TMI Blog2015 (3) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... f the opinion that the present case is squarely covered in favour of the assessee by the decisions of of CIT vs Radha Kishan Goel (2005 (4) TMI 47 - ALLAHABAD High Court ), by the decision of Hon’ble Gujarat High Court in the case of CIT vs Mahendra C. Shah (2008 (2) TMI 32 - GUJARAT HIGH COURT) in favour of the assessee and hold that in absence of specific query raised by the authorised officer during the course of recording of statement u/s 132(4) of the Act about the manner in which undisclosed income has been derived and AO was not justified in imposing penalty u/s 271AAA of the Act. We also notice a peculiar fact of the present case that during the course of assessment, replying to the query of the AO, the assessee vide his reply dated 25.7.2011, as reproduced hereinabove, explained the manner in which the undisclosed income has been derived which cannot be ignored. Therefore, we reach to a logical conclusion that the CIT(A) was right in granting relief for the assessee in deleting the penalty and we are unable to see any controversy or any other valid reason to interfere with the same - Decided in favor of assessee. - ITA NO.5261/DEL/2013 - - - Dated:- 9-3-2015 - Shri Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d order submitted that on similar facts and circumstances, the CIT(A) granted relief in the case of Neerat Singal for AY 2010-11 in Appeal No.51/12-13 vide order of the CIT(A) dated 17.12.2012 which was upheld by the ITAT by order dated 24.6.2013 (supra) and, therefore, the present case is squarely covered in favour of the assessee by the order of the Tribunal (supra). 6. On careful consideration of above submissions of both the parties, we note that the CIT(A) has granted relief for the assessee by following his own decision dated 17.12.2012 in the case of Shri Neerat Singal (supra) which was upheld by ITAT E Bench Delhi by order dated 24.6.2013. The relevant operative part of this order reads thus:- 11. When we compare Explanation 5 to section 271(1) of the Act with the provisions laid down u/s 271AAA of the Act we find a lot of similarity therein under which penalty is not attracted in a case of search on the undisclosed income. As per Explanation 5 to section 271(1) of the Act if the assessee in the course of search makes a statement under sub section (4) of section 132 that any money, bullion, jewellery or other valuable article or things found in his possession or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable simultaneously but these are period specific. As discussed above, the only additional requirement for non attraction of penal provision u/s 271AAA of the Act in comparison to this u/s 271(1) is that besides specifying the manner in which the admitted an undisclosed income has been derived, the assessee will also have to substantiate this manner. In view of this relative study of both the provisions when we go through the decisions relied upon by the Ld. AR, we find that in the case of ACIT vs. GEBILAL Kanhialal (HUF) (supra) before the Hon ble Supreme Court the Karta of the asseseee HUF had made a statement u/s 132 (4)admitting ITA No-337/Del/2013 9 concealed income in the course of search and specified the manner in which such income stood derived. In this statement the Karta also surrendered an amount of ₹ 42,32,000/-. The Karta however neither filed return of income u/s 139 (1) on due date nor paid due tax on the surrendered income. Later on he also retracted from his statement recorded u/s 132(4) about surrender. The Hon ble Supreme Court after deliberating in detail on different Explanations to section 271(1) has been pleased to hold that the assessee was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in this decision of Hon ble Gujarat High Court, Pune Bench of the Tribunal in the case of DCIT vs. Shri Inderchand Surajmal Bothra (supra) wherein penalty u/s 271(1) was levied held that it is not required to specify the manner in which the income was earned in respect of the amount offered to tax in the return of income filed to search action by paying taxes thereon for adopting immunity from penalty under Explanation 5 of section 271(A) (C) of the Act. The cuttak Bench of the Tribunal in the case of Shri Ashok Kumar Sharma (HUF) and others vs. DCIT (supra) wherein penalty u/s 271 AAA was levied the assesee had disclosed concealed income while giving statement u/s 132 of the Act during the course of search and had paid the tax thereon and showed the said undisclosed income filed under the head income from business and department had accepted these returns and accordingly passed the assessment order. Penalty u/s 271AAA was levied. It was held that undisputedly the assessee had shown the undisclosed income under the head income from business in the returns filed by them and that was accepted by the department by passing the assessment orders accordingly, therefore the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t much importance should not be attached to the statement about the manner in which such income has been derived. It can be inferred on the facts and circumstances of the case, in absence of anything to the contrary. Therefore, mere non statement of the manner in which such income was derived would not make Explanation 5 (2) inapplicable, held the Hon ble High Court. 