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TMI Blog2019 (1) TMI 1604X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the lower appellate authorities misdirected themselves in holding that the conditions in Section 271AAA (2) were satisfied by the assessee. - Decided in favour of revenue. - ITA No. 3547/Del./2015 - - - Dated:- 28-1-2019 - Shri Amit Shukla, Judicial Member And Shri L.P. Sahu, Accountant Member For The Appellant : Shri S.S. Rana, CIT/DR For The Respondent : Shri Rajiv Saxena, Advocate and Shri Ajit Kumar Jha, Advocate ORDER Per L.P. Sahu, A.M.: This appeal by the assessee arises out of the order passed by the CIT(A)-24, New Delhi dated 24.03.2015 in relation to assessment year 2009- 10, challenging the confirmation of penalty imposed u/s. 271-AAA of the IT Act. 2. Briefly stated the facts relevant to adjudicate the issues involved in this appeal are that a search and seizure operation was carried out at the premises of assessee along with other cases of Rajdarbar Group on 31.07.2008. Pursuant to the notice u/s. 153A of the, the assessee filed its return of income on 05.08.2010 declaring income of ₹ 1,07,66,230/- including ₹ 90.00 surrendered by way of letter dated 26.09.2008 addressed to DIT (Inv.), which is placed at page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. On the other hand, the ld. DR relied on the orders of the authorities below and submitted that the surrender of undisclosed income was made in view of various discrepancies found in the course of search vide letter dated 26.09.2008 before the Investigation Wing and not before the Assessing Officer in the assessment proceedings. Since the assessee failed to specify the manner in which the undisclosed income surrendered by him was earned, the ld. authorities below were justified to hold that the conditions envisaged for immunity from penalty u/s. 271-AAA of the Act did not stand satisfied by the assessee. Reliance if placed on the latest decision of Hon ble jurisdictional High Court in the case of Pr. CIT vs. Smt. Ritu Singal (2018) 92 taxmann.com 224(Del) dated March 12, 2018. 5. We have considered the rival submissions and have gone through the entire material available on record and we find that no doubt the Tribunal in various cases as cited by the assessee has deleted similar penalty imposed u/s. 271AAA of the Act, but we find complete answer of assessee s all the contentions made before us in the latest decision of Hon ble Jurisdictional High Court in the case of Pr. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found 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 (1) 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. 8. This provision was brought into force with effect from 01-04-2007. Its scope and effect was explained by Circular of the Central Board of Direct Taxes (CBDT) dated 12-03-2008 (Circular No.3) in the following terms: 68. Provision for penalty for concealment in search and seizure cases.-68.1 A new section 271AAA has also been inserted so as to provide that, in a case where search has been initiated under section 132 on or after 1st June, 2007, the assessee shall be liable to pay by way of penalty, in addition to tax, if any, payable by him, a sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy of penalty under the proposed new section 271AAA has also been provided. 68.5 Applicability- This amendment will take effect from the 1st day of June, 2007 and will accordingly apply in relation to assessment year 2007-2008 and subsequent years in cases where search under section 132 is initiated on or after 1st June, 2007. 9. Section 271AAA was amended by the Finance Act, 2012 with effect from 01-04-2012. The effect of the amendment was that it became applicable in all cases where search was initiated under Section 132 on or after 01-06-2007 but before 01-07-2012.Section 271AAA and its amendments are part of series of amendments with respect to the effect of presumption in the case of search cases under Section 132(4A). These were introduced simultaneously with the omission of Explanation 5 to Section 271(1)(c) on the one hand and insertion of Explanation 5A as well as Section 292C. The provision applies to income of the specified period, i.e. period for which return had not yet become due and the broken periods starting from the beginning of the financial years till the date of the search. It provides for 10% penalty of such income through a statutory inference or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 specified in Section 139(1). Such statement was made by the Karta during the search which concluded on 1-8-1987. It is not in dispute that condition No. 1 was fulfilled. The second condition for availing of the immunity from penalty under Section 271(1)(c) was that the assessee should specify, in his statement under Section 132(4), the manner in which such income stood derived. Admittedly, the second condition, in the present case also sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 time-limit 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 the search proceedings got over, was that the assessee had to pay the tax together with interest in respect of such undisclosed income upto the date of payment. Explanation 5 (2) did not prescribe the time-limit within which the assessee should pay tax on income disclosed in the statement under Section 132(4). 