TMI Blog2009 (6) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice premises of the group concerns, including that of the appellant, was subjected to search and seizure operation under section 132 of the Income-tax Act, on 8-12-2005. Shri Tanveerkumar Choksi, Director of the Company in a statement under section 132(4) agreed to offer as undisclosed income a sum of Rs. 3 crores for all the group concerns. Shri Tanveerkumar Choksi, Director of the Company and head of the Group, when specifically asked to explain the source and the break-up of undisclosed income year-wise, stated that none of the individuals derived any income from any other source, other than salary/remuneration/interest or withdrawal from the capital account in the partnership firm. Hence, the unreconciled jewellery, valuables, unexpla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The Assessing Officer was of the view that in the statement made under section 132(4) Shri Tanveerkumar Choksi, had merely indicated the quantum of income to be offered and did not specify the manner in which this income was earned. The assessee s reply in this regard was vague and evasive. Accordingly, he held that the assessee is not entitled to exemption contemplated under Explanation 5(2) of section 271(1)( c ) and levied the minimum penalty of Rs. 16,83,000. 6. On appeal the CIT(A) confirmed by observing as under : "It may be stated that prior to introduction of the aforesaid Explanation , an assessee who was found to be owner of any money, bullion, jewellery or other valuable article or thing, during the course of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of such income. It may be stated at the outset that the conditions at ( i ) ( ii ) above clearly established that both these conditions have to be fulfilled in the course of search itself when the statement under section 132(4) is recorded. Now, let us examine whether on the facts and in the circumstances of the assessee s case the requisite conditions for availing the benefit of immunity from penalty are fulfilled or not, it is not in dispute that the statement of Shri Tanvirkumar Choksi under section 132(4) was recorded on 4-2-2006 wherein the assessee made declaration of undisclosed income of Rs. 50 lakhs. This amount of Rs. 50 lakhs was stated to be represented by assets in the form of unaccounted "miscellaneous assets. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and in the light of the settled legal position, I find that there is no infirmity in the order passed by the Assessing Officer. The provisions of Explanation 5 to section 271(1)( c ) are clearly attracted and therefore, the penalty under section 271(1)( c ) is leviable. 9. Aggrieved the assessee is on appeal. It is not in dispute that there was a search in the assessee s premises and in the course of the search Shri Tanveerkumar Choksi, Director of the Company and head of the Group, had given a statement under section 132(4) offering for tax a total sum of Rs. 3 crores for all the entities of the group, out of which mere Rs. 50 lakhs is offered in the hands of the assessee. It was also stated in the statement made under section 132( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished before the said date, such income has not been declared therein; or ( b )for any previous year which is to end on or after the date of the search, then, even if notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under section 271(1)( c ), be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income unless : 1. ****** 2. He, in the course of the search, makes a statement under sub-section (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to be excluded from levy of penalty. The crux of the argument of the department and the first appellate authority is that the assessee has not specified in the statement "the manner in which such income has been derived" and hence the assessee is not entitled to the benefit of Explanation 5(2) to section 271(1)( c ). 12. Thus in case of a search, if the assessee accepts undisclosed income and pays tax on the same, penalty is not leviable. This is a benefit offered to the assessee. Therefore, this Explanation has to be interpreted in the manner to achieve the purpose and object of introducing this Explanation . The assessee is required to specify the manner in which the undisclosed income was derived. A broad description of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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