12. The Hon ble Gujarat High Court in the case of CIT vs. Mahendra C. Shah has been pleased to held as under :- In so far as the alleged failure on the part of the assessee to specify in the statement u/s 132(4) of the Income Tax Act 1961 regarding the manner in which such income has been derived, suffice it to state that when the statement is being recorded by the authorized officer it is incumbent upon the authorized officer to explain the provisions of Explanation 5 in its entirety to the assessee concerned and the Authorized Officer cannot stop short at a particular stage so as to permit the Revenue to take advantage of such a lapse in the statement. The reason is not far to seek. In the first instance, the statement is being recorded in the question and answer form and there would be no occasion of an asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the Ld. AR that nowhere the authorized officer has asked a specific question with regard to the manner in which the undisclosed income has been derived. The relevant questions are question Nos. 4,5,6 and 7. For a ready reference these questions and reply by the assesee thereto are being reproduced hereunder:- 4 For facility of reference and as in aid for further analysis and discussion the relevant part of the statement recorded during the course of search is as follows:- Q 4. I am drawing your attention to annexure A-3 at Page No- 6. Please go through the same and explain the content thereof? Ans. This paper depicts details regarding purchase of various lands on various dates by M/s Bhushan Energy Ltd in Kolkata. As mentioned in this paper in the entire transaction an amount of ₹ 178657781/- was paid in cash on 02/05/2009. This cash was paid out of my own unaccounted ITA No-337/Del/2013 14 funds which was never l disclosed for taxation purpose. I hereby accept the above amount to be my unaccounted income in the shape of investment in the current financial year and the same is offered for taxation. Q5. I am drawing your attention towards annexu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es only) to be my unaccounted income for the current financial year, which I hereby offer for taxation. 15. We find further that vide its reply dated 03.6.2010, addressed to the Asstt. Director of Income Tax (Investigation) and dated 25/7/2011, 8/6/2012 and 20/6/2012 to the Asstt. Commissioner of Income Tax the assessee has tried to explain the undisclosed income of ₹ 125 crore surrendered by the asseseee in his statement recorded u/s 132(4) of the Act. The contents of para No. 1 2 of the letter dated 25.7.2011 are being reproduced hereunder :- (1) With regard to Your Honour s query regarding income of ₹ 125 crores for F.Y 2009-10 disclosed during the course of search u/s 132, it is submitted that during the course of the said search at the residential premises of the Assessee on 04 March 2010 certain documents relating to transactions in properties undertaken by him were found as per page Nos. 4 5 of Annexure A-3 in SR- 4. As per the said papers the Assessee had an outstanding of a sum of ₹ 3,00,00,000/- and ₹ 69,00,000/- from various persons which were declared as additional income of A/Y 2010- 1\2011 while making a statement u/s 132(4) of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified in imposing penalty u/s 271AAA of the Act specially when the offered undisclosed income has been accepted and due tax thereon has been paid by the assessee. We thus while setting aside orders of the authorities below in this regard direct the AO to delete the penalty of ₹ 12,50,00,000/- levied u/s 271AAA of the Act. The ground is accordingly allowed. 7. Turning to the facts of the present case from Paper Book page no.16, we observe that in the statement recorded u/s 132(4) of the Act on 4.3.2010, the assessee Shri Brij Bhushan Singal, replying to question no.8 of the revenue authority accepted unaccounted income of ₹ 31 crore for FY 2009-10 relevant to AY 2010-11 surrendering and offering the same amount as undisclosed income and assuring the department that due taxes will be paid in due time thereon. 8. We further note that reply filed during the assessment proceedings dated 25.7.2011 (available on page no. 19 to 21 of the Paper Book), the assessee submitted and explained the following facts:- (1) With regard to Your Honour's query regarding income of ₹ 50 crores for FY 2009-10 disclosed during the course of search u/s 132, it is submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded during the course of survey u/s 133A as none is drawable. 9. In view of above, we are of the considered opinion that the assessee replied all the questions of revenue authorities in the statement recorded on 4.3.2010 u/s 132(4) of the Act. We further note that during the assessment proceedings, the assessee in his reply dated 25.7.2011further submitted details of the surrendered income of ₹ 50 crore and submitted that he had entered into various speculative transactions and also transaction related to properties during the period from 1.4.2009 to 4.3.2010 i.e. FY 2009-10 relevant to AY 2010-11 and the said transactions were carried out in an unrecognised manner and neither any accounting records nor any documentary evidence/support in respect of these transactions/activities carried out by the assessee were maintained. Under these facts and circumstances of the case and in the light of decision of ITAT Delhi E Bench in the case of Neerat Singal dated 24.6.2013, we are of the opinion that the present case is squarely covered in favour of the assessee by the decisions of Hon ble Allahabad High Court in the case of CIT vs Radha Kishan Goel (supra), by the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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