TMI Blog2012 (8) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... of the IT Act. As in the present case the assessee did not disclose the income or the assets any time in the returns filed by them. Furthermore, the search conducted was not in their premises, as it was in the premises of someone else. Having regard to the restricted nature of the phrase “books of account” the particulars found in the premises of someone else could not be said to have been “in the course of search”, because the present assessee's premises were not searched. Nor did they make any disclosure or statement, or surrender their income, during the course of search. They filed a return, which for the first time, disclosed the hitherto concealed income. Their explanations were not of the kind which therefore, fell within the exception to Explanation 5 of Section 271 (1) (c) - against assessee. - ITA Nos.995/2010 & 997/2010, ITA Nos. 995,997/2010, 1217, 1219 - 1221, 1231 & 1233/2010 - - - Dated:- 23-8-2012 - MR. JUSTICE S. RAVINDRA BHAT, MR. JUSTICE R.V. EASWAR, JJ. For Appellant : Mr. N.P. Sahni, Senior Standing Counsel, Mr. S.Krishnan, Advocate For Respondent : Mr. S.Krishnan, Advocate, Mr. Sanjeev Sabharwal, Senior Standing Counsel with Mr. Puneet Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2); Rs.25,39,730/- (2002-2003); and Rs.19,47,220/- (2003-2004). Similarly in the case of Kiran Devi after summons were issued a return was filed showing considerable higher income on 28.03.2006. In the case of Kiran Devi the additional income disclosed under Section 153 C was Rs..3,57,410/- (1999-2000), Rs..37,12,580/- (2000-2001); Rs..55,31,900/- (2001-2002), Rs..8,76,740/- (2002-2003); Rs..18,67,320/- (2003-2004). For the last year the Assessing Officer found that the income liable to be taxed was Rs..20,05,584/- on account of an addition of Rs..7,02,964/- made under Section 68 of the Income Tax Act for unproved cash credit. 5. The Assessing Officer had also initiated penalty proceedings under Section 271 (1) (c) of the Income Tax Act, 1961 for concealment of income. After completion of assessment the penalty orders were made. The assessees appealed to the Commissioner (Appeals). The appeals of Meeri Devi were dismissed on 28.11.2007. Kiran Devi s appeals were also dismissed on 14.12.2007. 6. Being aggrieved by the orders the said assessees approached the Tribunal. Apparently in the case of Meeri Devi three appeals were dismissed by the CIT (Appeals). 7. In the meanwhile so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing, the Tribunal on the basis of the above reasoning (in its previous order dated 14.03.2008), allowed the appeals. Three appeals were filed by the Revenue, however, they were not considered by this Court on the ground that the tax effect was less than the prescribed amount. It is in these circumstances the two surviving appeals of Meera Devi, are being considered. In the case of Kiran Devi by a subsequent order dated 07.08.2009, another Bench of the ITAT dismissed the assessee s appeal. 9. Counsel for the assessee in both cases i.e. Kiran Devi and Meera Devi urged that the Tribunal fell into an error in not taking into consideration the fact that penalty proceedings were completely unwarranted in these cases. It was submitted that having regard to the 5th Explanation to Section 271 (1)(c) of the Income Tax Act and the fact that the assessees had promptly responded and filed the returns after receipt of notices consequent upon the search, it could not be said that there was any intention on their part to conceal the income or that they had furnished false or inaccurate particulars in their original returns filed under Section 139 of the Act. Counsel highlighted the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essees, and was applied without looking into individual facts and circumstances, the subsequent order in Kiran Devi s case is an elaborate one. Counsel for the Revenue submitted that the decision in Meera Devi s on the other hand suffers from the same infirmity as it does not discuss the individual facts and why fifth Explanation (to Section 271 (1) (c)) was attracted. 12. It was highlighted by the counsel for the Revenue that the search in this case took place in a third party s premises. During the course of conduct of that search, documents pertaining to these two assessees, i.e. Kiran Devi and Meera Devi were found and seized. Despite notices, they did not respond. Ultimately the Assessing Officer had to issue notices under Section 153C. It was on receipt of these notices that both the assessees approached the Assessing Officer and filed returns for the block period. These returns showed substantial increase as compared with the original (regular) returns of income which had originally been filed under Section 139. In both cases there was no explanation why the income which was subsequently disclosed under Section 153C had been omitted. In these cases the income claimed was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efer the matter to a larger Bench. 15. There is some authority for the assessees argument that a Bench of a Tribunal should not depart from an earlier view expressed by it, in the interests of consistency and stability in the administration of law. The Court is also aware that the Tribunal is a quasi-judicial authority, and is not a court of record. There are important exceptions to the doctrine of precedent, which reinforce the public interest in proper administration of justice. The first is that a decision is an authority for what it says, in the context of the facts. The second is that if the previous decision is per incuriam, the Tribunal, or court is not bound to consider it as a binding precedent. 16. In this context, it would be necessary to notice that Section 271 (1) (c) empowers the Assessing Officer to impose penalties wherever the assessee does not furnish accurate particulars, in the form of returns, such as concealing the sources of income, or withholding true and full information. This duty was spelt out by the Supreme Court as one cast on the assessee to disclose all facts, including every potential income. In Calcutta Discount Company v Income Tax Officer AIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim the benefit of the exception, carved out from the main Explanation to that provision. 