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TMI Blog2016 (5) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... venue : Shri Dinesh Singh, Sr. DR ORDER Per Rajpal Yadav, Judicial Member The assessees are in appeal before us against the orders of the ld.CIT(A)-II, Surat dated 18.2.2011 passed for the Asstt.Year 2005-06 in the respective appeals of the appellants. 2. Solitary grievance of the appellants is that the Id.CIT(A) has erred confirming the penalty of ₹ 3,91,580/- (in the case of Mahendra K. Kataria) and ₹ 1,80,380/- (in the case of M/s.Sarika Jewellers). The Id. AO has imposed penalty under section 271(1)(c) of the Income Tax Act. 3. Facts on all vital points are common in both the appeals, rather, the orders of the Id.CIT(A) are almost verbatim except variations in the quantum and certain dates. Therefore, for the facility of reference, we take up the facts from the case of M/s.Mahendra B. Kataria. 4. Brief facts of the case are that a search and seizure operation was conducted on 27.12.2006 at the business as well as residential premises of Shri Mahendra B. Kataria group at Silvassa. Survey under section 133A was also undertaken at various places. During the course of search, statement of Shri Mahendra B. Kataria was recorded under section 132(4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Maleka Haji Amin Gadawala Vs. ACIT, in IT(SS)A.No.464, 465 and 466/Ahd/2011. According to the Id.counsel for the assessee in order to attract immunity under clause (2) of Explanation (5), the unaccounted income was disclosed in a statement under section 132(4) of the Income Tax Act, (ii) declarant has declared the manner in which such income is sourced, and (iii) taxes together with interest are paid on such income. She emphasized that the assessees have filed their return of income, disclosed the income on the basis of declaration made in the statement under section 132 of the Income Tax Act. They have paid taxes along with interest and the AO has neither made reference to any material nor made any addition. He simply accepted the return of income. 8. The Id.DR, on the other hand, relied upon the orders of the Revenue authorities. 9. On due considerations of the above facts and circumstances, we find that the Tribunal has extensively made reference to the decision of the Hon'ble Gujarat High Court in the case of Kirit Dahyabhai Patel (supra) while deciding the appeal of Maleka Haji Amin Gadawala (supra). The discussion made by the Tribunal in this regard i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or [Principal Commissioner or] Commissioner] before the said date; or (2) he in the course of the search, makes a statement under subsection (4) of section 132 that any money, bullion, jewellery or other valuable article of thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub section (1) of Section 139 and also 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. 9. The High Court of Madras in the case of S.D.V. Chandru (supra) held that in a case where the assessee had not disclosed his income in the returns filed for the previous year which have ended prior to the date of the search 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome on 31st July, 1987 and pay tax thereon particularly when the assessee concealed on August 1, 1987 that there was concealment of income. The third condition under clause (2) was that the assessee had to pay the tax together with interest, if any, in respect of such undisclosed income. However, no time limit for payment of such tax stood prescribed under clause(2). The only requirement stipulated in the third condition was for the assessee to pay tax together with interest . In the present case, the third condition also stood fulfilled. The assessee has paid tax with interest upto the date of payment. The only condition which was required to be fulfilled for getting the immunity, after the search proceedings got over, was that the assessee had to pay the tax together with interest in respect of such undisclosed income upto the date of payment. Clause(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e principle laid down in the decisions relied upon by the learned senior counsel for the appellant more particularly the principle laid down in the case of Assistant Commissioner of Income Tax Vs. Gebilal Kanhailal (supra) and Commissioner of Income Tax Vs. Abdul Rashid (supra), we are of the considered opinion that the penalty under Section 271(1)(C) of the Income Tax Act cannot be levied on the income shown in the return filed under Section 153 of the I.T. Act. 17. Considering the facts and circumstances of the case and also considering the decision of the Madras High Court in the case of S.D.V. Chandru (supra), we are of the opinion that the appellant is entitled to the benefit of the provisions of Explanation 5(2) to Section 271(1)(c) of the Income Tax Act. 10. Respectfully following the esteemed views of Hon ble jurisdictional High Court, we uphold the grievance of the assessee. In view of the fact that the income in question was covered by the declaration made in the statement recorded under section 132(4) and the tax thereon was duly paid by the assessee, the provisions of Explanation 5 to section 271(1)(c) of the Act will come into play on the facts of this cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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