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TMI Blog2019 (8) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (1) would be deemed to have concealed the particulars of income or furnished inaccurate particulars of income. If any money, bullion, jewellery or valuable showing income in the hands of the assessee, and such income was not from explained source, then after search in response to the notice u/s 153A, if the assessee has admitted that income, then deeming fiction for concealment of income would attract. The question before us is that no money, bullion, jewellery or book entry was found at the time of search. The only evidence against the assessee is that an admission of additional income was made in the statement u/s 132(4). The question is this admission akin to disclosure of money, bullion, jewellery or diary and income disclosed representing this statement is to be considered as concealed income ? This aspect has been considered in both these orders VASCROFT DESIGN PVT. LTD. VERSUS ACIT [ 2019 (2) TMI 1671 - ITAT AHMEDABAD] , wherein it has been held that on the strength of authoritative pronouncement of Hon ble High Courts in KAILASHBEN MANHARLAL CHOKSHI VERSUS CIT [ 2008 (9) TMI 525 - GUJARAT HIGH COURT] that solely on the basis of declaration addition is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Shreepal Starch Products Pvt. Ltd. - - 9000000 - 9000000 2 Siwana- Agri Marketing Pvt. Ltd. - 13000000 3500000 - 16500000 3 Vicas Vehicles Pvt. Ltd. - 9500000 8500000 500000 18500000 4 Creelotex Bngg. Put. Ltd. - 9900000 8500000 - 18400000 5 Marg Biotech Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the ld.AO has imposed penalty of ₹ 33,32,340/-. Appeal to the CIT(A) did not bring any relief to the assessee. 5. Before us, the ld.counsel for the assessee submitted that apart from the assessee, the disclosure was on behalf of Safari Biotech P.Ltd., Vascroft Design P.Ltd., Telecon Infotech P.Ltd. etc. and penalties were imposed under section 271(1)(c) of the Act upon all these three concerns. Dispute travelled upto the Tribunal in IT(SS)A.No.129 to 136/Ahd/2015. The Tribunal has allowed all the appeals and deleted penalty. He placed on record copy of the Tribunal s. On the other hand, the ld.DR relied upon the orders of the Revenue authorities. 6. We have duly considered rival contentions and gone through the record carefully. We find that the facts are identical in the above case decided by the Tribunal. Therefore, it is imperative upon us to take note of the finding recorded by the Tribunal, which reads as under: 7. We have carefully considered the rival submissions. In the present set of appeals, the controversy revolves around imposition of penalty broadly on four counts as summarized below: (i) Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dded to specifically address the situations where consequent to a search, assets and valuables or book entries etc. are discovered to be in control or possession of the assessee and thereafter the assessee files the return of income after the date of search. 8.2 In the backdrop of this position, we now turn to take cognizance of relevant facts germane to the issue. A perusal of the order of the lower authorities in quantum proceedings and the penalty proceedings gives the unmistakable impression that additional income offered in a statement recorded under s.132(4) of the Act in some group disclosure at the time of search has been accepted by the Revenue simplicitor. Hence, the additional income declared in the return filed under s.153A is based solely on certain admissions made by the assessee at the time of search. Significantly, it is noticed in the same vain that the aforesaid additional income is not backed by any document of incriminating nature in corroboration per se In accord with Explanation 5A, it is necessary that there must be certain assets (money or bullion) unearthed in the possession of the assessee during the search and/or entries are recorded in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in the form of statement, the deponent has nowhere claimed the existence of undisclosed income per se but has merely agreed to pay tax etc. and thus Explanation 5A, in our view, could not be applied. At this juncture, we simultaneously notice the phraseology of the Section 271(1)(c) of the Act whereby the AO may direct to the assessee to pay by way of penalty specified sum in the case of certain defaults including concealment of income etc. Ostensibly, the imposition of penalty under s.271(1)(c) of the Act is not automatic. In the circumstances narrated above, there can be no manner of doubt that statutory discretion vested with the AO ought to have been exercised in favour of the assessee and not against the assessee for such unproved income. The Revenue could not lay hands on any tangible material except conditional and tacit averments, which confession in itself is seen to be non-admission of any ingenuity. In the circumstances, we have no hesitation to hold that such confession cannot be the basis for imposition of onerous penalty. 