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TMI Blog2012 (5) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... or otherwise paid in deference to notices of demand, well before the penalty proceedings were concluded, the assessee could not be denied the immunity under section 271AAA(2) only because entire tax, along with interest, was not paid before filing of income tax return or, for that purpose, before concluding the assessment proceedings - Appeal is dismissed - IT APPEAL NOS. 1324-5 (KOL.) OF 2011 - - - Dated:- 17-2-2012 - PRAMOD KUMAR, MAHAVIR SINGH, JJ. Amitava Roy for the Appellant. J.N. Gupta for the Respondent. ORDER Pramod Kumar, Accountant Member These two appeal, filed by the Assessing Officer, are directed against two separate orders dated 8th July 2011 passed by the Commissioner (Appeals) in the matter of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 2008 for the assessment year 2008-09. The assessment under section 143(3) for the assessment year 2007-08 was completed on 31st December 2009, but, while finalizing the assessment, the Assessing Officer also initiated the penalty proceedings under section 271 AAA and observed that "Since the assessee has not paid the full taxes and interest on disclosure made u/s 132(4), penalty proceedings under section 271AAA of the Act are initiated." The same was the position with regard to the assessment year 2008-09. In the resultant penalty proceedings, it was submitted by the assessee that before filing the income tax return, the assessee had paid advance tax of Rs. 18,72,162 on 25.10.2007 and the assessee had also requested that the cash of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch was conducted on 30/8/2007 and the disclosure was made in the statement recorded u/s 132(4) of the Act for the specified previous year, the penalty provisions of Section 271AAA was squarely applicable in this case. The sub section (2) of Section 271 AAA provides that: (2) Nothing contained in sub-section (1) shall apply if the assessee,- ( i ) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; ( ii ) substantiates the manner in which the undisclosed income was derived; and ( iii ) pays the tax, together with interest, if any, in respect of the undisclosed income. It can be seen that, in order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used the material on record and duly considered facts of the case in the light of the applicable legal position. 6. We find that Section 271AAA, which is applicable in respect of undisclosed income unearthed as a result of search operations carried out on or after 1st June 2007, provides as follows: Penalty where search has been initiated. 271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted; ( b ) "specified previous year" means the previous year- ( i ) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or ( ii ) in which search was conducted. 7. We find that under the scheme of Section 271AAA, there is a complete p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in a situation in which due tax and interest has not been paid in full before filing of the relevant income tax return, the assessee will not be eligible for immunity under section 271AAA(2). 8. While dealing with Explanation 5 to Section 271(1)(c), which is broadly on the same lines, Hon'ble Gujarat High Court, in the case of CIT v. Mahendra C. Shah [2008] 299 ITR 305/172 Taxman 58 has observed that, " there is no prescription about the point of time when the tax had to be paid qua the amount of income declared in the statement under section 132(4) of the Act". We must, however, point out that even after making these specific observations Their Lordships had to treat the conclusion of assessment proceedings as outer limit f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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