TMI Blog1993 (12) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the provisions of Expln. 5 to s. 271(1)(c) of the IT Act, which provides that if during the course of a search an assessee disclosed and surrenders his or her assets found during the course of search which have been acquired from undisclosed income and he pays tax and interest on such surrendered income, he would not be deemed to have concealed the particulars of his income or to have filed inaccurate particulars of his income within the meaning of s. 271(1)(c). The assessee worked out the value of such undisclosed jewellery initially at Rs. 3,15,000. However, on the basis of advice of assessee's counsel its value was raised to Rs. 3,32,000 on the basis of which the assessee filed her IT return. Thereafter according to the assessee's version, there were discussions with the Assessing Officer and the assessee revised the value of that jewellery to Rs. 4,10,000. According to the learned counsel for the assessee, the Department insisted that the value of the precious and semi-precious stones set in the jewellery/ornaments should be separately valued and hence, in order to purchase peace with the Department, she further agreed to include the value of precious and semi-precious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), etc. The learned CIT(A), however, observed that the assessee could not succeed and the penalty deserved to be confirmed. While doing so, he observed that the surrender was very uncertain in its nature and could not have been given such cognizance vis-a-vis the legal provisions. Secondly, the assessee herself had modified the figures of surrender. He was of the opinion that when a surrender under s. 132(4) was made it had to be specified otherwise by making a general statement at tax payer will go on taking advantage by including everything which otherwise was found subsequently unexplained under the garb of so-called surrender and that this was not the intention of the legislature in introducing the provisions of s. 132(4). Another reason given by him was that the declarant had to satisfy the manner in which such income has been derived but in the instant case the assessee had explained that she had derived money after marriage on festivals etc., which was invested in purchase of jewellery and that the assessee could not have acquired money of about Rs. 4 lacs for investment in jewellery and that there was no evidence regarding gifts having been received from the relatives. He a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge 54 of the paper book. He pointed out that in order under s. 132(5) 120 gms. belonging to Naniji and children, which has been included in the value of Rs. 4,10,000, was not included which can be seen from chart prepared by the assessee on page 1 of the paper book. Similarly, the reduction of 242 gms. of impurity was not allowed in the order under s. 132(5). Besides this, in the order under s. 132(5) the weight of assessee's declared jewellery was taken at 456 gms., whereas in the final assessment order it has been taken at Rs. 536 gms. Thus, according to Shri Ranka if these figures of 120 gms., 242 gm.s and (536-456) 80 gms. = 442 gms. is deducted from the original figure of 1809 gms. taken in order under 132(5), the total figure which was declared originally by the assessee and which has been finally assessed remains the same. The learned counsel referred to the observations of the learned CIT(A), besides the other facts which can be gathered from record, that in fact, the assessment order of the assessee was on an agreed and voluntary basis, in so far as the amounts to be surrendered by the assessee and the valuation to be taken was concerned. The learned counsel argued that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel which was revised to Rs. 4,10,000 during the course of series of discussions with the IT Department and which was estimated and assessed at Rs. 4,83,400 by the Department. In these circumstances, according to Shri Ranka, no penalty under s. 271(1)(c) was exigible under law. 5. The learned counsel for the assessee thereafter referred us to several decisions to support his argument to the effect that her disclosure was made in good faith. However, since the case law cited by the learned counsel pertains to s. 273A, we are not inclined to refer to that case law. Moreover, looking to the language of Expln. 5 to s. 271(1)(c), particularly cl. (2) of the Explanation, we do not find it necessary even to discuss as to whether the disclosure was or was not in good faith because, in our opinion, that is not relevant. 6. The learned counsel also submitted that in view of the decision in the case of Navneet Lal K. Jhaveri vs. CIT (1980) 16 CTR (Guj) 346 : (1980) 125 ITR 385 (Guj) (although this case is also in connection with s. 273A) the difference in returned and assessed income does not necessarily amount to non-disclosure of full income if the difference is due to the estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the learned CIT(A) in his order. He claimed that if source and manner of earning income was not disclosed, the very purpose of disclosure at the time of search was defeated because Revenue must know at the time of search these facts. He submitted that even in reply to a specific question No. 7 in the statement dt. 1st Aug., 1988, she had not disclosed the source of earning the income and hence assessee's case was not covered by exception to Expln. 5 to s. 271(1)(c). The learned Departmental Representative pointed out that there were certain discrepancies between the affidavit of assessee's grandmother Smt. Gyarsidevi and the facts stated by her in her statement and the assessee had not even given correct address of her grandmother. Further, there was no promise by the Department to the effect that no penalty would be imposed. On the other hand, assessee was specifically told that penalty according to law may be imposed. 