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TMI Blog2009 (11) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... arly when by non-recording of the statement under s. 132(4) of the Act, assessee is shown to have deprived of a benefit conveyed by Expln. 5 to s. 271(1)(c) of the Act. The expression 'may' as used in s. 132(4) of the Act in such a case needs to be read as 'shall'. Assessee has acted bona fidely in filing the return of his income by disclosing additional income that stood assessed without any variation. In a case like this, there being failure on the part of the authorized officer to record a statement under s. 132(4) of the Act in the course of search under s. 132 of the Act, the provision deeming concealment of the particulars of income for the purpose of imposition of penalty can neither be read in isolation nor taken as divorced from the obligatory statement to be recorded under s. 132(4) of the Act. It also cannot be read to the disadvantage of the appellant particularly when the assessee is shown to have made a substantive compliance of making the disclosure and bona fidely acting thereon as well. - - - - - Dated:- 4-11-2009 - Member(s) : B. R. JAIN., K. S. S. PRASADA RAO. ORDER-B.R. JAIN, A.M.: This appeal by assessee against the order dt. 30th March, 2005 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason that the search party was manhandled and similarly at the time of survey at one of the associate concerns, the survey party was also obstructed. Police cases were registered, FIR was lodged at Hanumangarh Police Station and finally the case was closed by holding that family members of the assessee were not guilty. Subsequently the Asstt. Director of IT (Inv.), Bikaner, took up the matter of investigation after conclusion of search on 13th Jan., 1995 and called the assessee in his camp office on 24th Jan., 1995 at Bikaner. The assessee vide letter dt. 13th Jan., 1995 addressed to the authorized officer [Asstt. Director of IT (Inv.)] camp at Hanumangarh declared an income of Rs. 50 lacs on account of undisclosed income involved in the papers seized by the Department and to avail all benefits of Expln. 5 of s. 271(1)(c) of the Act. The assessee filed return of income for asst. yr. 1995-96 on 25th Oct., 1995 declaring total income of Rs. 50,30,062 including Rs. 50 lacs surrendered through his letter dt. 13th Jan., 1995. The finally assessed income after the appeal effect and rectification vide order dt. 20th Sept., 2000 made under s. 154 of IT Act amounted to Rs. 50,37,470. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal observed that the assessee has taken contradictory stand and as such it was not able to arrive at just decision. It, therefore, sent the issue to the file of learned CIT(A) with the direction that he will give clear-cut findings on these issues by a speaking order instead of just referring to the paras of order of AO. It was also made clear in that order that the decisions relied on by the learned Authorised Representative can be applied or not, shall be considered only after the facts are ascertained before it. The assessee's appeal thus stood allowed for statistical purposes only. 4. Consequent to Tribunal order the learned CIT(A), Bikaner, vide his order dt. 30th March, 2005 in Appeal No. 4/Bkn/2004-05 answered all the three issues that were remitted to him by the Tribunal and found as a matter of fact that the appellant indulged in transaction outside regular books of account which is evident from the seized diary. Part of the transactions in the seized diary were entered in the regular books of account whereas part of the transactions were not recorded in the regular books of account. Thus, the appellant was conscious of the concealment and it cannot be said that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Department had seized the positive and clinching evidence in the shape of diary from the assessee which contained 255 entries and out of that only 119 entries tallied with the regular books of account of the appellant for previous year relevant to asst. yr. 1995-96. Undated transactions were presumed to be carried out on the date of search and thus it was held that the entries in the seized diary related to asst. yr. 1995-96." 6. The learned counsel for the assessee, Shri N.R. Mertia assailing the order of learned CIT(A), filed two paper books dt. 2nd Feb., 2002 and 15th June, 2009 before Tribunal both on 19th June, 2009. At the outset it was clarified that the return of income in this case filed on 25th Oct., 1995 was voluntary return under s. 139(1) of IT Act. The prescribed due date for filing the return under s. 139(1) was 31st Aug., 1995 but this date stood extended upto 31st Oct., 1995 by Government Notification No. 220/1/1995-IT(A)-ii dt. 4th Sept., 1995. It was also stated that the accounts of the assessee were not required to be audited as he was selling the good as a Katcha Artiya only. Learned counsel for the assessee, Shri Mertia through his written submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --------------------------------------------------------- Balance taken above Rs. 48,65,447 ------------------------------------------------------------------ B Investments in shares/debentures applications sent/money rotated Rs. 50,000 ------------------------------------------------------------------ C Value of 13 kgs. Silver ornaments/articles/coins etc. Rs. 80,000 ------------------------------------------------------------------ D. Excess cash found during search operation Rs. 40,000 ------------------------------------------------------------------ E All other items of expenditure/ investment/income such as income by way of interest, Dalali, Arhat; expenses on repairs of buildings/machinery e.g., vehicles etc. including any investment/income as per any documents seized Rs. 7,89,396 ------------------------------------------------------------------ Total of all these heads Rs. 50,00,000 ------------------------------------------------ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of search. It is reiterated that it was the bounden duty of the officers of the Department to draw the attention of the assessee towards beneficial provisions of the statute to secure any benefit, rebate or claim etc. even if the same were not claimed by the assessee but are clearly available from the material on record. 9. On the second issue it was contended that the learned CIT(A) was not justified in holding that the appellant failed to give statement under s. 132(4) of IT Act. In fact it is not unilateral obligation of the assessee alone. It was simultaneously obligatory on the authorized officer also to draw attention of the assessee towards immunity available under Expln. 