TMI Blog2011 (7) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of search and seizure operations cannot partake the character of statement u/s 132(4) - Decided against the assessee - IT APPEAL NO. 212 OF 2011 - - - Dated:- 21-7-2011 - ADARSH KUMAR GOEL, AJAY KUMAR MITTAL, JJ. Pankaj Jain and Rishabh Kapoor for the Appellant. ORDER Ajay Kumar Mittal, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short "the Act") has been filed by the assessee against the order dated 31.3.2010, passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (in short "the Tribunal") in ITA No. 54/ASR/2010, relating to the assessment year 2006-07. 2. The following substantial questions of law have been claimed for determination of this Court: "(a) Whether on the true and correct interpretation of the provisions of Explanation to section 132(4) read with Section 131, read with Rule 112A(1) the statement recorded u/s 131 is in continuation of the proceedings of search initiated u/s 132 of the Act? (b) Whether the statement recorded u/s 131 during the continuance of the search 'proceedings' u/s 132 is without jurisdiction and powers prescribed under the Act?" 3. The facts, in brief, necessary for adjudicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed thereto reads thus:- "Section 132(4): The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. Explanation - For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act." 11. Sub-section (4) of Section 132 of the Act empowers the authorised officer to examine any person on oath who is found to be in possession or control of any books of account, documents, valuable articles etc. during the course of search. The explanation attached thereto clarifies that the examination refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 984 w.e.f. 1.10.1984. According to Explanation 5 to Section 271(1)(c) of the Act, where an assessee surrenders undisclosed income in the course of the search by making a statement under Section 132(4) of the Act and pays taxes and interest thereon, penalty as provided under Section 271(1)(c) of the Act is not leviable. 14. The scope and effect of the Explanation 5 to Section 271 (1)(c) of the Act was explained by the Central Board of Direct Taxes in Circular No.394, dated 14.9.1984, (1984) 150 ITR (St) 22 in the following words: "36.2. The new Explanation contains a special provision applicable to cases where in the course of a search under section 132 of the Income-tax Act, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing. The new Explanation provides that if in such cases, the assessee claims that the assets referred to above have been acquired by him by utilising (whether wholly or in part) his income for any previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date, or where such return has been furnished before the said date, such i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer". The expression "authorised officer" used in Section 132(4) of the Act instead of "assessing officer" also supports the aforesaid interpretation. Therefore, statement made under Section 131(1) of the Act during assessment proceedings in pursuance of search and seizure operations cannot partake the character of statement under Section 132(4) of the Act. As a necessary corollary, the benefit of Explanation 5 to Section 271(1)(c) of the Act would, thus, not be admissible in such situation. 16. Adverting to the facts of the present case, the search took place at the premises of the assessee on 8.11.2005 wherein the assessee had not declared any income in the statement recorded under Section 132(4) of the Act. The disclosure regarding concealed income in respect of undeclared investment in the purchase of immoveable property was made under Section 131(1) of the Act on 5.1.2006. Thus, no immunity can be claimed by the assessee from levy of penalty in terms of Explanation 5 to Section 271(1)(c) of the Act. 17. The similar issue raised by the assessee before the Tribunal was rejected after considering the scope of Section 132(4) and Explanation 5 to Section 271(1)(c) of the Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h operations. It is added that certain case laws relied upon by the assessee's counsel have already been considered by the Ld. CIT(A), in his impugned appellate order. Therefore, we are of the considered opinion that the immunity contemplated under Explanation 5 to Section 271(1)(c) of the Act, is not available to the present assessee. However, the issue is covered under the general provisions of Section 271(1)(c) of the Act, as well as under the deemed concealed income within the meaning of Explanation 5 to Section 271(1)(c) of the Act, for the purpose of concealed income." 18. The Tribunal while repelling the contention of the assessee further noticed as under:- "Thus, the assessee has clearly failed to comply with the statutory requirements, as contained under the said section. It is, further, added that it is not a case of agreed surrender made by the assessee because the assessee has simply admitted concealed income in the course of proceedings under section 131 of the Act. We have carefully gone through and considered the ratio of the decisions as well as the facts of the case laws relied upon by the Ld. Counsel for the assessee and found that none of the case law is appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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