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TMI Blog2014 (10) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... bilal Kanhaialal HUF, Through Karta, Udaipur [2012 (9) TMI 297 - SUPREME COURT] - three conditions must be fulfilled by an assessee, before claiming the immunity under clause (2) of Explanation 5 to Section 271 of the Act - the search was made on 26.06.1985, and the returns were filed within time, on 30.09.1986 - There was no finding at any stage of the proceedings that the acquisition of the seized gold was during any earlier AY - the first condition can be deemed to have been complied with by the appellant - what is required in the context of clause (2) of Explanation 5 to Section 271 of the Act is making of a statement by the assessee and not the acceptability or otherwise of it - Since the assessee made the statement, this condition is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilure to enter in the stock books, was not accepted. Substantial quantity thereof was seized. In the subsequent proceedings initiated under Section 132 of the Act, the value of the seized gold was treated as income. It is stated that on payment of the tax thereon, the gold was released. The appellant filed regular returns for the assessment year 1986- 87, on 30.09.1986. An order of assessment was passed by treating the value of the gold as Undisclosed Income under Section 69A of the Act and the corresponding tax was levied. Though in the appeal preferred by the appellant herein before the Commissioner (Appeals) some relief was granted, the same was nullified in the further appeal preferred by the Department. The Assessing Officer initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the context of levying penalty under that Section. He has also placed reliance upon the judgment of the Delhi High Court in Commissioner of Income Tax v. SAS Pharmaceuticals (2011) 335 ITR 0259. and this Court in Commissioner of Income Tax v M/s. Nasa Continental Exports Limited (I.T.T.A.No.96 of 2001) Sri J.V. Prasad, learned counsel for the respondent, on the other hand, submits that the search was conducted in the business premises of the appellant and that led to the discovery of a substantial quantity of gold, that was unaccounted for in the books. He submits that the very fact that the value of the seized gold was treated as undisclosed income and the same stood affirmed by the Tribunal in a different set of proceedings, reveals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Obviously because the consequences that flow from the proceedings initiated under Section 271(1)(c) of the Act are drastic, the Parliament made an effort to balance the interest of the State, on the one hand, and the interest of the assessee, on the other by incorporating certain safeguards. In this context, Explanation 5 of Section 271 of the Act, becomes relevant and significant. It reads: Explanation 5: Where in the course of a search under Section 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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. The provision is in two parts. The first is about the circumstances under which the penalty becomes leviable, covering sub- clauses (a) and (b). The second is the exceptions carved out to it in the form of clauses (1) and (2). Sub-clauses (a) and (b) cover two substantially different situations. The first one is where the assessee failed to furnish the details of the income that was found during search, in the returns filed for the assessment year. It means that there was a clear failure or suppression on the part of the assessee, to mention in the returns filed by him. Sub-clause (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est, if any, in respect of such undisclosed income. When these requirements are fitted into the case on hand, the first condition needs slight adjustment, since the appellant had time to file the return for the particular assessment year. To be precise, the search was made on 26.06.1985, and the returns were filed within time, on 30.09.1986. There was no finding at any stage of the proceedings that the acquisition of the seized gold was during any earlier assessment year. Therefore, the first condition can be deemed to have been complied with by the appellant. So far as the second condition is concerned, a statement was recorded from the appellant under Section 132(4) of the Act. As a matter of fact, the Assessing Officer made a speci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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