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TMI Blog2019 (10) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Thereafter he cannot be blamed that he has not substantiated the manner in which the disclosed income was derived. If there was any doubt in the mind of the revenue, they should have asked further question about it when initial onus placed by the explanation has been discharged by him, the onus shifts on the revenue. If no further question are asked, the matter ends there. In light of the above discussion, there is no infirmity or otherwise in the impugned order passed by the tribunal. Both the appeals are therefore, fail and deserve to be dismissed and are accordingly dismissed. - R/TAX APPEAL NO. 174 of 2019 With R/TAX APPEAL NO. 540 of 2019 - - - Dated:- 17-9-2019 - MR J.B. PARDIWALA AND MR A.C. RAO, JJ. For The Appellant (s) : MR NIKUNT RAVAL with MRS KALPANAK RAVAL (1046) For The Opponent (s) : MS VAIBHAVI K PARIKH (3238) ORAL JUDGMENT ( PER : HONOURABLE MR.JUSTICE A.C. RAO) 1.00. As common question of law arises in both these appeals, the same are heard, decided and disposed of by this common judgement and order. 2.00. Both these appeals ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid director of the assessee company failed to satisfy the manner of deriving of his undisclosed income and the assessee's submission was not accepted by the A.O. and ultimately, A.O. held that the assessee is liable to pay penalty The A.O. imposed penalty u/s.271AAA of the Act on the undisclosed income at ₹ 1,50,00,000/-. 3.05. Being aggrieved by the said assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) and the Commissioner in the appeal held that the A.O. was not justified in imposing penalty under section 271AAA of the Act and consequently deleted the penalty imposed by the A.O. on the undisclosed income. 3.06. Against the aforesaid order of the Commissioner, the revenue preferred further appeal before the Income Tax Appellate Tribunal, Surat Bench, Surat ( the tribunal for short) being ITA No.1815/AHD/2014/SRT. The Tribunal dismissed the appeal vide order dated 10/10/2018. 3.07. Heard Mr. Nikunt Raval, learned counsel appearing for the revenue and Mr. Tushar Hemani, learned senior counsel appearing for the respective assessee in both the Appeals at length and consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Court is not called for. 5.01. Mr.Hemani relied on the decision of the Co-ordinate Bench of this Court in the case of PCIT Vs. M/s.Sun Corporation rendered in Tax Appeal No.1150 of 2018 dated 17/9/2018 . It is contended that in the said case, the Co-ordinate Bench of this Court noted that the question put to the partner of the firm was kindly elaborate on the details of undisclosed income of ₹ 34 crores and how it is earned by you and your group. and in reply the partner had stated that the undisclosed income was earned out of land related transaction and the same was not recorded in the books. This Court in the decision in the said case held that such answer was specifically in compliance with the requirement of establishing the manner in which the income was earned. That he could not give break up of income person wise or firm wise would not be of much relevance as firstly, this was sufficient compliance of requirement of manner of earning income and secondly, Assessing Officer had made additions taxing the admitted amounts in respective hands. Mr.Hemani, however contended that as it is evident from the statement reproduced by the CIT(A), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 488 (Gujarat) and contended that in the said case, the Coordinate Bench of this Court has held, 8. Thus, insofar as the satisfaction of clause(i) and (ii) of sub-section (2) of section 271AAA of the Act is concerned, both the Commissioner (Appeals) as well as the tribunal have recorded concurrent findings of fact that Shri Kotadia, during the course of recording of his statement at the time of the search, had stated that the income was earned by accepting on-money in its building project. Therefore, the manner in which the income had been derived has been clearly specified in the statement made by Shri Kotadia. Insofar as substantiating the manner in which the undisclosed income was derived is concerned, the tribunal has recorded that it had been pointed out that the undisclosed income was received by the assessee as on-money. It is not the case of the appellant that during the course of recording of the statement of Shri Kotadia any specific questions had been asked to substantiate the manner in which the income was derived. Thus, it cannot be said that the findings recorded by the Commissioner (Appeals) and tribunal regarding satisfaction of clauses (i) and (ii) of subsection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( iii) pays the tax together with interest, if any, in respect of the undisclosed income. ( 3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1). ( 4) The provisions of sections 274 and 274 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation.