TMI Blog2012 (7) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed u/s 271(1)(c) of the I.T. Act, 1961 for the assessment years 2001-02 02-03 have been challenged. 2. At the very outset, Ld.Counsel for the assessee submitted that penalties on additional income of Rs.1,60,181/- and Rs.86,179/- offered in the respective returns filed by the assessee in response to notice u/s 153A of the Act, were imposed for the assessment at Rs.91,323/- and Rs.43,461/- for the assessment years 2001-02 02-03, respectively and under similar circumstances confirmation of penalty of Rs.47,51,579/- levied u/s 271(1)(c) of the Act, in relation to additional income declared in response to notice u/s 153A of the Act came to be deleted by F bench of the ITAT, Delhi in the case of Prem Arora vs. DCIT in I.T.A. No.4702/Del./2010 for assessment year 2004-05 vide order 9.3.2012 and by placing photocopy of the Tribunal order (supra), it was pleaded that since facts are similar and issue is identical with difference in amount of income and penalty, therefore, in view of the said order, appeals of the assessee should be accepted and impugned penalties imposed for both the years may be deleted. 3. Ld.DR while taking support form Hon ble Karnataka, Madras and Rajas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee under provisions of section 271(1)(c) of the Act. Obviously, no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said survey. However, there cannot be any penalty on surmises, on conjectures and possibilities. Section 271(1)(c) of the Act has to be construed strictly. Unless it is found that there is actually a concealment or non-disclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the income tax return and offered the surrendered amount for the purpose of tax. If the facts of the case are examined in the light of decision of Hon ble Delhi High Court in SAS Pharmaceuticals (supra) penalty u/s 271(1)(c) is not imposable where there is neither concealment of income nor furnishing of inaccurate particulars of income in return filed u/s 153A of the Act. In earlier paragraphs we have held that the concealment of income is to be determined with reference to the return of income to be filed in response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuable article or thing found in his possession or under his control has been acquired out of his income which has not been disclosed in his return of income to be furnished before the expiry of time specified in sub-sec. (1) of sec. 139 and also specifies in the statement the manner in which such income has been derived and pays tax together with interest, if any, in respect of such income. 29. We also find that the Finance Act, 2007 has inserted words search initiated under sec. 132 before the first day of June, 2007 in Explanation 5 of sec. 271(1) of the Act. Further Explanation 5A was inserted in the Statute by the Finance Act, 2007 in respect of a search initiated under section 132 on or after the 1st day of June, 2007. Thus Explanation 5 will not be applicable in respect of a search initiated on or after 1.6.2007. Further the words search initiated under sec. 132 before the first day of June, 2007 have been inserted by the Finance Act, 2007 w.e.f. 1.6.2007. In our considered opinion the amended provisions of Explanation 5 will be applicable only for assessment year 2008-09 if any money, bullion, jewellery or other valuable article or thing is found from the possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the possession or under control of the assessee. In the case of the assessee the search was conducted on 2.11.2006 and cash of Rs.1,11,45,350/- was found from the possession of the assessee. The assessee had undisclosed commission income as well as purchases and sales as seen from the statement of affairs made by the assessee based on seized material. The assessee had drawn cash flow statement for the entire period of six years in order to determine undisclosed income based on seized material for each of six assessment years. Explanation 5 to section 271(1) of the Act cannot be invoked in assessment year 2004-05 merely on presumption that the assessee might have been in possession of cash throughout the period covered by search assessments. The income offered to tax u/s 153A for assessment year 2004-05 is based on entries recorded in the seized material. Unlike provisions of Explanation 5A, the provisions of Explanation 5 cannot be invoked in assessment year 2004-05 in respect of entries recorded in seized material. Thus invoking of Explanation 5 in assessment year 2004-05 is based on presumptions, surmises and conjectures. It is settled law that suspicion howsoever strong, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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