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TMI Blog2012 (2) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... id the tax and interest thereon on the income disclosed u/s 132(4) alongwith return ignoring that explanation 5(2) to section 271(1)(c) do not impose any such condition. 2.2 The assessee is a property dealer and also has income from share from partnership firm, income from house property and income from other sources. He filed return of income u/s 139(1) on 31-10-05 declaring income of Rs.15,37,240/-. Search u/s 132 was carried out on 14.11.2006 at the premises of the assessee. During survey u/s 133A conducted at the shop of the assessee certain papers relating to investment in purchase of land were found recorded on the paper marked Annexure-A 23. On these pages detail of land area and name of certain persons are mentioned. No amount is noted on these papers. The assessee in his statement recorded at the shop in reply to question no.2, 7 and 16 accepted that, on these papers the detail of lands in which he has made investment is noted for which he stated the estimated amount and offered such investment for tax . The assessee in reply to question no. 8 also offered an amount of Rs.69,55,000/- on account of investment in shares of M/s Parshwanath Complex Ltd in the name of diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts was voluntary is not acceptable. The share capital was introduced in the books of accounts of M/s. Parshwanath Complex Ltd. during the financial year 2004-05 whereas the search took place in the appellant s case on 14.11.2006. The return for the relevant asstt. year had already been filed u/s 139(1) on 31.10.05. But for the search/survey operations on 14.11.2006 at the appellant s premises, he would have never come forward to offer for taxation the share capital of Rs.69,55,000/- introduced in various names in the above mentioned company. Therefore, it cannot be said that the offer of Rs. 69,55,000/- made by the appellant was voluntary. As regards investment in various lands in the names of tribals, it is not in dispute during the course of survey operations various documents were found indicating lands in the names of tribal persons and these investments were not recorded in the books of account of the appellant. The mere fact that specific amounts were not recorded in the impounded documents is no ground for holding that no evidence was found during the course of search/survey. A perusal of these documents shows that complete details like name of the person, in whose name l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Explanation 5(2). Therefore, in respect of the two amounts mentioned above, although these were disclosed in the return of income filed after the search, but tax and interest thereon was not paid by the appellant alongwith the return. Thus all the conditions for availing the benefit of immunity from levy of penalty as provided in Explanation 5 to sec. 271(1)(c) are not satisfied. The issue of payment of tax and interest thereon in respect of undisclosed income came up before the Hon ble Punjab and Haryana High Court in the case of Ashok Kumar Gupta vs. CIT 287 ITR 376(P H). In this case, the assessee had not paid tax and interest on the undisclosed income surrendered by him even alongwith the belated return. It was held by the Hon ble Court that the assessee cannot be given the benefit of Explanation 5. It was further held that the non-availability of funds for payment of tax on surrendered income for payment of tax alongwith interest cannot be circumstance to claim immunity from levy of penalty in terms of Explanation 5. In view of these facts and circumstances, I am of the considered view that explanation 5 to section 271(1)(c) is attracted in this case and the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B 71) 2. CIT Vs. Shankerlal Nebhumal Uttamchandani 311 ITR 327 (Guj) (PB 72) (v) Ld. CIT(A) has confirmed the levy of penalty on this amount for the reason that surrender was made after search/ survey operation on 14.11.2006 and therefore it is not voluntary and in good faith. However he ignored the fact that accept for the surrender made by the assessee, the AO has no material to held that such share capital is concealed income of the assessee. He has not stated anything as to how the reliance placed by the assessee in the above two cases are misplaced particularly when no incriminating material in respect of share capital was found in search/ survey and till the assessee filed the return u/s 153A offering the said amount, the AO has not taken any action to establish that the said share capital is concealed income of the assessee. All this show that additional income offered by the assessee on account of share capital was to buy peace of mind and avoid litigation and therefore CIT(A) was not justified in levying the penalty on the said amount. (b) Investment in land Rs.34,85,685/- :- (i) In survey at shop certain papers were found in which the details of investment made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee filed the return u/s 153A offering the said amount, AO has not made any enquiry to establish that the said investment in land is concealed income of the assessee. All this show that additional income offered by the assessee on account of investment in land was to buy peace of mind and avoid litigation and therefore CIT(A) was not justified in levying the penalty on the said amount. 