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TMI Blog2013 (2) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Tribunal is justified in law in applying clause (2) of Expla-nation 5 to section 271(1)(c) in favour of the assessee and confirming the order of the first appellate authority setting aside the penalty ?" 2. Since the issue in all the appeals is the same, it would suffice if the facts in ITTA No. 41 of 2000 are narrated. 3. The facts leading up to ITTA No. 41 of 2000 indicate that a search was carried out in the business premises of the assessee on September 20, 1989. During the course of search, it was discovered that the assessee had invested an amount of Rs. 11 lakhs in two properties and this had not been disclosed. 4. The statement of the assessee was recorded under section 132(4) of the Act in which it was explained that apar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not justified. 9. Feeling aggrieved, the Revenue preferred an appeal before the Tribunal which was dismissed. It is only thereafter that the present appeals under section 260A of the Act were filed and the substantial question of law men-tioned above was framed for consideration. 10. The only contention of the learned counsel for the Revenue is that the assessee has not complied with the provisions of clause (2) of Explanation 5 to section 271(1)(c) of the Act and as such, the imposition of penalty by the Assessing Officer was justified. In this regard, the relevant portion of Explanation 5 is reproduced below : "Explanation 5.-Where in the course of a search initiated under section 132 before the 1st day of June, 2007, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any money, bullion, jewellery or other valuable article or thing found 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 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 the tax, together with interest, if any, in respect of such income." 11. The argument on non-compliance advanced before us was also advanced by the Revenue before the Tribunal, but this was rejected by the Tribunal inasmuch as it was held that the assessee had made a statement under sub-section (4) of section 132 of the Act stating that he had acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hows that the assessee had fully complied with the provisions of clause (2) of Explanation 5 to section 271(1)(c) of the Act. Moreover, the assessee had not acted in a contumacious manner. In fact, the assessee had made a clean breast of the entire facts and had admitted the purchase of the property from the income which was not dis-closed. The non-disclosure of the income was due to the circumstances mentioned above, viz., that the assessee was an uneducated and illiterate petty contractor who received payments only after deduction of tax at source. It is under these circumstances that the assessee believed bona fide that no further tax was required to be paid. 15. In T. Ashok Pai v. CIT [2007] 292 ITR 11 (SC) the Supreme Court observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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