9911796707
TMI Blog2019 (8) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... has passed assessment order on 31.1.2014 and assessed the total income at Rs. 99,49,500/-. He made an addition of Rs. 49,500/-. It is pertinent to observe that during the search, statement of Shri Shankarlal Chowdhary was recorded under section 132(4) on 19.11.2011. In his statement, he has admitted an additional income of Rs. 50 crores and bifurcation of such details has been noted by the AO at page no.3 of the assessment order, which read as under: "(1) During the various financial years, the following companies had raised share capital: Assessment Year in which the amount is disclosed Sr. No. Name of the Company 2006-07 2007-08 2008-09 2009-10 Total (Rs.) 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. 16500000 13200000 7000000 - 36700000 6 Safari Biotech Pvt. Ltd. 13250000 9200000 8800000 - 31250000 7 Telecon Infotech Pvt. Ltd. 10000000 9500000 980 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incriminating document or material was found during the course of search, Explanation 5A to Section 271(1)(c) of the Act is applicable in the light of standalone 'oral evidence' in the form of statement under s.132(4) of the Act? (ii) Whether when there was no addition over and above income declared by the assessee in the return of income filed under s.153A of the Act, penalty under s. 271(1)(c) of the Act is to be imposed? (iii) Whether there is no furnishing of inaccurate particulars of income as the additional income disclosed in the return of income filed under s.153A of the Act has been accepted and assessed without demur? (iv) Whether when the AO has failed to specify as to for which limb of default under Section 271(1)(c) of the Act, penalty proceedings are initiated, was the AO justified in imposing penalty and whether the penalty can be levied when the charge against the assessee in itself is allegedly vague and non-descript and the action of AO suffers from alleged non-application of mind. 8. In terms of first contention raised as noted above, the primary question that emerges for determination is whether penalty under s.271(1)(c) of the Act can be imposed qua the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets/entries represent unaccounted income. Ostensibly, Explanation 5A would come into play only when unaccounted assets of the nature as mentioned in the said Explanation are found during the search or income based on entries in the books of accounts is claimed by the assessee to be his income falling in any previous year. 8.3 In the instant case, the facts are quite distinct and peculiar. While no incriminating documents were recorded to have been found to support the undisclosed income except an elaborate and conditional statement of one of the key person of the group, the deponent of the statement has never claimed the entries in dispute to be 'income' of the assessee per se. A bare reading of the aforesaid statement (supra) reveals several peculiar features; (i) the assessee merely agrees to pay tax on the share capital without admitting the same to be beset with ingenuity of any sort; (ii) In contrast, the assessee asserts before the authorized officer that the share capital was subscribed by the genuine shareholders through banking channels and the source of subscription is impeccable and beyond any doubt; (iii) while the share capital raised is duly explained and reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act of abstract nature with distinguishing features, no incriminating material has been found to support the assertions made therein. To reiterate, the assertions made are highly qualified and without any admissions of undisclosed income per se. The Hon'ble Delhi High Court in the case of CIT vs. Harjeev Agrawal [2016] 229 DLT 33 order dated 10/03/2016 has ruled that oral statements on a 'standalone basis' without reference to any other material discovered during search would not empower the AO to make additions in a block assessment (which is peri materia with the present scheme of search assessment under s.153A of the Act). The Hon'ble Delhi High Court in CIT vs. Rajpal Bhatia (2011) 333 ITR 315 (Del) has also echoed that an oral evidence is neither 'books of accounts etc.' or 'assets'. It was a document which came to be created owing to search and not found in the course of search. In the circumstances, where a judicial view has been taken that addition itself on such statement is without authority of law, it is rather difficult to appreciate the action of the Revenue towards imposition of penalty on such additions in affirmative. Needless to say, the penalty provision stands o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticulars of income or furnished inaccurate particulars. The moot question for attracting this explanation is that in the course of search money, bullion, jewellery or income based on any entry in the books of accounts or other documents ought to have been found. In a given situation, no money or bullion or jewellery or income might have found from the assessees for the assessment years which were not part of "specified previous year" contemplated in section 271AAA or immunity available to the assessees under sub-clause (a) and (b) of Explanation 5A, then also, if in response to the notice under section 153A, the assessee disclosed some additional income voluntarily, would he be deemed to have concealed the income for visiting him with penalty under section 271(1)(c) of the Act ? The ld.Revenue authorities had drawn inference that since the assessee has not disclosed additional income in the original returns, meaning thereby, it is to be assumed that they have disclosed this amount only when some incriminating material was found. To our mind this assumption ought to be supported with reference of that incriminating material. Let us see the finding in the assessment order. 10. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the assessee, the assessee has not recorded details of his income and the same was worked out only during search and that too on the basis of the seized materials. In fact, it is an established judicial decision that 'documents seized during the search cannot be said the books of accounts maintained for any source of income, for the purposes of Explanation 5 (CIT Vs Glamour Restaurant (2003) 80 TTJ (Mum) 763. Diaries found and seized during course of search cannot be considered as books of account maintained by the assessee for the purpose of immunity to be granted to him under the provisions of Explanation 5 to section 271(1)(c) - Dr T P Kulkarni Vs CIT (2003) 86 ITD 696 (Mum). It has also been held that Only books of account maintained in the regular course can make the assessee eligible for grant of immunity from penalty and not just any of such books, which have not been maintained in regular course of business - Brij Lal Goyal Vs CIT (2004) 88 ITD 413 (Delhi)." 12. In this background, if we appreciate the evidences available on the record, then it would reveal the whole case of the Revenue for visiting the assessee with penalty is based on the statement of Shri Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is not a strict rule of law, but only rule of prudence. As a general rule, it is unsafe to rely upon a retracted confession without corroborative evidence. Due to this grey situation, CBDT has issued Circular No.286/2/2003 prohibiting the departmental officials from taking confession in the search. The board is of the view that often the officials used to obtain confessions from the assessee and stop further recovery of the material. Such confessions have been retracted and then the addition could not withstand the scrutiny of the higher appellate authority, because no material was found supporting such addition. 15. An issue whether addition solely on the basis of statement u/s.132(4) can be made was considered by the Hon'ble Jurisdictional High Court in the case of Kialashben Manharlal Chokshi Vs. CIT, 220 CTR (Guj) 138. In this case, search was conducted upon the assessee under section 132 of the Income Tax Act on 4.11.1988. The statement of the assessee was recorded under section 132(4) of the Act. He made disclosure of Rs. 7 lakhs. Later on, in January, 1989, the assessee retracted from the disclosure and stated the disclosure of Rs. 50,000/- was acceptable to him. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en followed by the Hon'ble High Court in the case of CIT Vs. Chandrakumar Jethmal Kochar, 55 taxmann.com 292 (Guj). The Hon'ble High Court has reproduced the discussion made by the Tribunal, and thereafter, concurred with the conclusions of the Tribunal by observing as under: "6. In view of the above discussion and considering the principal laid down in the case of Kailashben Manharlal Chokshi (supra),we are of the considered opinion that the view taken by the Tribunal is just and proper. We are not convinced with the submissions made by Mr. Mehta, learned advocate for the appellant that the Tribunal has not given cogent reasons. Therefore, the answer to the first question would be against the Revenue and in favour of the assessee. The second question will also enure for the benefit of the assessee as from the record it is clear that other concerns were not Benami concerns of the assessee. 7. For the forging reasons, the present appeal is dismissed. Accordingly, both the questions which were referred to this Court are answered in favour of the assessee and against the revenue." 17. Had this statement been retracted by the assessee, and they have not offered this undisclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f search, then notwithstanding such income is declared by him in any return of income furnished on or after the date of search, he shall for the purposes of imposition of a penalty under clause (c) of sub-section (1) would be deemed to have concealed the particulars of income or furnished inaccurate particulars of income. In other words, 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 under section 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 under section 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, wherein it has been held that on the strength of authoritative pronouncement of Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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