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TMI Blog2002 (4) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... count maintained and seized by the Department. 2. On the facts and in the circumstances of the case the CIT(A) erred in deleting the penalty holding that there was no concealment when in fact the assessee had in its possession papers containing unaccounted transactions and undisclosed income at the time of filing the return of income. The CIT(A) failed to appreciate that the income recorded in note- books was much more than that disclosed in the return of income. Even the cases cited are distinguishable on facts. 3. On the facts and in the circumstances of the case the CIT(A) erred in cancelling the penalty levied under section 271(1)(c) accepting the assessee's submission that income surrendered at the time of search matched with the income assessed for assessment years 1986-87 to 1989-90 and, therefore, the assessee is entitled for immunity. The CIT(A) erred in law because immunity was available for assessment year 1989-90 and not for earlier assessment years 1986-87 to 1988-89. 4. On the facts and in the circumstances of the case the CIT(A) erred in holding that the income on the basis of which concealment penalty was worked out was estimated income when in fact the seized pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Shri Hukamatrai Wadhwa under section 132(4) was recorded in which he offered a sum of Rs. 65,00,000 as undisclosed income in the hands of the assessee-firm to be assessed for assessment year 1989-90. Assessment year 1987-88 7. The return of income originally was filed at Rs. 76,460, the same was accepted under section 143(1) on 30th March, 1988. On the basis of search as mentioned above notice under section 148 was issued to the assessee. In response to the notice under section 148 a revised return was filed on 17th September 1990, declaring an income of Rs. 14,94,654. Referring to the seized documents, the income was assessed at Rs. 17,76,650 vide order date 26th December, 1990. Assessment year 1988-89 8. The return originally was filed on 30th June, 1988, declaring an income of Rs. 33,480. On the basis of search a revised return was filed by the assessee on 30th April, 1990, at an income of Rs. 23,08,880. On the basis of seized documents the income was assessed on a total income of Rs. 18,91,040 vide order dated 27th December, 1990. 9. In respect of the appeal for the assessment year 1989-90 the facts are that the assessee filed a return declaring an income of Rs. 23,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn return/regular books of account 1986-87 6,00,000 85,280 5,14,720 1987-88 14,94,654 76,460 14,18,194 1988-89 23,08,880 33,480 22,75,400 1989-90 23,71,594 40,189 23,31,405 67,75,128 2,35,409 65,39,719 He contended that since additional income is more or less same as declared in a statement under section 132(4) and after appeal there has not been much variation between the offered returned income and assessed income, the case of the assessee falls within the Explanation 5 to section 271(1)(c), of the Income-tax Act, 1961. He further referred that for assessment year 1988-89 the assessee had filed the revised return voluntarily even before any notice under section 148 was issued. In respect of assessment years 1986-87 and 1987-88, he submitted that even from the seized material the exact quantum of income for each year cannot be determined as the seized material contains datas for a calendar year while the income has been assessed on financial year basis and it has been done after estimating the income for last three months of the calendar year latter 9 months on estimate basis only which also does not prove that the assessee did earn that much income during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings itself that immunities will be given to the appellant from penalties and prosecution. The offer of the appellant was a voluntary offer on the agreement of immunity and hence penalty levied may be deleted. (i) CIT v. Suresh Chandra Mittal [2001] 251 ITR 9 (SC) (ii) CIT v. Suresh Chandra Mittal [2000] 241 ITR 124 (MP) (iii) Sir Shadi Lal Sugar & General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC) (iv) CIT v. Kiran & Co. [1996] 217 ITR 326 (Bom.) (v) Solid Containers Ltd. v. Dy. CIT [IT Appeal No. 4016 (Mum.) of 2001 dated 21-12-2001] Respondent is covered by immunity under Explanation 5 to section 271(1)(c) : (i)the respondent has maintained books of account for the source of income disclosed to the Department in the course of the search action; This is evident from the notebook/document seized by the Department which contained the entries in the form of assets/ liabilities and which is also evident from the assessment orders; (ii)The section refers to books of account for any source of income and not the regular books of account and further, there cannot be any undisclosed income in the regular books of account on which basis the return is filed before the Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty has been rightly deleted by the CIT(A) and the penalty order may be upheld, particularly, when the quantum relief given by CIT(A) is accepted by department by not filing any appeal to Tribunal. 15. We have carefully considered the rival submissions in the light of material placed before us. The assessments in the present case have been framed by taking into consideration the material seized during the course of search. The income which is finally rested after the order of CIT(A) in quantum proceedings is as per subjective satisfaction of the assessee as is evident from the fact that no second appeal was filed against the order of CIT(A) in quantum proceedings. Looking to the facts of the case, the plea of the assessee that assessment has been framed on estimate basis is not correct. The basis of income assessed is the documents found at the time of search. It is not the case of the assessee that income assessed is not the income of the assessee. The revised returns were also filed on the basis of material found in the search and quantified accordingly. 16. Now coming to the contention of the assessee that the addition was agreed one as during the course of search proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Apart from letter of offer, there was no other material available with the revenue authorities on the basis of which it could be said that assessee had concealed its income for the relevant years. In the present case, as it is mentioned earlier, there was ample material with the revenue authorities in respect of concealed income. The reliance has also been placed by the assessee on the decision in the case of Solid Containers Ltd. (supra). In this regard, we may mention that the facts of the said case of Tribunal were identical with the facts in the case of Suresh Chandra Mittal (supra). As already mentioned that the facts of the present case are different to the facts of the case of Suresh Chandra Mittal (supra) so the decision of Tribunal is also not applicable to the facts of the case. 18. The another argument of the assessee is that the respondent is covered by immunity under Explanation 5 to section 271(1)(c). The offer of the assessee during the course of search proceedings was in respect of assessment year 1989-90. The Explanation 5 to section 27(1)(c) speaks as follows : "Explanation 5.--Where in the course of search under section 132 the assessee is found to be the ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that benefit be given to the assessee under the Explanation. We are unable to accept this argument for the reason that the documents seized cannot be said to be the books maintained for any source of income. Firstly, for the reason that for the purpose of disclosing the income the assessee was not relying on the seized documents and secondly such contention of the assessee is contrary to the very basic intention of the provision. Any such interpretation wil be contrary to the provision contained in Explanation 5 to section 271(1)(c) of the Act. 19. The immunity from penalty has also been sought on the ground that disclsoure was made during the course of search and in view of payments made by way of promissory notes and cash seized no further tax was payable. As already mentioned that provision of immunity given by Explanation 5 to the section 271(1)(c) is not applicable to the assessee so this argument is also not acceptable. 20. It is also the contention of the assessee that there is to concealment in the revised return. The revised return was voluntary. For this the reliance has been placed on the various decisions of Tribunal referred to at p. 9 of the order under the head " ..... 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