TMI Blog2002 (4) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... and seized by the Department. 2. On the facts and in the circumstances of the case the CIT(A) erred in deleting the penalty holding that there was no concealment when in fact the assessee had in its possession papers containing unaccounted transactions and undisclosed income at the time of filing the return of income. The CIT(A) failed to appreciate that the income recorded in note- books was much more than that disclosed in the return of income. Even the cases cited are distinguishable on facts. 3. On the facts and in the circumstances of the case the CIT(A) erred in cancelling the penalty levied under section 271(1)( c ) accepting the assessee s submission that income surrendered at the time of search matched with the income assessed for assessment years 1986-87 to 1989-90 and, therefore, the assessee is entitled for immunity. The CIT(A) erred in law because immunity was available for assessment year 1989-90 and not for earlier assessment years 1986-87 to 1988-89. 4. On the facts and in the circumstances of the case the CIT(A) erred in holding that the income on the basis of which concealment penalty was worked out was estimated income when in fact the seized papers indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide assessment order dated 26th December, 1990. A statement of Shri Hukamatrai Wadhwa under section 132(4) was recorded in which he offered a sum of Rs. 65,00,000 as undisclosed income in the hands of the assessee-firm to be assessed for assessment year 1989-90. Assessment year 1987-88 7. The return of income originally was filed at Rs. 76,460, the same was accepted under section 143(1) on 30th March, 1988. On the basis of search as mentioned above notice under section 148 was issued to the assessee. In response to the notice under section 148 a revised return was filed on 17th September 1990, declaring an income of Rs. 14,94,654. Referring to the seized documents, the income was assessed at Rs. 17,76,650 vide order date 26th December, 1990. Assessment year 1988-89 8. The return originally was filed on 30th June, 1988, declaring an income of Rs. 33,480. On the basis of search a revised return was filed by the assessee on 30th April, 1990, at an income of Rs. 23,08,880. On the basis of seized documents the income was assessed on a total income of Rs. 18,91,040 vide order dated 27th December, 1990. 9. In respect of the appeal for the assessment year 1989-90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g one. Thus, it was a clear-cut case of concealment. 12. On the other hand, the learned counsel of the assessee contended that the assessee had declared an additional income of Rs. 65 lakhs over and above as per return/books of account regularly maintained. He referred to the following figures : Asst. yr. Income as per Income as per original Difference revised return return/regular books of account 1986-87 6,00,000 85,280 5,14,720 1987-88 14,94,654 76,460 14,18,194 1988-89 23,08,880 33,480 22,75,400 1989-90 23,71,594 40,189 23,31,405 67,75,128 2,35,409 65,39,719 He contended that since additional income is more or less same as declared in a statement under section 132(4) and after appeal there has not been much variation between the offered returned income and assessed income, the case of the assessee falls within the Explanation 5 to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of above arguments and facts the learned counsel of the assessee laid down the following propositions and also cited certain case law supporting the said propositions : Agreed Addition The appellant offered the undisclosed income in the statement recorded under section 132(4) of the Act on 28th February, 1989, on the arrangement that immunities will be given under Explanation 5 to section 271(1)( c ) of the Act. As a layman, it is not possible for the appellant to know the provisions of the Act as to under what Explanation immunity could be given or whether any immunity could be given at all. Hence, the presumption goes in favour of the appellant that the Department agreed at the time of search proceedings itself that immunities will be given to the appellant from penalties and prosecution. The offer of the appellant was a voluntary offer on the agreement of immunity and hence penalty levied may be deleted. ( i ) CIT v. Suresh Chandra Mittal [2001] 251 ITR 9 (SC) ( ii ) CIT v. Suresh Chandra Mittal [2000] 241 ITR 124 (MP) ( iii ) Sir Shadi Lal Sugar General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC) ( iv ) CIT v. Kiran Co. [1996] 217 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eds to be deleted : ( i ) CIT v. Dharamchand L. Shah [1993] 204 ITR 462 (Bom.) In statement recorded, income offered for assessment year 1989-90 in section 132(5) order, income assessed for assessment year 1989-90. Income for assessment years 1986-87 to 1988-89 offered voluntarily and accepted by Department with minor additions. Department cannot have both i.e., either they rely the statement as a whole and assess the respondent in assessment year 1989-90 if they want to assess in individual years, then no relevance be given to statement. Thus, Department cannot rely upon the statement for addition without giving immunity from penalty under section 271(1)( c ) of the Act. Statement to be read as a whole : ( i ) Glass Lines Equipment Co. Ltd. v. CIT [2001] 253 ITR 454 (Guj.) Thus, in totality of facts and circumstances of the case, the penalty has been rightly deleted by the CIT(A) and the penalty order may be upheld, particularly, when the quantum relief given by CIT(A) is accepted by department by not filing any appeal to Tribunal. 15. We have carefully considered the rival submissions in the light of material placed before us. The assessments in the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns originally filed. The reliance by the assessee on the decision in the case of Sir Shadilal Sugar General Mills Ltd. ( supra ) is also misplaced for the reasons that it is not the case of disallowance which is in dispute. It is a case of positive concealment detected by the revenue by way of search from the documents main- tained by the assessee. The another reason is that Hon ble Supreme Court in the case of K.P. Madhusudhanan v. CIT [2001] 251 ITR 99 have held that by reason of addition of Explanation 1 to section 271, the view taken by the Supreme Court in the case of Sir Shadilal Sugar General Mills Ltd. ( supra ) can no longer said to be applicable. 17. The reliance on the decision in the case of Kiran Co. ( supra ) is also misplaced. In the said case the assessments were framed by the Assessing Officer on the sums offered by the assessee which was subject to no penalty. Apart from letter of offer, there was no other material available with the revenue authorities on the basis of which it could be said that assessee had concealed its income for the relevant years. In the present case, as it is mentioned earlier, there was ample material with the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery or other valuable articles or thing found in his possession or under his control 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-section (1) of section 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." As it is clear from the language of the Explanation 5 to section 271(1)( c ), the benefit of immunity is only in respect of transactions which are recorded before the date of search in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Chief CIT or CIT before the said date. The contention of the assessee in this regard is that the documents seized in the course of search should be considered to be books of account maintained by the assessee and for that benefit be given to the assessee under the Explanation . We are unable to accept this argument for the reason that the documents seized cannot be said to be the books maintained for any source of income. Firstly, for the reason that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vised return would not be sufficient to exonerate the assessee from the penalty consequences. It is not the point of time of submissions of revised return that is crucial on the question. The revised return must be one which is permissible under section 139(5) of the Act and there must be a total absence of fraudulent intention on the part of the assessee at the time of filing of the original return. 21. The levy of penalty has also been agitated on the ground that the penalty and assessment are two separate proceedings and penalty cannot be levied merely on the basis of finding given in assessment order. In this regard reliance has been placed on the decision of Hon ble Bombay High Court in the case of Dharamchand L. Shah ( supra ) and in the case of Sarabhai R. Dalwadi v. ITO [1990] 34 ITD 183 (Ahd.). As has been observed earlier that the assessment has been framed on the basis of material in possession of Revenue, the correct income of the assessee, after the assessee has become final and cannot be a matter of conjecture. The case law relied upon by the assessment has no application to the facts of the case as it is not the case of the assessee that the income assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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