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2015 (4) TMI 914 - AT - Income TaxPenalty for undisclosed income u/s 271(1)(c) of Income Tax Act, 1961 - Explanation 5 to section 271(1)(c) does not cover any immovable property - Principle of ejusdem generis - Assessee fulfilled all the conditions specified in explanation 5(2) to section 271(1)(c) - Held that:- In the instant case, in relation to the assessment year under consideration, the assessee was found to be the owner of 'construction on agriculture land (Rs.12,54,780/-) and membership of VLCC (Rs.1,95,220/-) during search. The impugned investments were duly shown by the assessee in her return of income for the assessment year 2007-08. As discussed above, the ownership of the assessee in construction of agriculture land could not be termed as ownership of 'any money, bullion, jewellery or other valuable article or thing' as envisaged under Explanation 5 in view of the judgements of Cochin Bench in case of South India Fiance [1991 (8) TMI 135 - ITAT COCHIN]. Therefore, so far as investment in 'construction on agriculture land' was concerned, the Explanation 5 to Sec.271(1)(c) was not applicable in the assessee's case and accordingly, penalty to that extent was not leviable. The learned C.I.T.(A). wrongly took the contradictory stand. On the one hand he held that the assessee was not entitled for immunity provided under Explanation 5(2) because the undisclosed income consisted of investment in construction on agriculture land and therefore, not covered by the term 'any money, bullion, jewellery or other valuable article or thing' as held by the honourable Cochin Bench, at the same time he confirmed penalty levied by the A.O. under Explanation 5 to Sec.271(1)(c). Once it was held that Explanation 5 was not applicable on the facts of the assessee's case, penalty could have not been imposed under the said Explanation. Moreover, the CIT(A) wrongly considered payment towards membership of VLCC as immovable property and confirmed the levy of penalty. Furthermore, the assessee’s case was covered under exceptional circumstances provided under clause (2) of Explanation 5 to Sec.271(1)(c) as all the conditions specified in Explanation 5(2) to Sec.271(1)(c) were satisfied fulfilled as evident from the following facts: (a) Shri Purnandu Jain, head of the family, in his statement recorded u/s.132(4) on 27.04.2007 offered ₹ 20 crores as additional income for and on behalf of various members of his family.In view of the above discussion, we do not find any merit in the action of AO levying penalty u/s.271(1)(c) of the Act, as the assessee had fulfilled all the conditions specified in explanation 5(2) to section 271(1)(c) of the I.T.Act. - Decided in favour of assessee.
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