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TMI Blog2015 (5) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstantiated the manner in which such income has been derived. (iii) On the facts and in the circumstances of the case, the learned CIT(A), Nashik has erred in holding that interest receivable of Rs. 3,61,500/- from M/s Nikki Agro is covered by statement u/s 132(4) of the Act, whereas the assessee has not offered this income for taxation. (iv) Appellant craves, leave of the Hon'ble Tribunal to add, amend / alter or delete any of the aforesaid ground herein if directed so. (v) Any other ground that may be urged at the time of hearing." 3. The only issue raised in the present appeal is against the deletion of penalty levied under section 271AAA of the Act. 4. Briefly, the facts of the case are that the assessee was engaged in the activity of commodity trading and was also partner in various firms. A search and seizure action was carried out at the premises of the assessee along with Sahayog Group of Jalgaon on 22.11.2007. During the course of search, the statement of the assessee was recorded under section 132 of the Act on 22.11.2007 and the assessee made disclosure of undisclosed income of Rs. 1,69,75,257/-. In the return of income filed, the assessee declared total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation of the assessee vis-à-vis income of Rs. 3,04,845/-. 8. The Ld. Authorized Representative for the assessee pointed out that during the course of recording of statement under section 132(4) of the Act, additional income was offered on account of different items, whereas the declaration made in the return of income was on certain different items. It was further pointed out by the Ld. Authorized Representative for the assessee that on account of the first three items which were offered as additional income under section 132(4) of the Act, the assessee declared additional income of Rs. 97 lakhs and in respect of the balance items, no penalty under section 271AAA of the Act was levied. Our attention was drawn to the statement of the assessee recorded in this regard and it was pointed out by the Ld. Authorized Representative for the assessee that the Assessing Officer never questioned the manner of earning such income. Reliance in this regard was placed upon the ratio laid down by the Tribunal in following decisions :- (i) ACIT vs. Munish Kumar Goyal, (2014) 45 taxmann.com 563 (Chandigarh - Trib.); (ii) Neeraj Singal vs. ACIT, (2014) 40 CCH 387 (Delhi - Trib.); and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he undisclosed income and specifies the manner in which such income has been derived; secondly, if the assessee substantiates the manner in which the undisclosed income was derived; and, thirdly, pays the taxes, along with interest, if any, on such undisclosed income, then on fulfillment of the above three conditions, no penalty is leviable under section 271AAA of the Act. 12. Coming to the facts of the present appeal, search under section 132 of the Act was carried on at the premises of the assessee on 22.11.2007. During the course of search, the assessee had made the under-mentioned declaration of additional income, as under :- 1. Unrecorded cash Rs.1,00,00,000/- 2. Cash payment to M/s Niki Agro Rs. 50,00,000/- 3. On account of Silver articles Rs. 3,75,257/- 4. On account of errors & omissions Rs. 16,00,000/- Total Rs.1,69,75,257/- 13. However, the assessee in the return of income offered the following additional income :- 1. Gold Diamond Jewellery & Silver Rs. 3,75,257/- 2. Cash found at residence after submitting Explanation Rs.89,65,875/- 3. Interest receivable from M/s Nikky Agro Rs. 3,61,500/- 4. Commodities trading income at Rajasthan Rs. 57,244/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 97,02,632/-. 16. The CIT(A) further notes that the search party had not asked the assessee to specify and substantiate the source of income disclosed. However, the assessee in his statement, in reply to Query No.2 recorded dated 24.11.2007 Query No.11 dated 13.12.2007 had offered the additional income and admitted that the said undisclosed was earned out of undisclosed speculation income of commodities/derivatives and is not supported by documentary proof. The CIT(A) further notes that where the assessee had moved an application for adjustment of the cash seized of 1 crore against the taxes and interest liability, the third condition mentioned in sub-section (2) to section 271AAA of the Act was fulfilled and as such there was no merit in the levy of penalty under section 271AAA of the Act to the extent of Rs. 97,02,632/-. The balance penalty levied in the hands of the assessee was confirmed to the extent of Rs. 30,625/-. The Ld. Authorized Representative for the assessee has not pointed any appeal having been filed against the said confirmation of partial penalty under section 271AAA of the Act. Though, the Revenue is in appeal against the deletion of penalty to the extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt financial year i.e. 2009-10 relevant to A. Y. 2010-11 in any (should be 'my') individual capacity. They cover all the discrepancies in the seized papers during the course of search proceedings." 11. Therefore clearly the Revenue has not asked the assessee to disclose the manner in which such income was earned. In any case once the income is surrendered during the course of search u/s 132(4) it can be safely assumed that during discussion the assessee must have disclosed the manner. In any case we find force in the submissions of the Ld. Counsel for the assessee that if the Explanation of the assessee has been accepted for a sum of Rs. 1987500 out of total surrender of Rs. 4 crore then same manner should have been accepted for the whole of the amount. It is not clear from the penalty order how explanation for Rs. 1987500 was accepted. In any case the Ld. CIT(A) has considered all these issues in detail and the D.R. for the Revenue has not referred to any material or decision which can controvert the findings of the CIT(A). In the following cases which have been relied on by the Ld. Counsel for the assessee which was clearly held that penalty is not leviable. 12. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se before the Hon'ble Supreme Court, issue related to a penalty imposed u/s 271(1)(c) of the Act on an amount of income surrendered by the assessee in a statement recorded u/s 132(4) of the Act. Clause (2) of Explanation 5 to section 271(1)(c) of the Act prescribed immunity from levy of penalty u/s 271(1)(c) of the Act with respect to an income surrendered in a statement u/s 132(4) of the Act. One of the conditions prescribed therein is to the effect that assessee "pays the tax, together with interest, if any, in respect of such income". The Revenue had contended before the Hon'ble Supreme Court that assessee therein had failed to make payment of tax in time. In this context, the Hon'ble Supreme Court noted that the condition did not prescribe any time limit for payment of such tax and that the only requirement stipulated in the third condition was for the assessee to "pay tax together with interest". Factually, it was clear that the said condition stood fulfilled as assessee had paid tax with interest upto the date of payment. Therefore, the Hon'ble Supreme Court held the assessee was entitled to the immunity from payment of penalty in terms of clause (2) of Explanation 5 to secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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