. Having noted the facts, we find that the issue is covered against the Revenue by virtue of the judgment of this Court in case of Mahendra C. Shah (supra) in which, following observations were made: "15. In so far as the alleged failure on the part of the assessee to specify in the statement under Section 132(4) of the Act regarding the manner in which such income has been derived, suffice it to state that when the statement is being recorded by the authorized officer it is incumbent upon the authorized officer to explain the provisions of Explanation 5 in entirety to the assessee concerned and the authorized officer cannot stop short at a particular stage so as to permit the Revenue to take advantage of such a lapse in the statement. The reason is not far to seek. In the first instance, the sta....