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TMI Blog2020 (9) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... nt recorded u/s 132(4) of the Act itself would not either constitute an incriminating material or undisclosed income in the absence of any corresponding asset or entry in the seized documents representing the undisclosed income . Accordingly, the penalty levied by the AO on account of cash found and on account of unexplained jewellery stand deleted. Thus the appeal of the assessee is allowed. Therefore, while applying the principles in the case of Shri Gopal Das Sokhiya [ 2019 (4) TMI 1300 - ITAT JAIPUR] wherein the facts were similar, we are of the considered view that penalty levied by the AO against such disclosure is not sustainable. It may be pertinent to mention that the statement recorded u/s 132(4) of the Act itself would not either constitute an incriminating material or undisclosed income in the absence of any corresponding asset or entry in the seized documents representing the undisclosed income . Penalty levied by the AO on account of cash found and on account of unexplained jewellery stand deleted. Penalty u/s 271AAB(1)(c) - advances paid by the assessee - HELD THAT:- In the definition of undisclosed income where it talks about income by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat had the search not been conducted, the assessee would not have shown this income of ₹ 4.85 crores. 2. Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) was right in deleting the penalty on undisclosed income of ₹ 4.85 crores on amount of advances. 3. Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) is justified in holding that alleged income was found recorded is other documents maintained by the assessee in normal course as per clause (c) of sub-section (1) to explanation of Section 271AAB of the I.T. Act, 1961. 2.1 Due to prevailing COVID-19 pandemic condition, the hearing of the appeal is concluded through video conference. First of all, we take up the appeal of the assessee for adjudication as per the grounds of appeal raised hereinabove. 3.1 Brief facts of the case are that the search and seizure operation u/s 132 of the Act was took place on 23-05-2013 at the premises of the assessee and certain documents were seized. The assessee furnished the return of income on 13-09-2014 declaring income of ₹ 9,11,26,750/-. Out of the above income, the assessee declared ₹ 8, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee have declared the income of several crores in each hand. Even the withdrawals as per their Balance Sheets are also in crores of rupees during last five years and it was 9.27 crore rupees.(Details enclosed) Therefore, the cash of ₹ 1,50,00,000/- found at the residence of a family of about 20 members, out of which 13 members are tax payers and declared income of crores of rupees, then the said amount of cash cannot be treated as undisclosed income of the assessee. The issue is squarely covered by the decision of Shri Gopal Das Sokhiya in ITA No. 306/JP/2018 dated 11.04.2019 wherein it has been held that the past savings of the family members cannot be ignored while considering said amount of ₹ 12 lacs as undisclosed income of the assessee. Accordingly, in the absence of any clear cut finding about the cash not representing and belonging to the other family members as their past savings, the same cannot be treated as undisclosed income of the assessee for the year under consideration. Hence the penalty levied by the AO in respect of the cash found during the search is deleted. (page no. 34 of order) Therefore the issue is squarely covered by the above findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... birth of child as well as other auspicious occasions like anniversaries etc. The department has not made any effort to find out the fact whether the jewellery was acquired during the year under consideration or it is old jewellery. Therefore, once the jewellery was not found to be purchased during the year under consideration, then the same cannot be treated as an undisclosed income for the year under consideration which is specified previous year. The jewellery belong to the family members of the assessee and found at the residence was old jewellery and, therefore, the valuation of the jewellery for the purpose of computing the undisclosed income by applying the current rates on the gross weight is not permissible. Hence when the department has not made any efforts to ascertain the year of acquisition of the jewellery and then to apply the rates as prevailing in the year of acquisition and some of the jewellery even not acquired by the assessee or the family members but is inherited, then the manner in which the disclosure is obtained on account of the jewellery would not represent the undisclosed income as defined in the explanation to section 271AAB of the Act. We find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of search, according to the assessee was savings of all the family members for the last several years. The said fact was also disclosed by the assessee in the statement recorded u/s 132(4) of the Act. It was categorically submitted by the assessee that cash found at the residence belongs to the entire family members and it was found and seized from the individual rooms of the individual members. In this respect, the assessee also placed on record the drawings of all the members of the family of 20 persons. From the records, we also noticed that for the last 5/6 years i.e. F.Y. 2009-10 to 2014-15, 06 members of the assessee had declared the income of severalcrores in each hand. Even the withdrawal as per balance sheet are also in crores of rupees during the last five years regarding which the assessee had already placed on records the documents which contains in the paper book pages 1 to 70. Out of the 20 family members, 13 members are taxpayers and has declared income of crores of rupees. The ld.AR of the assessee had also relied on the decision in the case of Shri Gopal Das Sokhiya in ITA No. 306/JP/2018 dated 11.04.2019 wherein it has been held that the past sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , birth of child as well as other auspicious occasions like anniversaries etc. The department has not made any effort to find out the fact whether the jewellery was acquired during the year under consideration or it is old jewellery. Therefore, once the jewellery was not found to be purchased during the year under consideration, then the same cannot be treated as an undisclosed income for the year under consideration which is specified previous year. The jewellery belong to the family members of the assessee and found at the residence was old jewellery and, therefore, the valuation of the jewellery for the purpose of computing the