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TMI Blog2017 (1) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Pr.CIT Vs. Shri Jignesh Venilal Koralwala [2016 (7) TMI 938 - GUJARAT HIGH COURT] has held that Explanation 5 would not be applicable unless during search, the assessee is found to be owner of any money, bullion, jewellery or other valuable article or thing is found. No such things were found during the course of search and addition was made on the basis of narrations in the diary. - Decided in favour of assessee - IT(SS)A.No.197/Ahd/2014, ITA No.1751/Ahd/2014, IT(SS)A.No.246 to 250/ahd/2014 - - - Dated:- 16-1-2017 - SHRI RAJPAL YADAV, JUDICIAL MEMBER For The Assessee : Shri Tushar P. Hemani, AR For The Revenue : Shri Antony Pariath, Sr.DR ORDER Present seven appeals are directed at the instance of the assessee against separate orders of the ld.CIT(A)-XVI, Ahmedabad passed in the Asstt.Years 2001-02 to 2007-08. 2. Solitary grievance of the assessee is that the ld.CIT(A) has erred in confirming the following penalty under section 271(1)(c) of the Income Tax Act, 1961. Asstt.Year Amount (Rs.) 2001-02 6,30,000/- 2002-03 11,40,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.43% 2004-05 16,63,554 26,54,974 10.51% 2005-06 16,63,554 5,19,318 7.90% 2006-07 15,53,775 25,01,070 70.25% 2007-08 0 -21,12,276 -2.41% 96,09,883 63,20,466 Average Profit Ratio 5. 17% 3.1 In addition to the above chart, learned CIT(A) has also compared the income disclosed by the assessee with the income declared as per the original return. A.Y. Original Returned Income 5% Income on credit entries in seized records declared by appellant Other un-accounted incomes disclosed in returns Income Returned u/s. 153 A 2001 -02 2,97,090 14,85,000 1.00,000 18,82,090 2002-03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of a search action. The computation of income by estimation in such case is a compulsion for determining taxable income. It is not on the basis of some difference of opinion between the assessee and the department. If this type of argument is being accepted, then it will be a premium to an assessee who was indulging in carrying out its business out of books. In other words, by not recording any transaction in the books of accounts, the assessee could assume that atleast it could absolve itself from levy of penalty because its income would be estimated if it will be caught in these activities. This is not a case where the AO has rejected book result on any difference of opinion between him and the assessee. Therefore, this fold of contention is rejected. 8. In the next fold of submission, it was pleaded that penalty has been imposed with help of Explanation -5 of Section 271(1)(c) of the Act. This Explanation does not cover the income unearthed on the basis of entries found in some diary or note book. According to the ld.counsel for the assessee this explanation is applicable, if during the course of search any money, bullion, jewellery or asset was found. For buttressing h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Shri Himani opposed the appeal contending that the Tribunal has relied on the decision of Gujarat High Court in case of Kirit Dahyabhai Patel v. Assistant Commissioner of Income Tax [Tax Appeal No.1181/2010 decided on 3.12.2014].He further submitted that in any case the additional income pertained to the assessee's on money receipts and would not be covered by explanation 5. When explanation 5 itself did not apply, the question of granting immunity upon fulfilment of conditions contained therein would not arise. 5. Explanation 5 to section 271(1)(c) reads as under : [Explanation 5. Where in the course of a search under section 132 before the 1st day of June, 2007, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments or transactions. In other words, therefore, unless during the search, the assessee is found to be owner of any money, bullion, jewellery or other valuable article or thing, explanation 5 would not apply. This becomes clear when the legislature for the period post 1st June, 2007 has enacted explanation 5A which reads as under : [Explanation 5A. Where in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of (a) 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 for any previous year; or (b) any income based on any entry in any books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and, (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous ..... 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