9911796707
TMI Blog2016 (9) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has filed his return of income on 25.3.2013 declaring total income at Rs. 1,50,52,490/-. The assessee has disclosed unaccounted income of Rs. 1.50 crores in his hand. The AO has passed assessment order under section 143(3) on 31.1.2014, and he accepted disclosed income of the assessee. The ld.AO has initiated penalty proceedings under section 271AAA of the Act. He issued a show cause notice under section 274 r.w.s. 271AAA. In response to the show cause notice, the assessee has filed written submissions, and this submission has been reproduced by the AO in the penalty order. It reads as under: "2. In response to the notice so issued, the assessee has submitted his reply on 12.05.2014, raising various contentions which are reproduced as under: 1. "With reference to the above, assessee would like to submit the brief facts of the case. The search was conducted in this case on 09/08/2011 by the department u/s. 132 of the I.TAct as a result of which disclosure for Rs. 1,50,00,000/- was made for the year under consideration been duly shown in the return of income & accepted in the assessment order passed u/s. 143(3) of the I.TAct by the assessing officer. The due taxes on this di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound to be false and would not have been found to be so had the search not been conducted; (b) "specified previous year" means the previous year- (i) which has ended before the date of search, but the date of filing the return of income under sub-section (i) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted.]" 3. From the above clauses of the section it becomes clear that no penalty on the income disclosed & pertaining to the search year can be levied if the same is accepted by the assessee & due taxes on the same are paid by him. Regarding the issue of manner of deriving of disclosed income & accepting the same in 132(4) statement is not at all relevant if specific question for the same has not been raised during the course of search & more so when the due taxes are paid on the same which later on also has been accepted by the assessing officer in the assessment order. For this proposition of legal position the assessee would like to place reliance on the following judgements: i) Concrete Developers v. Asstt. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to question no. 7 it was clearly stated that the detail explanation of the loose paper found as per Annexure - 2 Page No. 1 to 169 will be given by his son Shri Rajeshbhai M. Shah. On very same day Shri Rajeshbhai M. Shah has also given statement u/s. 132(4) in which he had after considering the said loose paper files & other documents as well as answer given by his father, disclosed the total income of Rs. 25,00,35,469/-. For this disclosure detailed bifurcation in consultation with family members was submitted later on. The said bifurcation submitted of disclosed income figure included the amount of Rs. 1,50,00,000/- belonging to the assesses & this fact has been noted in the form of chart in assessment order. So, in substance the assessee had made disclosure of Rs. 1,50,00,000/- on the date of the search which was included in the total disclosure amounting to Rs. 25,00,35,469/-. Thus, condition of accepting the undisclosed income in statement 132(4) gets fulfilled. Now, as far as manner of earnings of this income is concerned no such question was raised during the course of recording statement & so, it does not become necessary for getting the immunity from the section of provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings. The appellant's share of allocation/manner was stated to be "on account of Miscellaneous transaction to cover up other notings, leakages etc". Having given careful consideration, I agree with the Ld. ARs, that there is no definition of "stating the manner and substantiating the same" laid down in s. 271AAA, as indeed it is to be gathered from not only the statement u/s 132(4) but also the seized documents/assets which are confronted to the appellant. When seen in the light of Mahendra C Shah (supra), I find force in the contention of the ARs that subsequent to admission u/s 132(4), clearly indicating the broad manner of earning to be "on account of Miscellaneous transaction to cover up other notings, leakages etc" followed by offering in the return, and unconditional and unaltered bringing of the same to tax by the AO, substantially tantamount to stating the manner and substantiating the same, and that the AO cannot hold otherwise during penalty proceedings without bringing in positive evidence to establish the absence of substantiation or the falsity in claim of the appellant or without referring to seized documents. As such, in light of various authorities cited b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the possession of the assessee he is not deemed to have concealed his income or concealed particulars thereof. The explanation is not confined to physical possession but extends to other forms of possession, [emphasis supplied] 4.4 The fact that the Ld. AO himself has taxed the amount offered u/s 132(4) and further in the return u/s 153A, without contradicting or contesting the basis and quantification of such "undisclosed income" to disprove the same would also, it was vehemently contended, go to establish that the manner as stated by the appellant u/s 132(4) stands not only substantiated as required u/s 271AAA(2)(ii) but the AO is also satisfied about such substantiation right at the assessment stage, and the AO is not expected to suddenly hold otherwise during penalty proceedings unless he brings positive material to disprove the already accepted substantiation by the appellant. I find considerable force in the contentions raised as above and have no hesitation in fully agreeing with the same. While on one hand HC has clearly opined that considering the social environment, the appellant cannot be expected to give graphic details of manner of earning unaccounted income, the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X
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