undisclosed income by applying the current rates on the gross weight is not permissible. Hence when the department has not made any efforts to ascertain the year of acquisition of the jewellery and then to apply the rates as prevailing in the year of acquisition and some of the jewellery even not acquired by the assessee or the family members but is inherited, then the manner in which the disclosure is obtained on account of the jewellery would not represent the undisclosed income as defined in the explanation to section 271AAB of the Act. We find that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns including marriage, birth of child as well as other auspicious occasions like anniversaries etc. The Department has not made any efforts to find out the fact whether the jewellery was acquired during the year under consideration or it is old jewellery. Therefore, once the jewellery was not found to be purchased during the year under consideration then the same cannot be treated as undisclosed income of the assessee for the year under consideration which is specified previous year. The jewellery belong to the family members of the assessee and found at the residence was old jewellery and therefore, the valuation of the jewellery for the purpose of computing the undisclosed income by applying the current rates on the gross weight is not permissible. Therefore, when the Department has not made any efforts to ascertain the year of acquisition of the jewellery and then to apply the rates as prevailing in the year of acquisition and some of the jewellery even not acquired by the assessee or the family members but is inherited, then the manner in which the disclosure is obtained on account of the jewellery would not represent the undisclosed income as defined in explanation to Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list of advances given for land purchased totaling to 4.85 Crores. These pages are filed before me in paper book pager 43-46. The appellant owned these advance given as his undisclosed income u/s 132(4) of the act and paid taxed there in the returned filed on 31-01-2015. The nature of these transactions was described by the appellant in the statement u/s 132(4) of the Act as advance given for the purchase of land in Q/A 21 22 of the statement. Same was accepted as such by the AO in the assessment order. The AO imposed penalty on 8.05 Crores. 5.6 I have carefully perused the order relied upon. The relevant para 21 of Rajendra Kumar Gupta Vs. DCIT ITA 359/JP/2017 reads as under 21. During the course of search, a note book (diary) has been found referred to as Ann. AS wherein there are certain notings relating to cash advances given to various persons totaling to ₹ 82,80,000. Referring to the statement of the assessee in respect of these notings recorded u/s 132(4), ld CIT(A) has given a finding that the assessee has given a generalized statement without specifying the complete particulars of persons to whom loans were given and also failed to substantiate the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntext of bringing to tax such investments to tax in the quantum proceedings, though the fact of the matter is that the AO has not even invoked the said deeming provisions in the quantum proceedings. Therefore, even on this account, the deeming fiction cannot be extended to the penalty proceedings which are separate and distinct from the assessment proceedings and more so, where the provisions of section 271AAB provide for a specific definition of undisclosed income. Where a specific definition of undisclosed income has been provided in Section 271AAB, being a penal provision, the same must be strictly construed and in light of satisfaction of conditions specified therein and it is not expected to examine other provisions where the same has been defined or deemed for the purposes of bringing the amount to tax. In light of the same, the undisclosed investment by way of advances can be subject matter of addition in the quantum proceedings, as the same has been surrendered during the course of search in the statement recorded u/s 132(4) and offered in the return of income, however the same cannot be said to qualify as an undisclosed income in the context of section 271AAB read with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble High Court of Allahabad. Even otherwise this aspect is discussed elaborately in the order of Niraj Mathur delivered by Hon'ble ITAT Jaipur. Thus, following the decision of the Hon'ble ITAT Jaipur Bench discussed supra, the penalty levied by the AO on the advances of 4.85 Crores is untenable. The various other cases of ITAT Jaipur bench referred by the Ld. AR also support his case. 6.3 Thus following the decision of the Hon ble ITAT Jaipur Bench discussed supra, the penalty levied by the AO on the advances of ₹ 4.85 Crores is untenable. The various other cases of ITAT Jaipur Bench referred by the Ld. AR also support his case. After having gone through the submissions made by both the parties and facts of the present case, we noticed that the ld. CIT(A) has decided these grounds by relying upon the decision of Coordinate Bench of ITAT Jaipur in the case of Rajender Kumar Gupta vs DCIT (ITA No. 359/JP/2017 and in the case of Raja Ram Maheshwari vs DCIT (ITA No.992/JP/2017 dated 10-01-2019). As per the facts, assessee was subjected to search and seizure on 23-05-2013. During the course of search, certain loose papers were found and seized marked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the definition of undisclosed income, where it talks about income by way of any entry in the books of account or other documents or transactions found in the course of a search under section 132 , what perhaps has been envisaged by the legislature is an inflow of funds in the hands of the assessee which has been found by way of any entry in the books of accounts or other documents, and which has not been recorded before the date of search in the books of accounts or other documents maintained by the assessee in the normal course and not vice-versa. We are also conscious of the fact that there are deeming provisions in terms of section 69 and 69B wherein such amounts may be deemed as income in absence of satisfactory explanation. In our view, the deeming fiction so envisaged under Section 69 and Section 69B cannot be extended and applied automatically in context of section 271AAB. It is a well-settled legal proposition that the deeming provisions are limited for the purposes that have been brought on the statute book and have therefore to be applied in the context of provisions wherein they have been brought on the statue book and not otherwise. In the instant case, the deeming ..... X X X X Extracts X X X X X X X X Extracts X X X X
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