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TMI Blog2023 (4) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... made is correct. If an assessee enhanced his income voluntarily, then no penalty would be imposed upon the assessee. Assessee has relied upon the decision of Neeraj Jindal [ 2017 (2) TMI 1002 - DELHI HIGH COURT] has also considered the scope of Explanation 5A and held that unless money, bullion, jewellery or asset found during the course of search representing the extra income disclosed by an assessee in response to section 153A, vis-a-vis the income filed under section 139(1), the assessee cannot be visited with penalty. We allow all these appeals of the assessee and delete the penalties. - I.T.A. Nos. 302, 303, 304 & 306/KOL/2022 - - - Dated:- 27-12-2022 - Shri Rajpal Yadav, Vice-President (KZ) And Shri Girish Agrawal, Accountant Member For the Assessee : Shri Rajeeva Kumar, Advocate, For the Revenue : Shri Vijay Kumar, Addl. CIT, Sr. D.R. ORDER PER RAJPAL YADAV, VICE-PRESIDENT (KZ): - The present four appeals are directed at the instance of assessee against the separate orders of ld. Commissioner of Income Tax (Appeals)-20, Kolkata passed on 23.12.2021 for assessment years 2008-2009 to 2012-2013 except 2011-2012. 2. The assessee has rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e initiated in respect of the additional income disclosed under section 132(4) of Rs. 7,00,000/-. Asst. Year: 2010 -11 Returned income under section 139 Rs. 16,68,761/- Returned income under section 153A Rs.21,89,190/ - Income disclosed under section 132(4) Rs. 6,00,000/- Assessed income Rs.60,33,000/- Sl. Particulars of addition Amount 1. Speculation loss disallowed Rs.28,83,322/ - 2. Disallowance under section 14A Rs. 9,60,489/ - Penalty proceedings were initiated in respect of the income disclosed under section 132(4) of Rs. 6,00,000/- and disallowance of speculation loss of Rs. 28,83,322/-. The disallowance of speculation loss of Rs. 28,83,6322/- was deleted by the CIT(A). Asst. Year: 2012 -13 Returned income under section 139 Rs. 1,68,7 65/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his decision has been placed on the record. The Hon ble Court while construing the meaning of Explanation 5 has put reliance upon the decision of the Hon ble Supreme Court in the case of ACIT Vs. Gebilal Kanbhaialal (HUF), 348 ITR 561 (SC). According to this decision, the Explanation 5 is deeming provision. It provides where in the course of search under section 132, the assessee is found to be owner of unaccounted asset and he claims that such assets have been acquired by him by utilizing whole or part of his income from any previous year, which has ended before the date of search or which is to end on or after the date of search, then in such a situation, 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 the particulars of his income for the purpose of imposition of penalty under section 271(1)(c) of the Act. The Hon ble Court, thereafter, propounded that sub-clause (1) and (2) Explanation 5 provides exceptions for deeming the concealment of particulars of income. In that case, the Hon ble Court was dealing in sub-clause (2) of Explanation 5 and observed that in order to claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d but the assessee has not filed the return, then, notwithstanding that 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) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. 271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132on or after the 1st day of June, 2007 but before the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) Nothing contained in sub-section (1) shall apply if the assessee, (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax return for such year has not been filed. Since the assessment years involved before us are the Asstt.Years 2008-09 and 2009-10, the due date for filing of the return for the Asstt.Year 2009-10 was expired before the search action. Thus, both these years do not fall within the ambit of specified years . Since the period of these two assessment years does not fall within the expression specified year provided in Section 271AAA, therefore, we do not deem it necessary to construe and explain the meaning of Explanation 5A within the scope of Section 271AAA. The assessees as such cannot claim immunity akin to one available in sub-clause (1) and (2) of the Explanation 5, more particularly, on the strength of the judgment of Hon ble Gujarat High Court in the case of Kirit Dahyabhai Patel (supra). The ld.First Appellate Authority has dealt with these situation in an analytical manner and in right perspective. As far as the construction of meaning of Explanation 5A to section 271AAA by the ld.First Appellate Authority is concerned, we do not find any error. 9. At the cost of repetition, we would like to observe that as per Explanation 5A, if in the course of search initiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, service of notice under section 143(2) etc. In the next page finding of the AO read as under: 2. The assessee is engaged in the business of fabrication and engineering job work and also derives income from Agricultural activities, remuneration and interest from partnership firms etc. Copies of P L account, capital account and balance sheet, was filed with the return. Various issues were discussed at length. 2.1 It is seen that the assessee had made disclosure unaccounted income of Rs 22,00,000/- which was not disclosed in the return filed u/s. 139(1). This being concealed 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 Rs 28,45,960/- Total assessed income Rs 28,45,960/- Agricultural income for rate purpose Rs.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 verificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement has been explained in various authoritative pronouncements. Let us first take note of section 132(4) of the Act. The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r retracting from the disclosure. The ld.First Appellate Authority concurred with the AO and confirmed the addition of Rs.7 lakhs to his income. The Tribunal has also confirmed the addition by observing that there was nothing on record which indicated that the disclosure was taken from the assessee under duress, pressure or coercion. The retraction after lapse of two 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other valuable articles, to our mind, ought not to be based on this statement. When the assessees have taken specific plea that no money, bullion or jewellery or income based on any entries for these two assessment years was found during 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 hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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