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TMI Blog2015 (8) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Vishal Fashions Private Limited under section 132 (4) of the Act was recorded on 20.1.2009 wherein total disclosure of Rs. 7.56 crores was made by him which included Rs. 1 crore made in the name of the assessee on account of unaccounted income investment, advance, assets expenditure etc. Subsequently assessment was framed under section 143(3) by order dated 28.12.2010 and the total income of the assessee was determined at Rs. 1,34,82,050/- which included the undisclosed income of Rs. 1 crore. On the aforesaid undisclosed income of Rs. 1 crore A.O was of the view that during the course of search, assessee had failed to specify the manner in which such income has been derived and therefore vide order dated 20.6. 2011 levied penalty of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Clause (i) lays down the first condition that undisclosed income should have been admitted by Dipesh L. Shah (brother of assessee) in the statement u/s 132(4) and assessee should specify the manner in which it has been derived. Shri Dipesh L Shah, in the statement recorded on 20.01.2009, in the course of search stated in reply to questions no.34 that he was disclosing Rs. 1 crore for the assessee for financial year 2008-09 representing current year income. He clearly mentioned that und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement. The reason is not far to seek. In the first instance, the statement is being recorded in the question and answer form and there would be no occasion for an assessee to state and make averments in the exact format stipulated by the provisions considering the setting in which such statement is being recorded. Secondly, considering the social environment it is not possible to expect from an assessee, whether literate or illiterate, to be specific and to the point regarding the conditions stipulated by the second exception while making statement under section 132(4). Even if the statement does not specify the manner in which the income is derived, if the income is declared and tax thereon paid, there would be substantial compliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which such income has been derived, it can be inferred that such undisclosed income was derived from the business which he was carrying on. The object of the provision is achieved by making the statement admitting the non-disclosure of money, bullion, jewellery, etc. thus, much importance should not be attached to the statement about the manner in which such income has been derived. It can be inferred on the facts and circumstances of the case, in the absence of anything to the contrary. Therefore, mere non-statement of the manner in which such income was derived would not make explanation 5(2) inapplicable."(P.454)." 5.4 After going through the statement recorded under section 132 (4) of the IT Act and the principles laid down by the Hono ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt and by the Allahabad High Court in the above cited cases the assessee has made disclosure of unaccounted income while recording a statement under section 132(4) of the Income tax Act and paid the taxes with interest. The returned income included disclosure amount of Rs. 1,00,00,000/- made during search while recording statement u/s.132(4) of the Act. The A.O. has not made any comment or observation about the source .and nature of income, manner in which income was derived or substantiating the manner. This shows that the A.O. himself was satisfied about the income offered in return of income. In view of these facts and circumstances of the case and the principles laid down in the decisions by the Hon'ble High Courts narrated above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of clause (ii) of sub section 2 to section 271AAA, Ld. CIT(A) has noted that the same was also satisfied as during the course of search the authorized officer did not ask any specific question on substantiating the manner in which income was derived, but however the assessee had clearly mentioned in the statement recorded under section 132(4) that the undisclosed income was current year's business income. Ld. CIT(A) has also noted that clause (iii) of subsection 2 of section 271AAA was also satisfied by the assessee as the assessee had paid the tax along with interest. Ld. CIT(A) has thus given a finding that that the 3 conditions specified under section 271AAA were satisfied by the assessee in the light of decisions of Hon'ble Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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