- For this purposes of this section. - ( a) undisclosed income means- ( i) any income of the specified previous year represented, either wholly or partly, by way of money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 1323, which has - ( A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or ( B) otherwise not been disclosed to the Principal Chief Commissioner or Chief Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of RKT Market which related to financial year 2010-11. Above diaries are found from our office at RKTM Market and in these diaries my and my office staffs handwriting is there. Question No.8 : Considering the material found during search and as per the Annexure-BS, statement etc., it appears that you have earned unaccounted on money of Radha Krishna Textile Market Krish Enclave which is not shown in regular books of Patdi Commercial and Investment Ltd. and Krish enclave. Please clarify the same. Answer No.8 : Considering various documents that are kept found during the search at our various premises and also considering the various document at our office premises at C-1 175, Radha Krishan Textile market, I would like to inform you that from the shop of Radha Krishna Textile Market and shops of RTU Wings of Radha Krishna Textile Market and towards Krish Enclave Flats sales, we have earned in the form of unaccounted income on money which is our unaccounted cash receivable and its account are in diaries of BS-7, BS-8 BS-9 as above. In which RKT Market's account upto 31/3/2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or uneducated, to specify and to point out the facts complying with the requirement of conditions stipulated in the clauses (i) and (ii) of sub-section(2) of Section 271AAA of the Act. In this situation, and on the basis of foregoing discussion, we reach to a logical conclusion that the ld. CIT(A) was right in granting relief to the assessee by following ratio of the decision of Hon'ble Gujarat High Court in the case of Mahendra C. Shah (supra), which has been referred by Hon'ble Jurisdictional High Court in its subsequent judgements in the cases of PCIT Vs. emirates Technologies Pvt. Ltd. (supra) and PCIT vs. Swapna Enterprises (supra). We are unable to see any ambiguity perversity or any other valid reason to interfere with the same. Hence, we uphold the same. Accordingly, grounds of appeal of revenue being devoid of merits are dismissed the order of ld.CIT(A). 6.03. The manner in which the undisclosed income derived has been clearly specified in the statement made by Mr.Jerambhai Patel, the Director of the assessee Company. He has disclosed the details of cash transaction towards booking / selling of R, T U wings of RKTM Market. The selling after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has observed thus : 11. Explanation 5(2) of Section 271(1)(c) was considered by the Supreme Court in Assistant Commissioner of Income Tax v. Gebilal Kanhailal [2012] 25 taxmann.com 214/210 taxmann.com 244/348 ITR 561. It was held that Explanation 5 (2) to Section 271 (1) (c) provides, where, in the course of search under Section 132, the assessee, found to be owner of unaccounted assets, claims that such assets have been acquired 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, 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 particulars of his income for the purpose of imposition of penalty, but there are exceptions to such deeming provision or to such a presumption of concealment. The Court then said: It provides that where, in the course of search under Section 132, the assessee is found to be the owner of unaccounted assets and the assessee claims that such assets have been acquired by him by utilizing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so stood fulfilled. The assessee has paid tax with interest up to the date of payment. The only condition which was required to be fulfilled for getting 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 up to the date of payment. Clause (2) did not prescribe the time limit within which the assessee should pay tax on income disclosed in the statement under Section 132(4). For the above reasons, we hold that the assessee was entitled to immunity under Clause (2) of Expln. 5 to Section 271(1) (c). 12. Like in that case, the first condition under Section 271AAA is 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). The second condition for availing of the immunity from penalty under Section 271(1)(c) is that the assessee should specify, in his statement under Section 132( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Section 271AAA one must not lose sight of its essential purpose which resulted in its enactment. There is a penalty at the rate of 10% of the undisclosed amount declared, if the conditions in Section 271AAA (2) are not met with. This is quite different from the penal provision under Section 271 (1) (c) of the Act, which directs that if income is concealed or inaccurate returns are filed, which are disallowed by the AO, the penalty shall be three times the amount of tax sought to be evaded . In the case of amounts disclosed during the course of search, the penalty amount is only ten percent of the undisclosed income. Parliament has, therefore, given a different treatment to the latter category. At the same time, if an assessee were to successfully urge the escape route so to say, of Section 271AAA (2), all three conditions mentioned in the provision, (as held in Gebilal Kanhailal's case (supra) in respect of pari material provisions) have to necessarily be fulfilled. In the preset case, the assessee, while declaring the undisclosed income also stated, that the surrender is being made subject to no penal action of Section 271(1)(c). 15. While dealing wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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