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TMI Blog2019 (3) TMI 1305X X X X Extracts X X X X X X X X Extracts X X X X ..... he due date of the filing of the return for that impugned assessment year i.e. on or before 30/9/2011. Admittedly such tax has not been paid before the due date of filing of return of income but only later on. Reading of the provisions of section 271AAA we also do not find that there is any time limit for payment of the tax, despite the necessary condition. It is rather surprising that the legislator has made a condition precedent for immunity from levy of the penalty of payment of taxes along with interest on undisclosed income, but has not prescribed the time limit for the payment of such tax. It is necessary that whenever there is a condition precedent from seeking immunity from penalty of payment of tax, naturally there should also be a timeline by which it should have been paid. The legislature has not put such timeline. The honourable courts have interpreted such timeline up to the date of assessment because that is the time when the taxes are computed on the undisclosed income. CIT A has held that assessee has not paid tax alongwith the return of income, however there is another provision for consequences of for non payment of self assessment tax u/s 140A (3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions as contained in section 271AAA(2) of the Income tax Act, 1961 as under: (i) in the course of the search the assessee has made a statement under section 132(4), admitted the undisclosed income and specified the manner in which such income has been derived and has declared undisclosed income of ₹ 20 crores. (ii) That the assessee has substantiated the manner in which the undisclosed income was derived. (iii) That the assessee has paid the tax, together with interest, in respect of the undisclosed income. 3. That the Ld. A.O. has erred in law as well as on facts in imposing Penalty of ₹ 2,00,00,000 u/s 271 AAA and the Ld. CIT(A) further erred in law as well as on facts in dismissing the appeal based on incomplete and wrong information that total payment of taxes in respect of A.Y. 2011-12 is ₹ 34249900 against the net amount of tax payable at ₹ 82011070. Calculation of Section 143(1) is wrong incorrect. Further during the course of search on 18-01-2011, a sum of ₹ 1,21,00,000/- was seized by the income tax officials for making payment of income-tax for the Assessment Year 2011-12 but Assessing Officer deposited the said amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) assessee admitted the undisclosed income and specified the manner in which such income has been derived. It is also substantiated the manner in which the undisclosed income was derived. The assessee has also paid the tax altogether with interest in respect of the undisclosed income before assessment. Further the returned income has been accepted without making any addition and assessee has fully cooperated during the search and after the search, therefore, no penalty should be levied. The learned assessing officer rejected the explanation of the assessee and stated that during the course of search the undisclosed income to the tune of INR 200,000,000 was found which was disclosed by the assessee in the statement recorded u/s 132 (4) of the act but has not paid the full tax together with interest in respect of such undisclosed income till the due date of filing the return, therefore, the assessee is liable for levy of penalty u/s 271AAA of the income tax act. Accordingly the learned AO levied a penalty of INR 20,000,000 vide order dated 30/9/2013. 5. The assessee aggrieved with the order of the learned AO preferred an appeal before the learned CIT A 29, New Delhi who pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the interest has not been paid by the appellant up to the date of filing of return of income and hence the assessee cannot avail the immunity. The assessee aggrieved with the order of the learned CIT A has preferred an appeal before us. 6. The learned authorised representative submitted that penalty of INR 20,000,000 has been levied wrongly on the assessee. He submitted that on 25/4/2017 an order under section 154 of the income tax act 1961 was passed by the learned assessing officer wherein it was stated that the cash seized of INR 12,100,000 was adjusted on 10/6/2013 and therefore the interest u/s 234B and other consequential interest should be reduced to that extent. Such mistake was rectified and according to that net tax payable was a refund of INR 4739869/ . He therefore submitted that it is apparent that the whole tax has been paid by the assessee before the levy of the penalty. He also stated that in the assessment order u/s 143 (3) it is also been confirmed that there is no demand outstanding against the disclosure made by the assessee. He therefore submitted that the whole tax was paid before levy of penalty. He further referred to para number 8 of the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned CIT A, assessee did not deposit the cheques of the tax. Therefore on the disclosure, the tax was not paid before the due date of filing of the return, hence, penalty was levied. Here the total disclosure of INR 200,000,000 was made and the penalty levied is also of INR 20,000,000 being 10% of the total disclosure. 9. The provisions of section 271AAA provides that where the search has been initiated u/s 1324 after 01/06/2007 but before 01/07/2012, assessee shall pay by way of a penalty in addition to tax payable by him a sum computed at the rate of 10% of the undisclosed income of the specified previous year. In the present case the search has been initiated on 18/1/2011 therefore the provisions of this section are applicable. Assessee gets immunity from payment of the above penalty if it satisfies all the following conditions as contained in subsection (2), a. he admits the undisclosed income and specify the manner of earning such income in the statement recorded u/s 132 (4) in the course of search b. he substantiate the manner in which the undisclosed income was derived c. and pays the tax together with interest if any in respect of the undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired by him by utilizing, wholly or partly, his income for any previous year which has ended before the date of search or which is to end on or after the date of search, then, in such a situation, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed the particulars of his income for the purposes of imposition of penalty under Section 271(1)(c). The only exceptions to such a deeming provision or to such a presumption of concealment are given in Sub-Clauses (1) and (2) of Expln. 5. In this case, we are concerned with interpretation of Clause (2) of Expln. 5, which has been quoted above. Three conditions have got to be satisfied by the assessee for claiming immunity from payment of penalty under Clause (2) of Expln. 5 to Section 271(1)(c).The first condition was that the assessee must make a statement under Section 132(4) in the course of search stating that the unaccounted assets and incriminating documents found from his possession during the search have been acquired out of his income, which has not been disclosed in the return of income to be furnished before expiry of time spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement under Section 132(4), the manner in which such income stood derived. The revenue contended Gebilal Kanhaialal's case (supra) that though the second condition stood satisfied, the third condition was not sought. It urged that the assessee was not entitled to immunity under Clause (2) as he did not satisfy the third condition for availing the benefit of waiver of penalty under Section 271(1)(c) as he failed to file his return of income on 31st July, 1987 and pay tax thereon particularly when the assessee conceded on 1st Aug., 1987 that there was concealment of income. The third condition under Clause (2) was that the assessee had to pay the tax together with interest, if any, in respect of such undisclosed income. The court held that no timelimit for payment of such tax stood prescribed under Clause (2) and that the only requirement stipulated in the third condition was for the assessee to pay tax together with interest . It was held in Gebilal Kanhaialal's case (supra) that the third condition was also fulfilled as the assessee paid tax with interest upto the date of payment. The only condition which was required to be fulfilled for securing the immunity, after th ..... 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