8. Regarding the argument of the learned counsel that the assessee had agreed for higher additions to purchase peace, he submitted that there was nothing in the IT Act which provided for non-imposition of penalty for purchasing peace by the assessee. On the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed policy of the IT Department. Regarding not having given the correct address of Smt. Gyarsidevi in her statement, the learned counsel explained that she had given correct address inspite of her mental state which she had explained because "Maniaron-ka-Rasta" is starting point from Tripolia Bazar side but for the same place for entry from Kishanpole Bazar side entry is from Matanion-ka-Rsta and hence when the assessee gave the address as "Matanion-ka-Rasta" instead of 'Maniaron-ka-Rasta', she meant the same thing. We referred to replies to question No. 5 and 6 in which she had given full and complete facts and details and had concealed nothing. Further if there were slight discrepancies in the contents of affidavit of assessee's grandmother and her statement, it had to be seen in the background that she was 98 years old and could not be said to be so mentally alert as not to faulted in response to question being asked by Departmental Officers. 11. Shri Ranka finally summed up that in the first instance the assessee's case was covered by exception to Expln. 5 to s. 271(1)(c). Alternatively if the penalty was considered to be imposed under Expln. 1 to s. 271(1)(c), the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trol, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub-s. (1) of s. 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income." 14. As already stated by us, there is no dispute regarding the fact that assessee's statement on 1st Aug., 1988 was recorded under s. 132(4) of the IT Act. We find that in response to question Nos. 1, 4 and 5 she had stated that out of the ornaments/jewellery found in the lockers some belonged to her husband, some to her children some to her Nani and some to herself. Then in response to question No. 5, with reference to the list of ornaments she identified that her own ornaments are at S. Nos. 1, 2, 3, 5, 7, 8, 10, 11 (except Titali) 14, 15, 17, 20, 22, 26, 28, 29, 30, 31, 32, 33, 34 and 35. That ornaments weighing 133 gms. out of Sl. No. 16, 4 gms. out of Sl. No. 22 and ornaments at Sl. No. 21 and 23 belonged to her husband. She further stated that her children's ornaments were at Sl. No. 11 (10 gms Pairs of Titali), Sl. No. 12-13, 98.5 gms ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey remain as undisclosed assets/investment which have been added to the income of the assessee under s. 69 of the IT Act and should normally have attracted penalty under s. 271(1)(c) on the basis of Expln. 5 to that section, they fall under second clause of that Explanation. From all the facts and circumstances and evidence on record, we are satisfied that in this case in her statement made under s. 132(4), the assessee had identified the jewellery found in the lockers which belonged to her as well as to other members of her family and she had also specified in her statement the manner in which such income, which in the instant case, has to be treated as deemed income, had been derived by her. There is no dispute before us regarding tax and interest having been paid by the assessee on the income which has been added as income under s. 69 of the IT Act and, hence, in our opinion, the assessee satisfies all the conditions required in cl. (2) of Expln. 5 to s. 271(1)(c) and she cannot be deemed to have concealed her income or to have furnished inaccurate particulars of her income as envisaged in Expln. 5 to s. 271(1)(c). 16. So far as the dispute regarding the initial amount being d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that although the assessee accepted that the value of some jewellery which she accepted/belongs to her and the value of which may be added to her income and may be taxed, would not mean that the assessee had concealed the particulars in respect of that income or she had filed inaccurate particulars of income in that regard. The difference, if any, is only on account of estimate of the value of that jewellery, whether it is valued as such or whether it is valued by adding separately the value of semi-precious and precious stones set in that jewellery, would not mean that the assessee had concealed the particulars of that income because the estimate may differ from person to person and cannot be said to be concealed when all the facts have been placed before the Assessing Officer. The only thing which remains is that the Assessing Officer does not accept what is stated by the assessee and makes his own estimate, both regarding the valuation and may be regarding the items also which may or may not be adopted to be belonging to others as claimed by the assessee and which ultimately are added to assessee's income but this would not mean that anything has been concealed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the explanation offered by the assessee was false nor that she offered an explanation which she could not substantiate nor that the explanation offered was not bona fide and that all facts relating to the same and material to the computation of her total income had not been disclosed by her. If the case is considered by applying provisions of Expln. 5 to s. 271(1)(c), because she was found in possession of jewellery at the time of search which were claimed to have been acquired by utilising her income which had not been disclosed to the IT Department prior to the date of search, we hold that assessee is covered by the provisions of cl. (2) to Expln. 5 of s. 271(1)(c) because she had made a statement under s. 132(4) during the course of search in which she had specified the manner in which such income had been derived and had paid tax together with interest on such income which had not been disclosed to the Department till that time in her return of income which was to be filed by her under s. 139(1) of the IT Act. 19. As mentioned above since on the facts and in the circumstances of the case the assessee is not liable for penalty under any of the provisions of s. 271(1)(c) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
