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2015 (8) TMI 921 - AT - Income TaxPenalty under section 271(1)(c) - disclosure of income as the result of search operation on the assessee and not voluntary - CIT(A) deleted the penalty - Held that:- Provisions of Explanation 5 are applicable in the cases where during the course of search initiated on or before 1.6.2007 any money, bullion, jewellery or other valuable article or thing is found in the possession or under control of the assessee ; and in the instant case of the assessee, the search was conducted on 11.01.2007 and cash of ₹ 5,26,530/- was found from the possession of the assessee ; and so the cash was admittedly, not seized during the relevant assessment years before us. In other words, the assessee had surrendered undisclosed income and cash was seized during search in A.Y 2007-2008, and not in the relevant assessment years. However, in the relevant assessment year under consideration before us, the assessee has made an addition of ₹ 21,65,932/- in the return filed pursuant to section 153A notice. Explanation 5 to section 271(1) of the Act cannot be invoked in assessment years 2005-06 & 2006-07, which are before us, merely on presumption that the assessee might have been in possession of the seized cash throughout the period covered by search assessments. The income offered to tax u/s 153A for assessment years 2005-06 and 2006-07 cannot be said to be based on assets seized, because from the assessment order, it is clear that search was on 11.01.2007 (i. E AY 2007-08), the cash seized during search was only to the tune of ₹ 5,26,530/- and it is not emerging from the records that the assessee has claimed during search that the cash seized (on 11.01.2007), belonged to him and that was owned by him in the relevant assessment years i. E. AYs 2005-06 and 2006-07. Unless there is a clear finding in this respect, Explanation 5 of Section 271(1)(c) cannot be of any help to the department. As rightly pointed out by the Coordinate Bench in Prem Arora (2012 (6) TMI 480 - ITAT DELHI), the provisions of Explanation 5 cannot be invoked in assessment years 2005-06 and 2006-07 in respect of entries recorded in seized material. Thus invoking of Explanation 5 in assessment year 2005-06 & 2006-07 is based on assumptions and presumptions. It is settled law that suspicion howsoever strong, cannot take the place of evidence and hence the contention of the Revenue that assessee was in possession of cash throughout the period of assessment years under consideration has to be rejected. Thus even the amended provisions of Explanation 5 cannot be applied in assessment years 2005-06 & 2006-07. Consequently penalty u/s 271(c) cannot be imposed by invoking Explanation 5 of the Act in assessment years 2005-06 & 2006-07 in respect of cash found in previous year relevant to assessment year 2007-08.- Decided in favour of assessee.
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