TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 235
X X X X Extracts X X X X
X X X X Extracts X X X X
....f cases including the case of the assessee on 9.4.2010. In order to give logical end to the proceedings a notice under section 153A was issued on 27.1.2011 and in compliance thereof the assessee has filed his return of income. The ld.CIT(A) has tabulated income returned by the assessee under section 139(1) as well as under section 153A. Such details read as under: AY Income u/s 139(1) Income u/s 153A Additional income 2005-06 4,98,613/- 68,11,981/- 62,84,168/- 2006-07 38,700/- 48,44,421/- 48,05,721/- 2007-08 6,02,468/- 22,51,650/- 16,49,182/- 2008-09 3,26,393/- 86,61,572/- 83,35,179/- 2009-10 4,43,440/- 14,65,768/- 10,22,328 5. Assessments were finalized under section 153A r.w. section 143(3) on 28.2.2013 vide which the ld.AO has accepted the returned income. He initiated penalty proceedings under section 271(1)(c) with the help of Explanation 5A. After hearing the assessee, he imposed penalty as noticed above. Appeal to the CIT(A) did not bring any relief to the assessee. 6. The ld.counsel for the assessee at the very outset contended that identical issue was considered by the Tribunal in the case of Arvindbhai V. Bhansusali Vs. ACIT, IT(SS)A.No.271 to 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 section 271(1)(c) of the Act. The Hon'ble Court, thereafter, propounded that subclause (1) and (2) Explanation 5 provides exceptions for deeming the concealment of particulars of income. In that case, the Hon'ble Court was dealing in sub-clause (2) of Explanation-5 and observe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 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 to section 271AAA by the ld.First Appellate Authority is concerned, we do not find any error. 9. At the cost of repetition, we would like to observe that as per Explanation 5A, if in the course of search initiated under section 132 on or after....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 T Act, if any. Give credit for prepaid taxes after due verification. Demand notice and challan issued accordingly. Issue notice u/s. 271(1)(c)of the IT Act." 11. We have perused the penalty order also. There are only three paragraphs i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arch 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 subsection 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 made during the statement recorded under this section will be admitted in the evidence and can be used against the assessee in the proceeding. 14. No doubt, the disclosure or admission made under section 132(4) of the Act during th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 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 been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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, the Revenue authorities have not referred any documentary evidences demonstrating the fact that voluntary income offered by assessees in these two years actually unearthed during the course of search. Therefore, to our mind, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... incriminating document. Accordingly, we hold that there cannot be any penalty under section 271(1)C of the Act in the given facts and circumstances. Hence the ground of appeal of the assessee is allowed. In the result, the appeal of the assessee is allowed." 10. A perusal of both the orders would indicate that the Tribunal was unanimous in its approach in holding that if during the course of search any incriminating material; money, bullion or jewellery was not unearthed, then additional income declared by the assessee in response to notice under section 153A, the deeming fiction of concealment under Explanation 5A would not be attracted. We do not have any hesitation in concurring with the above construction of Explanation 5A. But basic difference of applying it on the facts would arise as under in the present appeal. The assessee has appended the following note in the computation of income: "Notes: 1. The Original Return of Income was filed on 31.12.2006 vide acknowledgement No.13089 with ITO, Wd-1, Godhra. 2. Search Proceedings u/s 132 were carried out at my residential premises and business premises on 9/4/2010. 3. During the course of search various loose pap....