13. In the present case, during the course of the statement made by the assessee, during the course of the search on 4 March, 2010, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to 271 raises a presumption of concealment, when a difference is noticed by the AO, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise. 8. Assessee has only stated that he had surrendered the additional sum of ₹ 40,74,000/- with a view to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the income tax department. Statute does not recognize those types of defences under the explanation 1 to 271 (1) (c) of the Act. It is trite law that the voluntary disclosure does not release the Appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case. 5. Undisputedly, during the search and seizure operation conducted at the business and residential premises of the assessee u/s 132(1) on 11.12.2009, assessee surrendered additional income of ₹ 21 crores. It is also not in dispute that in the return filed by the assessee for AY 2010-11, assessee declared undisclosed income of ₹ 21 crores which includes ₹ 9.25 crores on account of excess stock and ₹ 11.75 crores as income from other sources in the computation of income annexed with the tax return. It is also not in dispute that the assessee has expressed his inability to explain certain seized documents rather stated that those may be included to form part of the amounts surrendered during search and seizure operation. It is also not in dispute that assessee has already paid tax together with interest on the surrendered income of ₹ 21 crores. 6. In the backdrop of the aforesaid facts and circumstances of the case, order passed by ld. Revenue authorities below, arguments advanced by ld. AR for the parties, the sole question arises for determination in this case is :- as to whether assessee has failed to substantiate the manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department. It is stated that this disclosure is made to avoid any panel-action including penalties and prosecution . 10. The ld. CIT (A) deleted the penalty on the premise that if no specific question was put to assessee u/s 132(4), it cannot be concluded that the assessee has failed to reply or specify/ substantiate the manner of concealment. It is settled principle of law that assessee has to specify the manner in which income has been derived and substantiated the manner in which the undisclosed income was derived at the time of search in its statement recorded u/s 132(4) and not thereafter. 11. However, answer to the question no.43 reproduced above categorically goes to prove that the assessee has shown his inability to reconcile the discrepancy in the stock found and failed to substantiate the manner in which income has been derived by the search team during the course of search, however has made the disclosure only in order to buy peace of mind and to avoid litigation. So, we are of the considered view that the assessee has failed to satisfy the conditions laid down in section 271AAA (2) so as to get the general amnesty u/s 271AAA(2) because the assessee has neit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the ld. AR rendered by Hon ble Apex Court in ACIT vs. Gebilal Kanhaialal 348 ITR 561 (SC) and Mak Data (P.) Ltd. vs. CIT 358 ITR 539 (SC), Hon ble High Court of Gujarat in CIT vs. Mahendra C. Shah 299 ITR 305 (Guj.), Hon ble Allahabad High Court in CIT vs. Radha Kishan Goel - 278 ITR 454 (All.), Hon ble Delhi High Court in Mothers Pride Education Personnel (P.) Ltd. vs. DCIT ITA No.3372 (Delhi of 2011 dated 12.10.2012, reversed the decision rendered by the Tribunal setting aside the penalty on the ground that in the absence of the query raised by the authorized officer during the course of recording of statement u/s 132 (4) to specify and substantiate the manner in which the undisclosed income was derived by returning the following findings :- 16. That the income which was ultimately brought to tax pursuant to the disclosure made, which was voluntary on the part of the assessee is stating the obvious. The assessee merely stated that the sums advanced were undisclosed income. However, she did not specify how she derived that income and what head it fell in (rent, capital gain, professional or business income out of money lending, source of the money etc). Unless such ..... 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