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TMI Blog2015 (4) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned penalties therefore, deleted. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing (hereinafter in this Explanation referred to assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income,- (a) For any previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date or, where such return has been furnished before the said date, such income has not been declared therein; or (b) for any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, ...." Thus, prima facie, the Explanation 5 to section 271(1)(c) of the Income Tax Act, 1961, goes against the assessee. Explanation 5 has provided for a deeming provision whereby the assessee is treated as defaulter under section 271(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t interpretation of exceptions clauses is discussed below : In the case of N.K. Jain vs. C.K. Shah (SC) [1991 AIR 1289], the Apex Court has held that "it is true that all the penal statutes should be construed strictly and the court must see that the thing charged as an offence is within the plain meaning of the words used ......" Further, the Apex Court has again laid down in the case of State of Jharkhand and Ors. Vs. Ambay Cements; Appeal (civil) 7994 of 2003, that ".... it is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed ....." Hence, the Law is crystal clear and settled that in respect of the penal and exception provisions about strict interpretation, without liberty of intendment. Thus, assessee can not be granted benefit of having made voluntary disclosure statement under s.132(4) of I.T. Act for purpose of exemption of penalty to assessee. Thus, the assessee's claim of protection under exception provision to explanation 5 of section 271(1)(c) of the Act is untenable. Thus, assessee has failed to fulfil any of the conditions laid out in the exceptions clause. Hence, the assessee is completely in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 139(1) has expired. As the decision of Hon'ble ITAT Ahmedabad [Third Member] is binding the same is followed. Accordingly, it is held that the appellant is not entitled to the benefit of exemption under explanation 5(2) to section 271(1)(c) of the I.T. Act and penalty is liveable. Hence, the action of the Assessing Officer is upheld and the penalty is confirmed." 7. The assessee is not satisfied and is in further appeal before us. 8. We have heard the rival contentions, pursued the material on record and duly considered facts of the case, in the light of the applicable legal position. 9. As learned Counsel for the assessee rightly points out, the issue is now covered, in favour of the assesses, by Hon'ble jurisdictional High Court's judgement in the case of Kirit Dahyabhai Patel vs. ACIT (ITA Nos.1181, 1182 & 1185 of 2010; judgement dated 03.12.2014), wherein reversing the very Third Member decision of this Tribunal which was relied upon by the CIT(A), Their Lord ships have observed as follows :- "8. We have heard learned advocates for the parties and perused the material on record. Before dealing with the contentions, it would be relevant to reproduce Explanation 5 to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch and, in the statement given under Section 132(4) the assessee admitted the receipt of undisclosed income for those years and also specified the manner in which such income had been derived and thereafter pays the tax on that undisclosed income with interest, then such undisclosed income would get immunised from the levy of penalty. 10. Looking to the facts and circumstances of the case, it would be relevant to refer the decision relied upon by learned senior advocate for the appellant in the case of Gebilal Kanbhaialal (HUF)(supra), wherein the Apex Court in paragraph No.6 has observed as under: "6. Explanation 5 is a deeming provision. It provides that where, in the course of search under Section 132, the assessee is found to be the owner of unaccounted assets and the assessee claims that such assets have been acquired by him by utilizing, wholly or partly, his income for any previous Year which has ended before the date of search or which is to end on or after the date of search, then, in such a situation, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed the particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se(2) did not prescribe the time limit within which the assessee should pay tax on income disclosed in the statement under Section 132(4)." 11. Even, the High Court of Chattisgarh in the case of Abdul Rashid(supra) has held that in order to get the benefit of immunity under clause(2) of explanation 5 to Section 271(1)(c) of the Income Tax Act, it is not necessary to file the return before the due date provided that the assessee had made a statement, during the search and explained the manner in which the surrendered amount was derived, and paid tax as well as interest on the surrendered amount. 12. At this stage, it is required to be noted that the Apex Court in the case of Commissioner of Income Tax, West BanagalI Vs. Vegetable Products Ltd. (supra), has held that if the Court finds that the language of a taxing provision is ambiguous or capable of more meaning than one, then the Court has to adopt the interpretation which favours the assessee, more particularly so where the provision relates to the imposition of a penalty. 13. Considering the facts and circumstances of the case and also considering the decisions relied upon by learned senior advocate for the appellant, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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