8.5 An incidental but a pertinent question would arise also as to whether a statement recorded under s.132(4) of the Act can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned appeals of the assessees concerning AYs. 2006- 07, 2007-08 and 2008-09 are allowed with consequential directions to AO to delete respective penalties. 7. It is further observed that an identical situation was considered by the ITAT, Rajkot Bench in IT(SS)A.No.46 to 52/RJT/2012 in the case of Shri Mansukhbhai R. Sorathia and others. The discussion made by the Tribunal is worth to note. It reads as under: 9. At the cost of repetition, we would like to observe that as per Explanation 5A, if in the course of search initiated under section 132 on or after the 1st June, 2007, the assessee is found to be owner of any money, bullion, jewellery or other valuable article or things and the assessee claims such assets have been acquired by him by utilsing the whole or partly of his income from any previous year or any income based on any entry in any books of account or other documents or transactions found during the course of search, and the assessee claims that such entry in the books of account or other documents or transactions represents his income from any previous year, which has ended before the date of search, then, notwithstanding such income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, penalty proceedings u/s. 271(l)(c) of the I T Act is being initiated. 3. After verification, the total income is determined as under:- Total income as per return of income ₹ 28,45,960/- Total assessed income ₹ 28,45,960/- Agricultural income for rate purpose ₹ 6,14,131/- 4. Assessed u/s. 153A of the I T Act, 1961. Charge tax. Charge interest u/s. 234A, 234B and 234C of the I T Act, if any. Give credit for prepaid taxes after due verification. Demand notice and challan issued accordingly. Issue notice u/s. 271(1)(c)of the IT Act. 11. We have perused the penalty order also. There are only three paragraphs i.e. para-4, 6 and 7, where the AO has made some observation at his own, otherwise, in rest of the paragraphs he reproduced the submissions or the head-notes of the case laws. The observation of the AO in these paras read as under: 4. I have carefully considered the submissions ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after be used in evidence in any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. Explanation.- For the removal of doubts, it is hereby declared that the examination of any person under this sub- section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. 13. A bare perusal of section would reveal that it empowers the authorized officer to examine during the course of search or seizure any person on oath. The disclosure made during the statement recorded under this section will be admitted in the evidence and can be used against the assessee in the proceeding. 14. No doubt, the disclosure or admission made under section 132(4) of the Act during the course of search proceedings is an admissible evidence but not conclusive one. This presumption of admissibility of evidence is a rebuttable one, and if an assessee is able to demonstrate with the help of some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months from the date of disclosure by the assessee was considered as after-thought. The issue travelled before the Hon ble High Court. The Hon ble High Court has deleted the addition by observing that merely on the basis of disclosure, addition cannot be made. There should be some corroborative material. The following observations in para-26 of the judgement of Hon ble Court are worth to note. It reads as under: 26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of search, the AO ought to have immediately referred the documents, entries or any asset found which is relevant to these assessment years in the penalty proceedings. He should have rejected the explanation of the assessee by demonstrating it as factually incorrect. Rather, the authorities have proceeded on the assumption that had there been no money, bullion, jewellery or income based on entries was not found, the assessee would have not made voluntary disclosure of the income in these returns. They failed to note the question no.25 also, where the assessees claimed immunity from penalty, and peace from litigation. To our mind inference of availability of money, bullion or assets embedded in the entries cannot be drawn from the statement of the assessee (extracted supra). They should have been found in physical form and pertaining to these years, only then, deeming fiction of concealment would trigger. Thus, the Revenue authorities have not referred any documentary evidences demonstrating the fact that voluntary income offered by assessees in these two years actually unearthed during the course of search. Therefore, to our mind, the assessees do no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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