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TMI Blog2024 (7) TMI 1561X X X X Extracts X X X X X X X X Extracts X X X X ..... tory obligation placed upon the assessee to not only specify the manner in which the undisclosed income had been derived but also to substantiate the statement that may be made u/s 132(4). We also bear in mind the indubitable position that for the purposes of being absolved from the additional tax burden which stands constructed in terms of Section 271AAA(1), the burden is placed upon the assessee to establish that its case falls squarely within the scope and ambit of sub-section (2) thereof. As relying on Ritu Singal [ 2018 (3) TMI 593 - DELHI HIGH COURT ] 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. 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 facts are mentioned with some specificity, it cannot be said that the assessee has fulfilled the requirement that she, in her statement (under section 132(4)) substantiates the manner in which the undisclosed income was deriv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and whether the conditions laid down in the section were satisfied or not. The Ld. AO without assigning any reason and merely on the basis of surrender made by the assessee initiated penalty proceedings. The amount of surrender was made by the assessee on the basis of certain loose papers found and seized during search operation upon tecpro group at Gurgaon. There is a further observation that these papers were, dictated by the search team and further from the statement tendered by the assessee there is a condition that the surrender made by the assessee shall be without penal action by the Department whatsoever and the surrender was made to buy peace and to avoid litigation with the Department in the spirit of cooperation. Considering the totality of facts and the decision in CIT vs. Suresh Chander Mittal (251 ITR 9) (MP), we find merit in the conclusion drawn by the Ld CIT (A) and confirm the same, resultantly the appeal of the Revenue is dismissed. xxxx xxxx xxxx 4. It is in the aforesaid backdrop that we prima facie find merit in the submission of Mr. Maratha, that a mere surrender of income would not absolve the assessee from the levy of penalty. 5. We are thus of the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained 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) 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 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation. For the purposes of this section, (a) undisclosed income means (i) any income of the specified previous year represented, either wholly or partly, by any 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 132, which has (A) not been recorded on or before the date of search in the books of account or other documents maintained in the nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al tax burden which stands constructed in terms of Section 271-AAA(1), the burden is placed upon the assessee to establish that its case falls squarely within the scope and ambit of sub-section (2) thereof. 8. The imperatives underlying the statutory provision, when it speaks of specification and substantiation of the manner in which undisclosed income was derived, stands enunciated in a decision of the Delhi High Court in Principal Commissioner of Income Tax vs. Ritu Singal 2018 SCC OnLine Del7692 and relevant extracts whereof are reproduced hereinbelow: - 11. Explanation 5(2) of section 271(1)(c) was considered by the Supreme Court in Asst. CIT v. Gebilal Kanhaialal (2012) 348 ITR 561 (SC). 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 sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee conceded on August 1, 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. However, no time limit for payment of such tax stood prescribed under clause (2). The only requirement stipulated in the third condition was for the assessee to 'pay tax together with interest'. In the present case, the third condition also 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 Explanation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come for the financial year 2009-10 relevant for the assessment year 2010-11. However, the requirement of the assessee having to (ii) substantiates the manner in which the undisclosed income was derived was satisfied. Although a general statement that the undisclosed income was the source of Rs. 16 crores was disclosed, no substantiation of the manner of deriving such undisclosed income was revealed. 14. In construing 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 per cent. 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 Assessing Officer, 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 per cent. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voluntary. The Assessing Officer during the course of assessment proceedings has noticed that certain documents comprising share application forms, bank statements, memorandum of association of companies, affidavits, copies of Income-tax returns and assessment orders and blank share transfer deeds duly signed, have been impounded in the course of survey proceedings under section 133A conducted on December 16, 2003, in the case of a sister concern of the assessee. 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 facts are mentioned with some specificity, it cannot be said that the assessee has fulfilled the requirement that she, in her statement (under section 132(4)) substantiates the manner in which the undisclosed income was derived . Such being the case, this court is of the opinion that the lower app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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