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2017 (1) TMI 988 - ITAT AHMEDABADPenalty under section 271(1)(c) - addition on the basis of entries found in kaccha books - Held that:- Unless during the course of search, the assessee was found to be owner of any money, bullion, jewellery or other valuable things or articles, Explanation 5 would not apply. Thus, it emerges out that concept of concealment in the present appeals is being conceived on the basis of entries found in kaccha books. This inference has been drawn on the basis of Explanation 5. If the Explanation 5 is taken out and held as not applicable, then it would reveal that the department does not have any material harbor a belief that income has been concealed. This was a lacunae in Explanation 5 and that is the reason that after 1.6.2007 a new Explanation i.e. Explanation-5A has been appended which infers the income embedded in the entries found in the note books during the course of search. As n the present case the income of the assessee has been determined on the basis of seized material found during the course of search. These entries were found in katchha book. Hon’ble High Court in the case of Pr.CIT Vs. Shri Jignesh Venilal Koralwala [2016 (7) TMI 938 - GUJARAT HIGH COURT] has held that Explanation 5 would not be applicable unless during search, the assessee is found to be owner of any money, bullion, jewellery or other valuable article or thing is found. No such things were found during the course of search and addition was made on the basis of narrations in the diary. - Decided in favour of assessee
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