TaxTMI 
TaxTMI 
2017 (4) TMI 1425
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....e ld.AO has passed assessment order on 26.12.2011. He initiated penalty proceedings under section 271(1)(c) of the Income Tax Act against the assessee in these three assessment years. In order to buttress the facts of the case in more scientifically, we would like to take note of the details submitted by the assessee in tabular form exhibiting original returned income, returned income as per return filed in response to notice u/s.153A, assessed income as per order u/s.143(3) r.w.s 153A, difference between returned filed u/s.15A and assessed income, different between original returned income and assessed income and penalty amount under section 271(1)(c) for each assessment year: A.Y. Original returned income Returned income as per return filed in response to notice u/s.153A Assessed income as per order passed u/s.143(3) r.w.s. 153A Difference between return filed u/s.153A and assessed income Difference between original returned income and assessed income Penalty u/s.271(1)(c) of the Act. 2005-06 90,353 10,32,883 10,32,883 Nil 9,42,530 2,76,794 2008-09 1,85,967 4,91,347 4,91,347 Nil 3,05,380 85,211 2009-10 5,78,937 6,88,003 6,88,003 Nil 1,09,066 32,730 4.....
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....IT, Rajkot in IT(SS)A.No.46/RJT/2012 and others. The discussion made by the Tribunal reads as under: "7. The ld. Counsel for the assessee relied upon the judgment of the Hon'ble Gujarat High Court in Income Tax Appeal No.1181 to 1185 of 2010 in the case of Kirit Dayabhai Patel Vs. ACIT. Copy of this decision has been placed on the record. The Hon'ble Court while construing the meaning of Explanation 5 has put reliance upon the decision of the Hon'ble Supreme Court in the case of ACIT Vs. Gebilal Kanbhaialal (HUF), 348 ITR 561 (SC). According to this decision, the Explanation 5 is deeming provision. It provides where in the course of search under section 132, the assessee is found to be owner of unaccounted asset and he claims that such assets have been acquired by him by utilizing whole or part of his income from 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 purpose of imposition of penalty under sec....
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....h has ended before the date of search and,- (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. 271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132on or after the 1st day of June, 2007 but before the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) Nothing contained in sub-section (1) shall apply if the assessee,- (i) in the course....
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....d income and specified previous year. A perusal of the expression "specified previous year" would indicate that the year of search and immediately earlier year, if due date of filing of the return has not expired and income-tax return for such year has not been filed. Since the assessment years involved before us are the Asstt.Years 2008-09 and 2009-10, the due date for filing of the return for the Asstt.Year 2009-10 was expired before the search action. Thus, both these years do not fall within the ambit of "specified years". Since the period of these two assessment years does not fall within the expression "specified year" provided in Section 271AAA, therefore, we do not deem it necessary to construe and explain the meaning of Explanation 5A within the scope of Section 271AAA. The assessees as such cannot claim immunity akin to one available in sub-clause (1) and (2) of the Explanation 5, more particularly, on the strength of the judgment of Hon'ble Gujarat High Court in the case of Kirit Dahyabhai Patel (supra). The ld.First Appellate Authority has dealt with these situation in an analytical manner and in right perspective. As far as the construction of meaning of Explanation 5A....
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....o similarly worded. It is a very brief assessment orders running one-andhalf pages. In the first page, the ld.AO has narrated procedural aspect about the search action, issuance of notice and filing of the return, service of notice under section 143(2) etc. In the next page finding of the AO read as under: "2. The assessee is engaged in the business of fabrication and engineering job work and also derives income from Agricultural activities, remuneration and interest from partnership firms etc. Copies of P&L account, capital account and balance sheet, was filed with the return. Various issues were discussed at length. 2.1 It is seen that the assessee had made disclosure unaccounted income of Rs. 22,00,000/- which was not disclosed in the return filed u/s. 139(1). This being concealed income, penalty proceedings u/s. 271(l)(c) of the I T Act is being initiated. 3. After verification, the total income is determined as under:- Total income as per return of income Rs. 28,45,960/- Total assessed income Rs. 28,45,960/- Agricultural income for rate purpose Rs.6,14,131/- 4. Assessed u/s. 153A of the I T Act, 1961. Charge tax. Charge interest u/s. 234A, 234B and 234C of the I ....
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....agraphs of this order. The evidentiary value of such statement has been explained in various authoritative pronouncements. Let us first take note of section 132(4) of the Act. "The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. Explanation.- For the removal of doubts, it is hereby declared that the examination of any person under this sub- section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act." 13. A bare perusal of section would reveal that it empowers the authorized officer to examine during the course of search or seizure any person on oath. The disclosure ....
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....ths. The assessee did not have any reason for retracting from the disclosure. The ld.First Appellate Authority concurred with the AO and confirmed the addition of Rs. 7 lakhs to his income. The Tribunal has also confirmed the addition by observing that there was nothing on record which indicated that the disclosure was taken from the assessee under duress, pressure or coercion. The retraction after lapse of two months from the date of disclosure by the assessee was considered as after-thought. The issue travelled before the Hon'ble High Court. The Hon'ble High Court has deleted the addition by observing that merely on the basis of disclosure, addition cannot be made. There should be some corroborative material. The following observations in para-26 of the judgement of Hon'ble Court are worth to note. It reads as under: "26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has bee....
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....oney, bullion, jewellery or other valuable articles, to our mind, ought not to be based on this statement. When the assessees have taken specific plea that no money, bullion or jewellery or income based on any entries for these two assessment years was found during the course of search, the AO ought to have immediately referred the documents, entries or any asset found which is relevant to these assessment years in the penalty proceedings. He should have rejected the explanation of the assessee by demonstrating it as factually incorrect. Rather, the authorities have proceeded on the assumption that had there been no money, bullion, jewellery or income based on entries was not found, the assessee would have not made voluntary disclosure of the income in these returns. They failed to note the question no.25 also, where the assessees claimed immunity from penalty, and peace from litigation. To our mind inference of availability of money, bullion or assets embedded in the entries cannot be drawn from the statement of the assessee (extracted supra). They should have been found in physical form and pertaining to these years, only then, deeming fiction of concealment would trigger. Thus, ....
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....sessee must claim that such assets have been acquired by him by utilising (wholly or in part) his income. Moreover, such income must be in relation to a particular previous year that has either ended before the date of the search or is to end on or after the date of the search and such income is declared subsequently in the return of income filed after the search. Therefore, it is only when assets are found during the search which the assessee claims have been acquired by him by utilizing (wholly or in part) his income for any particular previous year, and then declares such income (which he utilized in acquiring the assets found) in a subsequent return filed after the date of search, would it be deemed that the assesee has concealed his income. In other words, the assets seized during the search must relate to the income of the particular assessment year whose return is filed after the date of the search. Such a conclusion is only logical, considering that assessment under the Act is with respect to a particular assessment year and the penalty imposed under Section 271(1)(c) would also be for concealing income in that particular assessment year, which concealment was revealed by t....