5 of s. 271(1)(c) of IT Act. The CBDT vide its Circular No. 14 (XL 25) of 1955 dt. 11th April, 1955 has required the authorized officer of the Department to assist the taxpayers. Reference was also made to the judgment in the ease of Chokshi Metal Refinery vs. CIT and also in the case of Parekh Bros. vs. CIT. 10. The appellant in this case has no chance to give the statement and make disclosure in the course of search and seizure operations due to the fault of Revenue. The assessee cannot be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that such undisclosed income was derived from business which he was carrying on. The object of the provision is achieved by making a statement admitting the non-disclosure of money, bullion, jewellery etc. Thus much importance should not be attached to the statement about the manner in which such income has been derived. It can be inferred on the facts and circumstances of the case, in the absence of anything to the contrary. Therefore, mere non-statement of the manner in which such income was derived would not make Expln. 5(2) inapplicable." 13. As regards third issue, the assessee's letter making surrender clearly shows that income disclosed comprises of commission, dalali, arhat on the materials given to various debtors and it relates to the period after 31st March, 1994 for which no return was required to be filed upto the date of search. The action under s. 132 was taken on the assessee on 13th Jan., 1995 i.e., during the year commencing from 1st April, 1994 to 31st March, 1995. It, therefore, has to be clearly understood that surrender was for asst. yr. 1995-96 as has also been stated by the assessee bona fidely. The learned CIT(A), diverted from the scope of direction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of deemed concealment as spelt out clearly in Expln. 5 of s. 271 (1)(c) of IT Act. In this view of the matter imposition of penalty by assessing authority and sustenance of the same by the learned CIT(A) needs no interference. 15.1 We have heard the parties and have carefully perused the material on record with reference to sub-r. (6) of r. 18 of ITAT Rules, 1963 and have also considered the precedents cited at Bar. Briefly the undisputed facts are that an action under s. 132 commenced on assessee's premises on 11th Jan., 1995. There being no involvement of assessee or his family members, the search party having been manhandled, the proceedings were temporarily suspended. The search was concluded on 13th Jan., 1995 without recording any statement of the appellant under s. 132(4) of the Act. Thereafter the Asstt. Director of IT, Bikaner camp at Hanumangarh called the assessee on 24th Jan., 1995 during which assessee came forth with a declaration of additional income of Rs. 50 lakhs. The Asstt. Director of IT, Bikaner taking the declaration to be a voluntary declaration sought further details of disclosure, to which the appellant made due compliance. Advance tax on the disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ou. I, therefore, request you to kindly consider this petition of mine in the spirit of the Expln. 5 of s. 271(1)(c) for which the provisions are intended and do not deprive me of the right to do what I should have done in course of search itself but could not do due to the unfortunate circumstances on that date. Thanking you very much, Yours faithfully, Sd/- (Radheyshyam) Petitioner" 17. The letter dt. 30th ,Jan., 1995 by Asstt. Director of IT (Inv.), to the assessee is reproduced as under: "Office of the Asstt. Director of IT (Inv.) Bikaner-334 001 To dt. 30th Jan., 1995 Shri Radhey Shayam Hissaria, C/o M/s Hissaria Brothers Hanumangarh Jn D/Sir Subject: Search and seizure operations/disclosure of unaccounted income-regarding Please refer to the above. In connection with the books of account and other incriminating documents seized in the course of search operations from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. Explanation 5-Where in the course of a search under s. 132, the assessee is found to be the owner of 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,- (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 therein; 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 cl. (c) of sub-s. (1) of this section, be deemed to have concealed the particulars of his income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The authorized officer concluded the action taken under s. 132 of the Act without recording statement of the appellant during the course of search proceedings. No reasons are spell out, on record as to why the authorized officer did not record appellant's statement even on 13th Jan., 1995 when he resumed the proceedings under s. 132 of the Act. At least the appellant cannot be blamed for non-action on the part of the authorized officer. Explanation 5 to s. 271(1)(c) of the Act bestows immunity on the assessee for making a disclosure of his income in the manner as specified therein. There is, however, nothing in the hands of an assessee to compel authorized officer and require him to record a statement during the course of search. It was an act to be performed by the authorized officer as it was his legal duty to have recorded the statement, particularly when by non-recording of the statement under s. 132(4) of the Act, assessee is shown to have deprived of a benefit conveyed by Expln. 5 to s. 271(1)(c) of the Act. The expression 'may' as used in s. 132(4) of the Act in such a case needs to be read as 'shall'. This view finds support from the judgment rendered by Hon'ble apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may, the Court has to consider various factors, namely, the object and the scheme of the Act, the context and the background against which the word has been used, the purpose and the advantage sought to be achieved by the use of this word, and the like. It is equally well-settled that where the word may involve a discretion coupled with an obligation or where it confers a positive benefit to a general class of subjects in a utility Act or where the Court advances a remedy and suppresses the mischief or where giving the words directory significance would defeat the very object of the Act, the word may is permissible and operative to confer discretion and especially so, where it is used in juxtaposition to the word shall, which ordinarily is imperative as it imposes a duty. Cases, however, are not wanting where the words are being used in a directory or in a mandatory sense, the intent of the legislature should be looked into along with the pertinent circumstances. If it appears to be the settled intention of the legislature to convey the sense of compulsion, as where an obligation is created, the use of the word may will not prevent the Court from giving it the effect of compulsi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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