2. Otherwise also penalty under section 271(1)(c) penalty is not leviable under explanation 5 to this section. This explanation reads as under:- Explanation 5 Where in the course of a search under section 132 before the 1st day of June 2007, 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 utilizing (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 previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta Vs. CIT 287 ITR 376 (P H). However in coming to this conclusion, the ld. CIT(A) has not properly appreciated the law. The same is explained as under: a.) Clause (2) to Explanation 5 as referred above only specifies for payment of tax together with interest on the income stated u/s 132(4). There is no time limit provided in the explanation for payment of tax. The assessee, though could not pay the tax alongwith the filling of return due to non-availability of liquid funds but the same has been paid subsequently as certified by the AO . It can be noted that wherever the law requires that payment of tax is to be made within a particular time, provision is made to that effect. For instance sec. 245C provides that no application for settlement of case shall be accepted unless the tax and the interest on the additional income disclosed in the application has been paid on or before the date of making the application and the proof of such payment is attached with the application. Therefore in the absence of similar specific condition embedded in clause (2) to Explanation 5, it cannot be presumed that unless the tax alongwith interest is paid alongwith the return, the immunity of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und in his possession or under his control has been acquired out of his income, which has not been disclosed so far in his return of income to be furnished before the expiry of the time specified in sub-section (1) of section 139, and also specifies in the statement, the manner, in which such income has been derived, and pays tax, together with interest, if any, in respect of such income. Sub-clause (2) does not provide any eventuality in which the immunity conferred by this clause may be taken away, or may be lost, except where the assessee fails to pay tax, together with interest, if any, in respect of such income. Sub-clause (2) does not contemplate the requirement of the assessee paying tax, together with interest, if any, in respect of such income, in any particular assessment year only. In the language of section 132(4) read with sub-clause (2) of Explanation 5, there is nowhere the requirement, that the assessee should undertake to show that asset, in a return of any particular assessment year, to be entitled to claim the immunity. When the parent provision contemplates the income to be permissible in any previous years, obviously sub-clauses (1) and (2), which are in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ryana High Court in the case of Ashok Kumar Gupta to held that tax on income stated u/s 132(4) should be paid before the due date of filing of return. In this decision, the judgment of Rajasthan High Court in case of Gebilal Kanhaialal has been dissented. This decision is distinguishable on facts as well as on law. Firstly when there is jurisdictional High Court decision on this issue, the Hon ble ITAT cannot follow the decision of any other High Court. Secondly in that case the assessee has surrendered an income u/s 132(4) for assessment year for which the date of filing of return has not expired. The assessee did not file the return before due date. In these facts it was held that tax is required to be paid immediately and in any case before the due date of return. However in the present case the surrender is made in respect of the assessment year for which due date of filing of return has already expired. Hence this case is not applicable on facts. In view of above the levy of penalty of Rs.35,07,610/- u/s 271(1)(c) confirmed by ld. CIT(A) be deleted. 2.5 During the course of proceedings before us, the ld. DR drew our attention to the fact that the assessee filed the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of a search under section 132 before the 1st day of June 2007, 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 utilizing (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 clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, unless, (1) such income is, or the transactions resulting in such income are recorded, (i) in a case falling under clause (a), before the date of the sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself has mentioned in Section 158BFA(2) that penalty will not be imposed in case the tax on the undisclosed income is paid alngwith the return and the assessee did not file the appeal. It is not disputed here that the assessee has paid the tax before imposition of penalty. 2.9 Hon'ble Jurisdictional High Court in the case of Gabilal Kanhaiya Lal Vs. ACIT (supra) has observed that sub-section 1 and 2 are in the nature of proviso t explanation 5. Hence, these proviso are to be read with line therewith. In explanation 5, it is mentioned that asset should be disclosed in the return of income. It is not necessary that such disclosure should be for a particular assessment year as mentioned in the statement recorded u/s 132(4) of the Act. If the asset is disclosed in the return and tax stands paid then penalty is not to be imposed. At the time of imposition of penalty, the assessee has already paid the tax then penalty cannot be imposed and the assessee will get benefit of immunity of explanation 5. There is one other requirement in explanation 5 that the assessee has to specify the manner in which such income has been derived. This issue has been considered by the Hon'ble Gujarat Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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