TaxTMI 
TaxTMI 
2010 (9) TMI 765
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.... case, the learned Tribunal is justified in law in confirming the order of the Commissioner of Income-tax (Appeals) deleting the penalty of Rs.1,70,625 imposed under section 271(1)(c) of the Income-tax Act, 1961 ?" 2. The necessary facts for disposal of the reference may be noticed. Search and seizure operation was carried at the business premises of the assessee and residential premises of the partners on April 11, 1989. The assessee made disclosure statement under section 132(4) of the Act whereby a surrender of Rs. 3,25,000 was made relating to the assessment year 1989-90. A sum of Rs. 2,00,000 was declared on account of stocks not entered in the books of account whereas the balance of Rs. 1,25,000 reflected other undisclosed inc....
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....osure of Rs.2 lakhs relates to stock and another disclosure of Rs. 1,25,000 is a general disclosure of income. At this stage, we have to give a proper meaning to 'other valuable articles or things'. Explanation 5 relates to money, bullion, jewellery or other valuable articles or things. We are of the opinion that the stock can be included under the definition of other valuable articles or things. The item of stock belonging to the assessee is an article or thing which has a value with an ultimate intention of selling the same thing for a value in the market. The stock may or may not be recorded in the books of account. Therefore, unaccounted stock can be the subject-matter of surrender. The learned Commissioner of Income-tax (Appeals) has g....
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....same in the return of his income, the Assessing Officer cannot invoke section 271(1)(c) under those situations. If he is not satisfied regarding the accuracy of such income he may use section 145 or 144, as the case may be, but under no circumstances he can invoke section 271(1)(c) under these circumstances. The entry of Rs. 1,25,000 has been reflected in the return of income and as such there is no element of concealment involved. Keeping in view the above discussion, penalty deleted by the Commissioner of Income-tax (Appeals) is confirmed." 4. Learned counsel for the Revenue has laid challenge to the aforesaid findings of the Tribunal on the plea that Explanation 5 to section 271(1)(c) has been misinterpreted by the Tribunal. Furt....
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....e search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, unless,- (1) such income is, or the transactions resulting in such income are recorded,- (i) in a case falling under clause (a), before the date of the search ; and (ii) in a case falling under clause (b), on or before such date,in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Chief Commissioner or Commissioner before the said date ; or (2) he, in the course of the search, makes a statement under sub-section (4) of ....
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....other valuable articles or things" and that the condition enumerated under Explanation 5 to section 271(1)(c) were fulfilled. It is also not disputed that the statement of the assessee was recorded under section 132(4) of the Act on the date of search. Therefore, the Tribunal was right in upholding order of the Commissioner of Income-tax (Appeals) cancelling penalty on Rs. 2,00,000. 9. Adverting to surrender of Rs. 1,25,000, the same was taken to be not covered under Explanation 5 to section 271(1)(c) of the Act. However, the Tribunal in paragraph 10 of the order had referred to the statement made by the partner of the assessee-firm on the date of search to the authorized officer. It reads thus : "10. Coming to the factual position....