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TMI Blog1997 (6) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... o him and form part of his current income for assessment year 1990-91. It was requested that the letter "may be treated as my statement under section 132(4) read with Explanation 5 of section 271(1)(c) of the Income-tax Act, 1961." The assessee further wrote letter dated6-11-1989, to Asstt. Commissioner (Inv.),New Delhito contend that the assessee earned cash and jewellery found from the locker from speculation business in assessment year 1990-91. For above income of Rs. 9,48,700 the assessee has maintained necessary books of account. A copy of letter earlier written on9-8-1989was filed with the above letter. The assessee also gave computation of income of Rs. 9,48,700 from speculation in letter dated27-11-1989. The above summary was claimed to be given on the basis of regularly maintained books of account in the shape of a diary in which all transactions pertaining to speculation were written in Urdu. 3. Subsequently on 29-11-1990 assessee filed return declaring an income of Rs. 10,68,537 including income from speculation in silver at Rs. 9,48,700 to cover cash and valuable articles seized from the vault. The Assessing Officer in the assessment order has observed that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he had given wrong address procuring the vault and no explanation was furnished why wrong address was given. (vii) The dates of operation of vault as also the fact that forward trading in silver was banned, the Assessing Officer concluded that assessee's claim of speculation business in silver was made up story to cover assets seized from the locker." The Assessing Officer while levying and computing penalty further made the following observations : " From the above, it is clear that the assessee has furnished inaccurate particulars to the queries raised regarding the source of the assets found in the said locker and he has not been able to give the correct particulars regarding sources of his income, therefore, the provisions of Explanation 5 to section 271(1)(c) read with section 132(4) are not fulfilled. 9. I, therefore, hold that the assessee has concealed the true particulars of his income. I impose a penalty of Rs. 5,11,963 which is worked out as under : Tax on assessed income Rs. 5,54,224 Tax on 1,20,462 Rs. 42,261 ------------------------- Tax on income from undisclosed sources : Rs. 5,11,963 Minimum penalty @ 100 per cent comes to : Rs. 5,11,963 Maximum penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue, the provisions of Explanation 5 were brought on the statute book. This provision treated certain income as deemed concealed income or income in respect of which inaccurate particulars were furnished where assets seized in search are not found recorded in the books of account. The said Explanation 5 is as under : " Explanation 5--Where in the course of a search under section 132, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing (hereinafter 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,-- (a) for any previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date or, where such return has been furnished before the said date, such income has not been declared ; or (b) for any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of which inaccurate particulars were furnished unless the case is covered under sub-clause (i) or (ii) of Explanation which are exception to the general rule. The aforesaid clauses, require that either seized assets should be recorded in books of account maintained by the assessee or otherwise the disclosure about asset should be made to the Chief Commissioner on the date of search and taxes, etc., paid. The later case would be covered by clause (ii) but here we are concerned about the application of clause (i) and, therefore, need not go into the larger questions like 'in the course of search under section 132' or when the assessee would be deemed to have made a statement under sub-section (4) of section 132. We are to examine whether provision of sub-section (1) to Explanation 5 are applicable, where money or other valuable assets referred to in the Explanation are claimed to represent income of the current year (of previous year which is to end on or after the date of search). The case would fall under clause (b) of Explanation 5 and if above income or transaction resulting in such income are recorded in the books of account, if any maintained for such income, the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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