9911796707
TMI Blog2008 (2) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... f diamonds and whether such cancellation of penalty is based on true and correct interpretation of the relevant provisions of law?" 2. The Assessment Year is 1988-89. Search operations took place at the premises of one M/s. Dinal Gems, 303, Panchratna, Opera House, Bombay under Section 132 of the Act on 03.07.1987. Admittedly, the respondent-assessee was also present at that point of time at the said premises. A personal search of the assessee was undertaken and diamonds worth Rs.5,06,712/- were found from the person of the assessee and seized. On 25.02.1991 assessment under Section 143(3) of the Act was completed on a total income of Rs.5,77,600/-. The record reveals that a return of income declaring total income of Rs.20,880/- was filed on 17.10.1989. This was followed by a revised return filed on 27.09.1990 declaring total income of Rs.5,27,600/-, including the value of diamonds found from the possession of the assessee i.e. worth Rs.5,06,712/-. The Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Act and levied a penalty of Rs.5,61,464/-. The penalty levied by the Assessing Officer was confirmed in First Appeal by the Commissioner (Appeals). The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a strict view of the matter was required to be taken; that there could not be same treatment of persons i.e. the assessees, who were not similarly situated. In support of the submissions made reliance has been placed on the Apex Court order in case of G.C. Agarwal Vs. Commissioner of Income-tax, (1990) 186 ITR 571. 4. Mr.M.J.Shah, learned advocate appearing on behalf of the respondent-assessee, heavily relied on the impugned order of the Tribunal and adopted the reasonings as part of his submissions. It was submitted that in so far as the fulfillment of conditions stipulated by Exception No.2 of Explanation 5 though the law requires the assessee to specify in the statement recorded under Section 132(4) of the Act the manner in which the declared income has been derived, an assessee cannot be denied immunity only because such averment is not found in the statement made if no question to that effect is put to the assessee by the authorized officer. In support of the submission reliance has been placed on decision of Allahabad High Court in case of Commissioner of Income-tax Vs. Radha Kishan Goel, [2005] 278 ITR 454 (All.). Responding to the submission of the Revenue that tax has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs have been concealed or inaccurate particulars have been furnished exceeds a sum of twenty-five thousand rupees, the Assessing Officer shall not issue any direction for payment by way of penalty without the previous approval of the Deputy Commissioner……… Explanation 5:- Where in the course of a search under section 132, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to in the said provision, and the assessee claims that such assets have been acquired by the assessee by utilizing (wholly or in part) his income for any previous year which has ended before the date of search, but for such year return of income has not been furnished before the date of search, or, where such return of income has been furnished before the date of search, and such income represented by such asset has not been declared in the return of income; or for any previous year which is to end on or after the date of the search, then, such income shall be deemed to have been concealed for the purposes of imposition of penalty under Section 271(1)(c) of the Act regardless of the fact that the assessee declares such income in the return of income filed after the date of search. However, there are two Exceptions carved out in such a situation. The first Exception, broadly speaking, relates to the income being reflected in the books of account maintained by the assessee or having been disclosed before Chief Commissioner of Income-tax before the date of filing the return, but for the present it is not necessary to deal with the requirements of the said Exception as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance, there is no prescription as to the point of time when the tax has to be paid qua the amount of income declared in the statement made under Section 132(4) of the Act. The Tribunal was justified in holding that there would be sufficient compliance of the provision if tax is shown to have been paid before the assessment was completed. The reasoning which has weighed with the Tribunal is that the search proceedings were conducted on 03.07.1987 when the statement under Section 132(4) of the Act was made. The last date for payment of advance tax qua the last installment of advance tax was 15.12.1987 in such a case, according to the Tribunal, and in the event, the assessee did not pay tax qua the income declared in the statement made under Section 132(4) of the Act, the assessee became liable to pay interest in accordance with the relevant provisions of the Act because Exception No.2 itself specifies payment of tax, together with interest, if any, indicating that legislature did not stipulate any specified time limit for payment of tax. There is no infirmity in this reasoning. 13. However, the outer limit has to be the point of time when the assessment proceedings are undertaken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch and seizure proceedings, for becoming entitled to immunity from levy of penalty the basic requirement is in case of Exception No.1 relevant entry in the books of account or disclosure before the competent authority, and in relation to Exception No.2 disclosure in the statement made under Section 132(4) of the Act. Disclosure or otherwise in the return of income post the date of search would not absolve an assessee from the deeming provision, namely, 'deemed concealment' once an assessee is found in possession of a valuable asset at the time of search. Hence, the contention raised on behalf of the Revenue that penalty is leviable under the main provision for concealment vis-a-vis the return of income does not merit acceptance. 15. In so far as the alleged failure on the part of the assessee to specify in the statement under Section 132(4) of the Act regarding the manner in which such income has been derived, suffice it to state that when the statement is being recorded by the authorized officer it is incumbent upon the authorized officer to explain the provisions of Explanation 5 in entirety to the assessee concerned and the authorized officer cannot stop short at a particular ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
