1999 (9) TMI 8 - HC - Income Tax

Summary

Issues involved:
The judgment addresses the following Issues:
1. Whether the assessee concealed income by filing a return after cash seizure by Customs and Central Excise and Income-tax Department under section 132A?
2. Whether Explanation 5 to section 271(1)(c) applies to a proceeding under section 132A?

Issue 1:
The assessee, an individual, had cash seized by Customs and Central Excise Authorities, which was later taken possession of by the Income-tax Department under section 132A. The assessee filed a return of income after the seizure, declaring the seized cash as part of the total income. The Assessing Officer imposed a penalty under section 271(1)(c) for concealing the seized cash as income. The Commissioner (Appeals) ruled in favor of the assessee, stating that disclosing the seized cash in the return precludes a finding of concealment. The Tribunal upheld this decision, emphasizing that the assessee cannot be penalized for showing the seized amount as income. However, the High Court held that the Tribunal erred in remitting the penalty, as the requisition of unaccounted money under section 132A is deemed as a search under section 132, making the Amnesty Scheme inapplicable.

Issue 2:
The Tribunal also held that Explanation 5 to section 271(1)(c) does not apply to cases under section 132A. The High Court disagreed, stating that the Tribunal's interpretation was incorrect. The High Court highlighted that the assessee's failure to prove the source of the seized money does not negate the concealment of income. Additionally, the High Court clarified that the provisions of section 132, including Explanation 5 to section 271(1)(c), are applicable to proceedings under section 132A. Consequently, the reference was answered in favor of the Revenue and against the assessee.