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TMI Blog2016 (8) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... both the conditions are distinct and independent of each other?". 2. Brief facts of the case are that the search & seizure action u/s 132(1) of the Act was carried out on 20.01.2011 on the premises of assessee. During the search incriminating material was seized from the premises of the assessee. The assessee made a statement u/s 132(4) of the Act and made a disclosure of additional income of Rs. 3,00,00,000/-.. Thereafter, the assessee filed return of income on 30.09.2011, declaring total income of Rs. 26,13,92,237/-. The assessment was completed u/s. 143(3) of the Act on 22.03.2013 computing total income at Rs. 26,13,92,237/-. While framing assessment no further addition was made by AO. 3. During the course of assessment proceedings, it was noticed by AO that the assessee, offered undisclosed income of Rs. 3,00,00,000/-. Out of the said undisclosed income of Rs. 1,32,96,340/- was not substantiated when confronted to Subhash Vincent Joseph . On the basis of above conclusion, the AO issued a show cause notice to assessee on 08.07.2013 for initiating penalty proceeding u/s 271AAA of the Act and. The assessee replied the show cause notice, vide his reply dated 26.07.2013. In reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was argued that CIT(A) wrongly deleted the penalty levied by AO. Ld. DR argued that order of CIT(A) be reversed and the order of AO may be restored. Ld. DR relied upon the decision of ITAT, Mumbai in ACIT vs. Prakash Steelage Ltd. (2015 55 taxman.com 284(Mumbai Trib.). On the other hand Ld. AR for assessee argued that AO has grossly erred in concluding that assessee has not substantiate the manner in which the undisclosed income of Rs. 1.33 Crore. The AR further argued that while recording the statement of Shri Subhash Vincent Joseph, no specific question in respect of amount of Rs. 1.33 Crore (approx) was posed. The amount of Rs. 1.67 Crore was duly substantiated with the document seized during the course of search & seizure. Ld. AR of the assessee further argued that the assessee voluntarily disclosed the amount of Rs. 3,00,00,000/- which included Rs. 1.33 Crore(approx). The question of specifying the manner in which the income has been derived is duly answered and substantiated with the document impounded/seized during the search & seizure. However, no specific question with regard to the amount of Rs. 1.33 Crore (approx) was asked to the Shri Subhash Vincent Joseph. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the "Act". Apart from that, it also emanates from the case file that in the course of 'search', the assessee admitted undisclosed income of Rs. 53.55 lakhs. The same was 'returned' on 13.09.2010 in furtherance to notice under section 153A of the 5 I.T.A. Nos.716 & 717/M/ 717/M/13 /M/13 "Act". We make it clear that earlier, he had disclosed income of Rs. 2,30,900/-. Post section 153A notice, he declared income of Rs. 55,85,900/- i.e. Rs. 2,30,900/- + additional amount of Rs. 53,55,000/-. Needless to state, he also paid the taxes there upon. It is not the case of the Revenue that the assessment finalized lead to any addition in assessee's case. Similarly, there is no finding that the assessee had any 'undisclosed' income not returned after 153A notice. We reiterate that no cogent material has been produced by the Revenue to rebut the findings of the CIT(Appeals) regarding admission of undisclosed income by way of statement recorded under section 132(4), explanation of its source and also payment of taxes by the assessee. Therefore, in our view, the present case is covered by section 271AAA(2) of the "Act" and the penalty has been rightly deleted by the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant circumstances. Even if a minimum penalty is prescribes, the authority competent to impose the penalty will be justified in refusing to impose penalty 6 ITA No3371/Del/11 when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." The Hon'ble Gujarat High Court also in the case of CIT v. Mahendra C. Shah 299 ITR 305 held as under:. "Insofar as the alleged failure on the part of the assessee to specify in the statement under s. 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 stage so as to permit the Revenue to take advantage of such a lapse in the statement. The reason is not far to seek. In the first instance, the statement is being recorded in the question and answer form and there would be no occasion for an assessee to state and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said order of the Tribunal (supra) dated 23.9.2013, which read as under: "6.1. The construction of the provisions of Explanation 5 put-forth by Ld DR on the basis of aforementioned instruction no.1882 are totally contrary to the aforementioned decision of Hon'ble Madras High court and the aforementioned decisions of other Benches of ITAT. These instructions are issued by CBDT on 5.6.1991 when the decision rendered by Hon'ble Madras High Court is dated 9.12.2003. During the course of hearing Ld CIT DR was required to place on record any decision of any court in which the view conveyed by the CBDT in aforementioned Instruction No. 1882 is adopted, he was unable to cite any such decision. It was only argued that instructions issued by CBDT are in the nature contemporanea exposition and for such purpose reliance was mainly placed on the decision of Hon'ble Supreme Court in the case of K.P. Varghese (supra). We have carefully considered such submissions of Ld CIT DR and we found that such contention of Ld DR has no force as the law regarding bindingness of circulars issued by CBDT has been later on explained by Larger Bench of Hon'ble Supreme Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing before Ld CIT (A) assessee had placed reliance on various decision in which it was held that where assessee has not been asked with such question that in what manner such income has been derived and the income has been offered and taxes have been paid then it will be sufficient compliance of Explanation 5 to section 271(1)(c). He in this regard referred to the decision of Hon'ble Gujarat High Court in the case of CIT vs. Mahendra C Shah [2008] 299 ITR 305/172 Taxman 58 and the decision of Allahabad High Court in the case of CIT vs. Radha. Kishan Goesl [2005] 278 ITR 454/ [2006] 152 Taxman 290. Thus, immunity provided by Explanation 5 is available to the assessee even though assessee has not specified the manner in which the undisclosed income is earned by him. 6.3. In view of the above discussion, we decline to interfere in the order passed by Ld CIT (A) and appeals filed by the Revenue are dismissed." 8. Considering the above settled nature of the issue, the penalty levied by the AO is deleted. Accordingly, grounds raised by the assessee are allowed." 6. Now coming to the facts of the present case, we have noticed that the AO while levying the penalty, out of total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument of AR of assessee that the amount surrendered has been accepted suo-moto by the Revenue itself leads to the irrefutable conclusion that the question of specifying and substantiating the manner in which it has earned has been answered to the satisfaction of the authorised person as well as assessing officer. Moreover it needs to be understood that in absence of any specific procedure prescribed in the Act, for specifying and substantiating the undisclosed income, the fact that the same has been accepted without any variation by the AO is by itself enough evidence of the said criteria is having been met and satisfied. And this of our view is duly supported with the decision of Delhi tribunal in Ritu Singhal case (supra) and Shri Purnandu Jain vs. ACIT (supra).The decision of Mumbai Tribunal in ACIT Vs Prakash Steelage Ltd (supra) referred by Ld DR is defer on the fact of the present case. In Prakash Steelage, the return income was not accepted by AO, the AO made addition while framing assessment. And the statement recorded on behalf of assessee does not specify the manner in which income is derived. However in the present case the return income is was accepted by AO without any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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