TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 268
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....he facility of reference, we are taking up the facts from A.Y. 2008-09. 4. Brief facts of the case are that the assessee has filed his return of income under section 139 of the Income Tax Act on 31.07.2018 declaring total income of Rs.1,17,100/-. A search under section 132 of the Income Tax Act was carried out at the residence, Office and other business concerns of the Rashmi Group and its Associate. The residence of the assessee was also covered under the search proceedings. A notice under section 153A was issued and served upon the assessee. In response to the notice, the assessee has filed the return of income. The ld. Assessing Officer has passed the assessment orders in all these years on 31.03.2015. The assessee has submitted details in tabular form, which would exhibit the details of original return filed in response to notice under section 153A and income disclosed under section 132(4) of the Income Tax Act. We deem it appropriate to take note of these details, which read as under:- "Asst. Year: 2008 -09 Returned income under section 139 Rs. 1,17,1 00/- Returned income under section 153A Rs.10,17,100/ - Income disclosed under section 132(4) Rs. 9, 00,000/- Asses....
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....esponse to a notice received under section 153A of the Income Tax Act. The case of the assessee is that Explanation 5A to section 271(1)(c) could only be invoked if during the course of search, any money bullion, jewellery or document, notings found during the course of search on the basis of which addition in the hands of the assessee are being made. If an assessee enhanced his income voluntarily, then no penalty would be imposed upon the assessee. 8. It is pertinent to note that on due consideration of the record, we are of the view that somewhat identical situation was considered by ITAT, Rajkot in the case of Shri Mansukhbhai R. Sorathia in ITA No. 46/RJT/2012 for A.Y. 2008-09, one of us i.e. Vice-President authored the order. The discussion made by the Tribunal in that case 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....
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....d Section 271AAA read as under: "Explanation 5A.- Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of- (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which 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....
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....d the search not been conducted; (b) "specified previous year" means the previous year- (i) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted". 8. A perusal of both these sections together would indicate that the immunity akin to Explanation 5 is available to the assessee under Explanation-5A also, if he fulfills the conditions narrated in section 271AAA. The Explanation appended to Section 271AAA provides the definition 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 n....
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....A, the assessee disclosed some additional income voluntarily, would he be deemed to have concealed the income for visiting him with penalty under section 271(1)(c) of the Act ? The ld.Revenue authorities had drawn inference that since the assessee has not disclosed additional income in the original returns, meaning thereby, it is to be assumed that they have disclosed this amount only when some incriminating material was found. To our mind this assumption ought to be supported with reference of that incriminating material. Let us see the finding in the assessment order. 10. We have perused the assessment order of Shri Mansukhbhai R. Sorathia in the Asstt.Year 2008-09. All other assessment 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 partne....
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.... Explanation 5 to section 271(1)(c) - Dr T P Kulkarni Vs CIT (2003) 86 ITD 696 (Mum). It has also been held that Only books of account maintained in the regular course can make the assessee eligible for grant of immunity from penalty and not just any of such books, which have not been maintained in regular course of business - Brij Lal Goyal Vs CIT (2004) 88 ITD 413 (Delhi)." 12. In this background, if we appreciate the evidences available on the record, then it would reveal the whole case of the Revenue for visiting the assessee with penalty is based on the statement of Shri Jayantilal R. Sorathia recorded during the course of search. 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 ....
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....h addition. 15. An issue whether addition solely on the basis of statement u/s.132(4) can be made was considered by the Hon'ble Jurisdictional High Court in the case of Kialashben Manharlal Chokshi Vs. CIT, 220 CTR (Guj) 138. In this case, search was conducted upon the assessee under section 132 of the Income Tax Act on 4.11.1988. The statement of the assessee was recorded under section 132(4) of the Act. He made disclosure of Rs.7 lakhs. Later on, in January, 1989, the assessee retracted from the disclosure and stated the disclosure of Rs.50,000/- was acceptable to him. The ld.AO made an addition 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 af....
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....ven cogent reasons. Therefore, the answer to the first question would be against the Revenue and in favour of the assessee. The second question will also enure for the benefit of the assessee as from the record it is clear that other concerns were not Benami concerns of the assessee. 7. For the forging reasons, the present appeal is dismissed. Accordingly, both the questions which were referred to this Court are answered in favour of the assessee and against the revenue." 17. Had this statement been retracted by the assessee, and they have not offered 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....