TaxTMI 
TaxTMI 
2019 (8) TMI 235
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....132 of the Act was carried out in the R.K. Construction group of 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 id....
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....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 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 concea....
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....hed 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 of the search, in a statement under sub-section (4) of section 132, admits th....
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.... of undisclosed 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....
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....nt orders are also similarly worded. It is a very brief assessment orders running one-and-half 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. Cha....
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....earch. We have extracted the relevant part of the statement in the foregoing paragraphs 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 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 autho....
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....ion of Rs. 7 lakhs on the basis of his statement and observed that the retraction was made after a lapse of 2 months. 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 recor....
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....ed this undisclosed income, forget to take action of levying the penalty, even additions would not have been sustained. The inference of ownership of any money, 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 (ex....
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....minating documents were found during the course of search, therefore, Explanation 5A to section 271(1)(c) is not applicable. Accordingly, the penalty was to be deleted. " From the above order, it is clear that there cannot be any penalty under explanation 5 A to section 271(1)C of the Act merely on the basis of the statement furnished under section 132(4) of the Act, until and unless it supported with the 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....