TaxTMI 
TaxTMI 
1997 (12) TMI 133
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....garding investments made by him and his family. With regard to a number of them, the assessee not being sure, had clarified that he would be required to verify the record. However, as per the assessee's version, at the insistance of the Income-tax Officials and on being repeatedly asked and persuaded to avail of the benefit of the immunity from penalty as provided under Explanation 5 to section 271(1)(c) of the I.T. Act, the assessee with a view to buy peace of mind and co-operate with the I.T. Department confirmed that he was prepared to pay income-tax and avail the benefit of immunity from penalty and prosecution by disclosing various investments as having been acquired out of his undisclosed income. Subject to the actual verification in regard to the various investments, the assessee finally made disclosure of Rs. 4 lakhs in his statement under section 132(4). 3. An order under section 132(5) of the I.T. Act was passed by the Assessing Officer on 6-11-1987 estimating the concealed income at Rs. 3,59,309. A copy of the order under section 132(5) is annexed at pages 8 to 11 of the assessee's paper book. 4. Based on the order under section 132(5), the assessee filed his retur....
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....ruck off the portion "so far as this shortfall of disclosure is concerned". The Assessing Officer in para 6 of his penalty order has further observed that the assessee had not fulfilled the condition governing the immunity from penalty and prosecution under Explanation 5 to section 271(1)(c) of the Act. Since the assessee had not made a true and full disclosure of his income. 6. On appeal the learned CIT(A) confirmed the penalty in toto observing as under:--- "I have considered the facts and the appellant's submissions. It is relevant to note that the Assessing Officer has highlighted the fact that vide his statement under section 132(4), the appellant had disclosed the sum of Rs. 4 lakhs whereas the appellant had offered the sum of Rs. 3,51,000 only for taxation in his return of income. As mentioned in the impugned order, the immunity contemplated by Explanation 5 is available only if the assessee pays the tax together with interest if any in respect of the income disclosed under section 132(4). However, as has been highlighted by the Assessing Officer, the appellant did not offer the relevant sum of Rs. 49,000 for taxation in his return of income, and did not pay the tax on....
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....d in the statement under section 132(4) and in respect of which penalty proceedings were sought to be initiated and submitted that the entire amount of those investments, in fact did not pertain to assessment year 1988-89 and as such the assessee was under no obligation to even pay tax on these amounts during the year of search, viz., 1988-89. He drew our attention to the summarised position in this regard which is duly verifiable from the answer to question No. 11 as appearing on page 3 of the paper book and further as per the inventory of investment found during the course of search as appearing on pages 6 and 7 of the assessee's paper book which has again been reproduced on page 19 of the paper book in the form of a chart. According to the learned counsel from the said chart, it is clear that the amount of investments strictly falling within the year of search are less than Rs. 3 lakhs and as such the appellant already having offered Rs. 3,15,000 under the return of income for assessment year 1988-89 there was no question of any concealment of income or furnishing of inaccurate particulars of income so as to draw the conclusion that the assessee had committed any default within ....
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....lier years and certain other investments which clearly do not pertain to assessment year 1988-89, were offered to tax only with a view to buy peace of mind. In this context penalty cannot be levied under section 271(1)(c), merely on the ground that the income was offered during the course of the assessment proceedings for tax. As held by the Hon'ble Supreme Court in Sir Shadilal Sugar & General Mills Ltd. v. CIT [1987] 168 ITR 705/33 Taxman 460A, that "there may be hundred and one reasons for such admission and merely from agreeing to additions, it does not follow that the amount agreed to be added was concealed income". It is quite apparent and clear that the income pertaining to this year was much less than the income of Rs. 3,15,000 disclosed in the income-tax return and merely because the assessee agreed finally to the addition to the extent of Rs. 4,17,665 no penalty under section 271(1)(c) could be automatically attracted as has been sought to be done in the present case. 10. The important legal issue that needs to be considered in all such situations, is, where the Revenue has invited disclosure of income assuring immunity to an assessee under Explanation 5 to section 271....