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TMI Blog2007 (12) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered his undisclosed income for the assessment year 1987-88 but has spread over the same for five years." 3 While Appeal No. 42 of 2003 was admitted on September 15, 2003, by farming the following substantial question of law: "Whether, on the facts and in the circumstances of the case, the Income -tax Appellate Tribunal was correct in its interpretation of Explanation 5 to section 271(1)(c) so as to hold that penalty under n 271(1) (c) was not leviable in the case, contrary to the findings given by Commissioner of Income-tax (Appeals) ?" 4 In our view, the precise question that emerges is, about the interpretation Explanation 5 to section 271(1)(c), as to whether on the face of the statement given by the assessee under section 132(4), any liability of penalty is attracted, on account of the assessee filing revised returns for the assessment years 1984-85 to 1988-89, showing the income disclosed under section 132(4) by spreading it over the aforesaid assessment years. The assessing authority, accepting the revised returns, has made the assess ment, though by changing the figures. For the present purposes, it would suffice to say, that out of the amount of Rs. 3,50,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal, the learned Tribunal found that the assessee had submitted revised returns for the assessment years 1984-85 to 1988-89, on the basis, that such income [as disclosed under section 132(4)] did pertain to the said years, and that, this stand of the assessee was accepted by the Assessing Officer, in view of the fact, that the documents found during the course of search indicated that the assessee is carrying on a business from the assessment year 1984-85, and the quantum of the income declared by the assessee in each year was varied by him, on estimate basis, and thus, it was clear, that as a matter of fact, the concealed income of Rs. 3,50,000 was earned during the 5 years, which was accepted by the Department, and that being the position, it cannot be said that the assessee did not stick to the statement given under section 132(4). The learned Tribunal also relied upon a judgment of the Allahabad Bench of the Tribunal, in the case of Shyam Biri Works P. Ltd. v. Asst. CIT Eeported in [2001] 70 TTJ 880, wherein also the assessee had disclosed large amount of undisclosed income in the statement under section 132(4), and later on filed revised returns for two years, declaring addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions resulting in such income are recorded,— (i) in a case failing under clause (a), before the date of the search; and (ii) in a case falling under clause (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Chief Commissioner or Commissioner before the said date ; or (2) he, in the course of the search, makes a statement under sub section (4) of section 132 that any money, bullion, jeweilery or other valuable article or 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." 11 We may also quote the provisions of section 271(1), which reads as under:- "271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person— (b) has fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated under section 132, the assessee is found to be the owner of any assets mentioned therein, and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income, for any previous year, which has ended before the date of the search, but the return of income for the said year, has not been furnished before the said date, or where such return had been furnished before the said date, such income has not been declared therein, 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 purpose of imposition of penalty under sub-section (1) (c) be deemed to have concealed the particulars of his income, or furnished inaccurate particulars of income. 14 Significantly, such concealed income could be for any previous years, and could be required to be disclosed in such particular previous years. It is to this language of Explanation 5, that two exceptions are carved out, by using the word "unless", and the controversy in the present case is covered by sub-clause (2), which has been quoted above, and which provides, that it would be not so treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Rs. 3,50,000, of course in addition, he gave out therein that he would show it in the return for the assessment year 1987-88. But then in the language of section 132(4) read with sub-clause (2) of Explanation 5, this is nowhere the requirement, that the assessee should undertake to show that asset, in a return of any particular assessment year, to be entitled to claim the immunity. 17 To appreciate this aspect, we may again revert to the opening part of Explanation 5, which attracts the liability under section 271(1) by providing Explanation, and clause (a) thereof clearly contemplates a situation, where the assessee may claim the undisclosed assets to have been acquired by him for any previous year, which has ended before the date of the search, but the return of the income of such year has not been furnished before the —said date. Further significantly, it is clause (b), which provides for the other eventuality of the asset having been acquired by him for any previous year, which is to end on or after the date of the search. This is a million dollar, distinction. Inasmuch as, in cases covered by clause (a), the asset may have been acquired by income for any previous year, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat event, obviously, the assessee would be not only entitled, rather would be under obligation to make disclosure of the income earned during the relevant previous years, in which the income may have been earned, resulting into the disclosure of the total assets as acquired by undisclosed income, and admitted in statement under section 132(4). 20 This may be a question of fact, as to whether the particular extent of income shown by the assessee in such revised returns in each particular previous year, may be correct or not, but then, there may be cases, where there may be foolproof material to show, that the assets found during the search, and disclosed under section 132(4), were acquired by the assessee during a particular past previous year. For instance, let us take an example, that in case of a search, fixed deposit receipts and/or pass books of undis closed bank accounts are found, disclosure whereof has been made by the assessee under section 132(4). Obviously, the dates of the fixed deposit receipts, and the entries of the receipts as appearing in the bank pass books are the foolproof material to show, that the assessee had acquired those assets at the time it purports to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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