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TMI Blog2012 (9) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... years in order to determine undisclosed income based on seized material for each of six assessment years. Explanation 5 to section 271(1) of the Act cannot be invoked in assessment year 2004-05 merely on presumption that the assessee might have been in possession of cash throughout the period covered by search assessments. The income offered to tax u/s 153A for assessment year 2004-05 is based on entries recorded in the seized material. Unlike provisions of Explanation 5A, the provisions of Explanation 5 cannot be invoked in assessment year 2004-05 in respect of entries recorded in seized material - in favour of assessee. - ITA Nos.4413 to 4418/Del./2011 - - - Dated:- 31-7-2012 - SHRI R.K. GUPTA AND B.C. MEENA, JJ. ASSESSEE BY : Shri Sanjeev Bansal, CA REVENUE BY : Shri D.K. Mishra, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : These six appeals filed by the assessee emanates from the order of CIT (Appeals)-I, New Delhi dated 12.08.2011 for the Assessment Years 2001-02 to 2006-07. 2. The assessee is an individual and partner in M/s. Leela Enterprises and M/s. Super Advertising Agency. A search and seizure operation was carried out u/s 132 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant was on the basis of the documents / papers found during the search is not in dispute. In such a situation, not withstanding the fact 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 section 271 (1)( c), be deemed to have concealed the particulars of his income or furnished in accurate particulars of such income except in cases were such transactions resulting in such income are recorded in the books of accounts maintained by him before the date of search. In order to avoid falling within the provisions of section 271 (1)( c) the appellant not only has to establish that Explanation 5 is not applicable to the facts of this case, but he has also to establish that he does not fall within the entire provisions of section 271 (1)(c). In Pradip Chandulal Patel v. P.G.Karode [(1992) 197 ITR 385, 398 (Guj), it has been held that, in passing an order under section 132(5), the Officer was right in coming to the conclusion that, independently of the said Explanation 5, penalty was imposable under section 271(1)(c). 10. The appellant has further stated in para 4.4 that the appellant has furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the declaration for the purposes of avoiding penalty should be voluntary and before detection of the concealed income by the Department. 11. From the above discussion and the citation of the various judgments it is observed that penalty u/s 271 (1 )( c) can be levied if the concealed income is detected by the Department as a consequence of the search. In this case the appellant had filed the return U/S 153A only after the department had discovered the concealed income during the search. The case of the appellant falls within the general provisions of section 271(1)(c) as well as within the Explanation 5, therefore, the penalty of Rs.16,270/- imposed by the Assessing Officer is legally correct and the same is upheld. 4. The grounds of appeal in all the appeals are as under except the difference in the amount of penalty levied for a particular year :- 1. The Ld. Appellate Authority erred in law and on fats in confirming the penalty of Rs.1,63,507/- (ITA No.4413/Del/2011) levied u/s 271(1)(c) on additional income offered in the return of income filed by the appellant in response to the notice u/s 153A of the Act, while ignoring that such penalty cannot be imposed on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inance Act, 2007 in respect of a search initiated under section 132 on or after the 1st day of June, 2007. Thus Explanation 5 will not be applicable in respect of a search initiated on or after 1.6.2007. Further the words search initiated under sec. 132 before the first day of June, 2007 have been inserted by the Finance Act, 2007 w.e.f. 1.6.2007. In our considered opinion the amended provisions of Explanation 5 will be applicable only for assessment year 2008-09 if any money, bullion, jewellery or other valuable article or thing is found from the possession of the searched person in respect whom searches are initiated on or after 1.4.2007 to 31.05.2007. 30. In case of a search initiated on or after 1.6.2007 as provided in Explanation 5A, the assessee will be liable for penalty/s 271(1)(c) both in respect of assets as well as any income based on any entry in any books of account or other documents or transactions. But no such provision relating to entries was in existence in Explanation 5 prior to insertion of Explanation 5A in section 271(1) of the Act. Hence the scheme of assessment till insertion of Explanation 5A and section 271AAA by the Finance Act, 2007 gave immunity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 merely on presumption that the assessee might have been in possession of cash throughout the period covered by search assessments. The income offered to tax u/s 153A for assessment year 2004-05 is based on entries recorded in the seized material. Unlike provisions of Explanation 5A, the provisions of Explanation 5 cannot be invoked in assessment year 2004-05 in respect of entries recorded in seized material. Thus invoking of Explanation 5 in assessment year 2004-05 is based on presumptions, surmises and conjectures. It is settled law that suspicion howsoever strong, it cannot take place of actual evidence and hence the contention of the Revenue that assessee was in possession of cash throughout the period of six assessment years has to be rejected. In view of above discussion we are of the considered opinion that even the amended provisions of Explanation 5 cannot be applied in assessment year 2004-05. Consequently penalty u/s 271(c) cannot be imposed by invoking Explanation 5 of the Act in assessment year 2004-05 in respect of cash found in previous year relevant to assessment year 2007-08. 32. Now coming to the decisions relied by Ld CIT (DR) in the case of Ajit B Zota (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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