17. This Court is conscious of the fact that taxing statutes have to be construed in their own terms, and there is no question of equity playing any role in that function. If that perspective is kept in mind, it is apparent that the Explanation 5 to Section 271 (1) (c) is premised on search of the assessee. The main part of the Explanation creates a legal fiction, (i.e. the assessee shall, for the purposes of imposition of a penalty under cl. (c) of sub-s. (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars). The assessee can, in limited circumstances, avail the benefit of the exceptions ( unless ) if (1) for any previous year which has ended before the date of the search, (but for which the return of income for such year has not been furnished before that) or, where such return has been furnished before the said date, it has not been declared in it, he satisfies that such income is, or the transactions resulting in such income are recorded before the date of the search or (2) for any previous year which is to end on or aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001. Section 2(12A) defines the said terms to mean : "(12A) 'books or books of account' includes ledgers, day-books, cash books, account books, and other books, whether kept in the written form or as print-outs of data stored in a floppy, disc, tape or any other form of electromagnetic data storage device." 32. Then above definition appears to have been framed by the Legislature keeping in view the development of computer technology. If the newly inserted definition of books of account inserted in the Income-tax Act is examined in contrast to the definition given under Section 34 of the Evidence Act, it will be clear that the stringent requirements of Section 34 are not to be found in the said definition. Obviously, for the simple reason that the purpose of both the legislations are different. So far as the cases at hand are concerned, they relate to the assessment years 1984-85 to 1988-89 ; much prior to the period of introduction of the definition which was introduced for the first time under the Finance Act, 2001. 33. In order to appreciate the submissions keeping in view the facts of the present cases, one has to concentrate not only on the bare term "books of account" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enience to secretly record secret, unaccounted clandestine transactions not meant for the purposes of the Income-tax Act, but with specific intention or desire on the part of the assessee to hide or conceal income so as to avoid imposition of tax thereon. 35. The words in Explanation 5 "books of account, if any, maintained by him for any source of income" are important words signifying the legislative intent embodied in the Explanation warranting grant of immunity from penalty. The legislative intent is to admit only those books of account maintained by the assessee on his own behalf as by their very nature and circumstances are maintained for the purposes of drawing the source of income. Therefore, when books of account are tendered for claiming the benefit of Explanation 5 to Section 271(1)(c) of the Act, it must be shown to be a book, that book must be a book of account, and on the top of it that must be one maintained for the purposes of drawing the source of income under the Income-tax Act. These essential requirements must be carefully observed while implementing tax legislation in the country where secret and parallel accounts based on frauds and forgery are extremely comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income, (a) 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 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, 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 cl. (c) of sub-s. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not even in dispute. In the light of above facts, we are to examine the question whether assessee is liable to be penalized under Section 271(1)(c) of the IT Act. 16.1 The main contention advanced on behalf of the assessee is that penalty proceeding was initiated by invoking Explanation 5 to Section 271(1)(c) and, therefore, question has to be strictly examined in the light of above Explanation. Even main provision of Section 271(1)(c) cannot be considered or applied to uphold the levy of penalty. Other Benches of the Tribunal did not go beyond considering Explanation 5 and held that said Explanation is not applicable and thereby cancelled the penalty. In our considered opinion, above contentions of the assessee based upon Explanation 5 are to be rejected. Various explanations to Section 271(1)(c) being part of the section, need not be invoked while initiating penalty proceeding. The penalty is to be imposed if conditions prescribed by Section 271(1)(c) are satisfied. The said section is to the following effects: xxxxxxx xxxxxxxxx xxxxxxxxx 16.7 It is further to be understood that Explanations deal with cases of "deemed concealment" and not of actual concealment fully esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lse could not be said to have been in the course of search , because the present assessees premises were not searched. Nor did they make any disclosure or statement, or surrender their income, during the course of search. They filed a return, which for the first time, disclosed the hitherto concealed income. Their explanations were not of the kind which therefore, fell within the exception to Explanation 5 of Section 271 (1) (c). The reliance placed by the assessees on the judgment of this court in Chhabra is inapposite, because in that case, the assessee surrendered the amount during, or immediately after the search. P.R. Mitrani does not help the assessees, because this Court is not holding that the presumption which has to be taken under the provision is irrebuttable, or sweeping. The court is merely construing the Parliamentary purpose for the fifth Explanation, and also interpreting the nature of the exceptions which allow the assessee the benefit. Clearly, the assessees in this case cannot claim any such benefit. 22. For the above reasons, the question of law in ITA Nos.1217/2010, 1219/2010, 1221/2010, 1231/2010 and 1233/2010 is answered in favour of the revenue and again ..... X X X X Extracts X X X X X X X X Extracts X X X X
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