TMI Blog2019 (2) TMI 1671X X X X Extracts X X X X X X X X Extracts X X X X ..... with distinguishing features, no incriminating material has been found to support the assertions made therein. To reiterate, the assertions made are highly qualified and without any admissions of undisclosed income per se. The Hon ble Delhi High Court in the case of CIT vs. Harjeev Agrawal [ 2016 (3) TMI 329 - DELHI HIGH COURT] has ruled that oral statements on a standalone basis without reference to any other material discovered during search would not empower the AO to make additions in a block assessment (which is peri materia with the present scheme of search assessment u/s 153A). Hon ble Delhi High Court in CIT vs. Rajpal Bhatia [ 2010 (11) TMI 1010 - DELHI HIGH COURT] has also echoed that an oral evidence is neither books of accounts etc. or assets . It was a document which came to be created owing to search and not found in the course of search. In the circumstances, where a judicial view has been taken that addition itself on such statement is without authority of law, it is rather difficult to appreciate the action of the Revenue towards imposition of penalty on such additions in affirmative. Needless to say, the penalty provision stands on a very stringent p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 136/Ahd/15 -Do- 2008-09 -Do- -Do- -Do- 2. The facts and the issue involved are similar in all the appeals. Accordingly, we shall first take up the appeal filed by the assessee in Safari Biotech Private Limited concerning AY 2006-07 for adjudication purposes. IT(SS)A No. 134/Ahd/2015 (Safari Biotech Private Limited) - AY 2006-07 3. Briefly stated, a search was conducted at the premises of the assessee and other entities of Riddhi Siddhi Group on 22.09.2011. Consequently, notice was issued under s.153A of the Act on the assessee. Pursuant thereto, the assessee filed return under s.153A of the Act declaring total income of ₹ 13,25,00,000/-. The assessment was also framed at the same figure under s.153A r.w.s. 143(3) of the Act vide assessment order dated 12.12.2013. While framing the assessment admitting the income returned as filed under s.153A of the Act, the AO inter alia observed that an original return of income was filed under s.139 of the Act prior to search declaring Nil income and the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O stood confirmed. 6. Further aggrieved, the assessee knocked the door of the Tribunal. 6.1 When the matter was called for hearing, the learned counsel for the assessee submitted at the outset that the income returned under s.153A of the Act has been accepted as it is, without any modification and therefore when seen with reference to return of income filed under S. 153A, there was no warrant for the AO to invoke the provisions of Section 271(1)(c) of the Act in the circumstances. The learned AR for the assessee straightway made several propositions to support its case for non imposition of penalty. 6.2 The first plank of contention propounded in this regard was that no incriminating document per se has been found in the course of search. The share capital/share premium were already recorded in the books of accounts. The basis for addition is a conditional statement recorded under s.132(4) of the Act on 19th November, 2011 of Shri Shankarlal Chowdhary wherein the entries in respect of share capital/share premium were accepted as income notwithstanding the assertion (as noted in the statement) that the capital was subscribed by genuine share holder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income nor such undisclosed income is supported by any documentary evidence, the conditional statement of willing to pay tax etc. with a caveat of no penal consequence; such act of assessee cannot be seen in isolation and cannot fall within the mischief of Explanation 5A to Section 271(1)(c) of the Act. The learned AR accordingly submitted that in the absence of any tangible evidence of incriminating nature except an unsupported and conditional statement recorded under s.132(4) of the Act for acquiescence of income, the strict conditions for imposition of penalty are not satisfied at all. 6.4 The learned AR thereafter next adverted to second proposition that income returned in response to notice under s.153A of the Act alone is required to be considered for the purposes of penalty under s.271(1)(c) of the Act and penalty can possibly be levied only on the income assessed over and above the income returned under s.153A of the Act, if any. For this proposition, the learned AR for the assessee referred to the judgment of the Hon le Jurisdictional High Court in the case of Kirit Dahyabhai Patel vs. ACIT [2017] 80 taxmann.com 162 (Guj) to submit that the return of income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f nor deleted the inappropriate words and paragraphs while issuing notice and therefore, the charge against the assessee is clearly unknown and vague. The action of AO is thus also without application of mind. 6.6 Adverting further, the learned AR for the assessee submitted that while alleging inaccurate particulars of income, the AO has not pointed out any inaccuracy in return of income filed under s.153A and accepted the income offered for tax in the return of income without any further addition. In this regard, the learned AR referred to and relied upon the decision of the Hon ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322 (SC) and contended that in the absence of any inaccuracy in the particulars of income filed under s.153A of the Act and assessed, the provisions of Section 271(1)(c) of the Act is a non-starter. The learned AR accordingly urged that the order of the CIT(A) be set aside and the action of the AO towards imposition of penalty be quashed on all these counts. 7. We have carefully considered the rival submissions. In the present set of appeals, the controversy revolves around imposition of penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t income of the assessee. Ostensibly, this Explanation has been added to specifically address the situations where consequent to a search, assets and valuables or book entries etc. are discovered to be in control or possession of the assessee and thereafter the assessee files the return of income after the date of search. 8.2 In the backdrop of this position, we now turn to take cognizance of relevant facts germane to the issue. A perusal of the order of the lower authorities in quantum proceedings and the penalty proceedings gives the unmistakable impression that additional income offered in a statement recorded under s.132(4) of the Act in some group disclosure at the time of search has been accepted by the Revenue simplicitor. Hence, the additional income declared in the return filed under s.153A is based solely on certain admissions made by the assessee at the time of search. Significantly, it is noticed in the same vain that the aforesaid additional income is not backed by any document of incriminating nature in corroboration per se. In accord with Explanation 5A, it is necessary that there must be certain assets (money or bullion) unearthed in the possession of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. As noticed from the solitary material in the form of statement, the deponent has nowhere claimed the existence of undisclosed income per se but has merely agreed to pay tax etc. and thus Explanation 5A, in our view, could not be applied. At this juncture, we simultaneously notice the phraseology of the Section 271(1)(c) of the Act whereby the AO may direct to the assessee to pay by way of penalty specified sum in the case of certain defaults including concealment of income etc. Ostensibly, the imposition of penalty under s.271(1)(c) of the Act is not automatic. In the circumstances narrated above, there can be no manner of doubt that statutory discretion vested with the AO ought to have been exercised in favour of the assessee and not against the assessee for such unproved income. The Revenue could not lay hands on any tangible material except conditional and tacit averments, which confession in itself is seen to be non-admission of any ingenuity. In the circumstances, we have no hesitation to hold that such confession cannot be the basis for imposition of onerous penalty. 8.5 An incidental but a pertinent question would arise also as to whether a statem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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