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2013 (9) TMI 681 - HC - Income TaxScope of Explanation 5 to Section 271 (1) (c) of the Income Tax Act – Penalty for concealment of Income - Note book was found during search in which details of expenses of renovation of residence were written. The assessee stated that he had made the expenditure out of business income but had not noted in his books of account – Held that:- Reliance has been placed upon the judgments of Madras High Court in the case of CIT vs. S.D.V. Chandru [2003 (12) TMI 40 - MADRAS High Court]; judgment of Hon’ble Rajasthan High Court in the case of Mishrimal Soni [2005 (12) TMI 83 - RAJASTHAN High Court] and judgment of Gujarat High Court in the case of CIT vs. Mahendra C. Shah [2008 (2) TMI 32 - GUJARAT HIGH COURT], which have explained the extent and scope of Explanation 5 to Section 271 (1) (c) of the Act, which deals with a situation in which any assets are found to be in the ownership of the assessee in the course of search under Section 132 of the Act. Clause (2) of Explanation 5 makes it clear that where in the course of search the assessee makes a statement under Section 132 (4) and owns that he acquired any of such assets out of his undisclosed income, not so far returned, and further states the manner in which such income has been derived and pays tax together with interest if any in respect of such income, no presumption of concealment has to be drawn, notwithstanding the admission to that effect. In other words to the extent the assessee makes a cleanbreast of his undisclosed income represented by assets found to be in the possession of the assessee he is not deemed to have concealed his income or concealed particulars thereof. The explanation is not confined to physical possession but extends to other forms of possession – In the present case, as per note book, the total came to Rs.5,39,300/- which the assessee, admitted to be undisclosed income of the financial year 1991-92 and on which he was ready to pay the tax. It is admitted that the statement was made during the course of search and the assessee was ready to make payment of tax. No further detail was required nor any further explanation was required to be given as to how and in what manner and in which year or years the undisclosed income was earned and as to why the tax was not paid on such undisclosed income – Decided against the Revenue.
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