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TMI Blog2015 (3) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... of Prakash Steelage group of companies, of which the assesseecompany forms a part, on 09.02.2009. Several incriminating materials were found, leading to a disclosure of undisclosed income of Rs. 15,00,21,000/- for the entire group vide statement u/s.132(4) dated 06/3/2009, to be appropriated by the 'assessee' amongst the various group concerns. The disclosure in the case of the assessee was for A.Ys. 2008-09 and 2009-10, at Rs. 49,21,666/- and Rs. 99,13,210/- respectively. The assessee subsequently filed its return of income for the relevant year on 29.11.2009, declaring a total income of Rs. 7,52,43,818/-. Its assessment was completed u/s.143(3) on 31.12.2010, determining the total income at Rs. 7,55,90,450/-, i.e., at an increase of Rs. 3,46,632/- over that returned, also initiating penalty proceedings u/s.271AAA vide notice u/s.274 of even date. The same was subsequently levied at Rs. 66,52,232/-, being 10% of the undisclosed income of Rs. 6,65,22,317/-, detailed as under, included in the assessed income of Rs. 755.90 lacs: a) Undisclosed interest income declared by the assessee Rs.99,13,210/- b) Undisclosed income relating to stock Rs.5,62,62,475/- c) Undisclosed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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. (3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation.-For the purposes of this section,- (a) "undisclosed income" means- (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the Prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 which is as under:- "Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of- (i) Any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to assets) and the assessee claims that such assets have been acquired by him by utilizing (wholly or in part) his income for any previous year; or (ii) Any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, Which has ended before the date of search and - (a) Whether the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) The due date for filing the return of income for such previous year has expired but the assessee has not filed the return, Then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s derived by the assessee. In fact, the ld. CIT(A) records the ingredients of Explanation 5 to section 271(1)(c) at para 6.5.4 of his order, while Explanation 5A to s. 271(1)(c) alone is relevant for a search initiated u/s.132 on and after 01.06.2007, as in the instant case; the former applying only in case of a search initiated before 01.06.2007. Even the decision relied upon by him (at para 6.5.5), i.e., Mahendra C. Shah (supra), is only in the context of section 271(1)(c). The two sections, i.e., s. 271(1)( c) and s. 271AAA, are not only worded differently, with thus different concomitant scopes, are rather mandated to operate exclusively (refer section 271AAA(3)). The foregoing, we believe, would bring forth the basis as well as the validity of our initial observation at para 4.1 of this order, i.e., of the ld. CIT(A) having grossly misapplied himself in the matter. We, therefore, accepting the Revenue's Ground # 1, vacate the findings by the ld. CIT(A) as well as his consequent decision as recorded in the concluding sub-para (# 6.5.6) of his order. The same, however, would not by itself imply a positive satisfaction of the conditions of section 271AAA, only on the basis of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest income, i.e., presuming that the manner of its derivation stands also specified. The admission u/s.132(4) is to specify the undisclosed income, or at least the manner in which it is to be arrived at; the whole premise for extending immunity from the penalty, statutorily mandated, being that the assessee commits himself, providing the necessary details under a condition of oath. Further, surprisingly again, we observe no finding by the ld. CIT(A) in respect of substantiation of the manner of deriving the undisclosed income, which stipulation, while missing in section 271(1)(c), stands incorporated in section 271AAA. The A.O. clearly records a finding, both in respect of the assessee having failed to specify the manner in which the undisclosed income is derived as well as of the assessee having failed to substantiate the same, and which in fact the ld. CIT(A) notes vide para 6.5.2 of his order. Clearly, these findings of fact would need to be addressed by the ld. CIT(A), either endorsing or reversing or otherwise modifying the same, i.e., based on his reappraisal of the materials found from the possession of, or otherwise furnished by, the assessee, or even the evidences led ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was made only in the presence of its counsel, Shri Vinay Doshi, CA, and itself makes a plea for grant of condonation from the levy of penalty (in answer to Q.11). Could it be therefore be said that the assessee had no occasion to aver with regard to the manner of deriving the income being disclosed? A company acts through the human agency of its management, which alone could depose qua the manner in which its undisclosed income stood earned/ derived, being rather in its exclusive knowledge? All that the law postulates is a honest disclosure qua the said income. A finding as to the satisfaction or otherwise of the said condition, or for that matter its' substantiation, i.e., of the manner in which the undisclosed income was derived, it needs to be appreciated, are pure findings of fact. The hon'ble high courts can interfere with such a finding/s only where it is in its view either perverse or without evidence or based on irrelevant material, or which is partly relevant and partly irrelevant (refer, inter alia, CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC)). Further, even where so, the province of the hon'ble court is to restore the matter back to the tribunal, stating its re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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