TMI Blog2013 (9) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... urt 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, notwith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cknow dated 07.11.2008 for the assessment year 1993-93. 3. The appeal has been preferred by the department on substantial question of law as follows:- "1. Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal was justified in law in deleting the penalty of Rs.5,00,000/- imposed by the AO u/s 271 (1) (c) of the Act and confirmed by the ld. CIT (Appeals)-II, Kanpur without appreciating that the surrender made on a/c of undisclosed income for A.Y. 1992-93 during the course of search and seizure operation conducted on 17.10.1994, was made much after the due date of filing of return of income u/s 139 (1) of the Act as well as after completion of original assessment proceedings u/s 143 (3) of the Act on 24.03.1994, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch, gave a statement accepting Rs.5,39,300/- as undisclosed income of financial year 1991-92 and accepted to pay tax on the same. Paragraph 6 and relevant para 6.1 are quoted:- "6. We have considered the submissions of both the parties and carefully gone through the materials available on record. In the instant case it is not in dispute that statement of the assessee was recorded during the course of search and in the said statement the assessee surrendered the amount which is clear from the answer to the question No.10 which the learned CIT (A) has reproduced at page No.2 of the impugned order. The said question and answer read as under: Q. No.10 : In reply to question No.7, you have told that the investment is out of business incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. 8. In the present case a note book was found 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. As per note book, the total came to Rs.5,39,300/- which the assessee, in respect to question no.1, admitted to be undisclosed income of the financial year 1991-92 and on w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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