TMI Blog2015 (4) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and accordingly, penalty to that extent was not leviable. The learned C.I.T.(A). wrongly took the contradictory stand. On the one hand he held that the assessee was not entitled for immunity provided under Explanation 5(2) because the undisclosed income consisted of investment in construction on agriculture land and therefore, not covered by the term 'any money, bullion, jewellery or other valuable article or thing' as held by the honourable Cochin Bench, at the same time he confirmed penalty levied by the A.O. under Explanation 5 to Sec.271(1)(c). Once it was held that Explanation 5 was not applicable on the facts of the assessee's case, penalty could have not been imposed under the said Explanation. Moreover, the CIT(A) wrongly considered payment towards membership of VLCC as immovable property and confirmed the levy of penalty. Furthermore, the assessee’s case was covered under exceptional circumstances provided under clause (2) of Explanation 5 to Sec.271(1)(c) as all the conditions specified in Explanation 5(2) to Sec.271(1)(c) were satisfied fulfilled as evident from the following facts: (a) Shri Purnandu Jain, head of the family, in his statement recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO was correct. Against this order of CIT(A), the assessee is in further appeal before us. 3. We have considered rival contentions, carefully gone through the orders of the authorities below as well as judicial pronouncement cited at bar. Explanation 5 to Sec.271(1)(c) of the Income-tax Act, 1961 reads as under: Explanation 5.- Where in the course of a search under section 132, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to 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 clause (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery or other valuable article or thing represents either wholly or partly income or property for the purpose of the Incometax Act, 1922 or this Act (hereinafter in this section referred to as the undisclosed income or property . Thus the power of search is based upon the reasonable belief that there is concealment of income represented by money, bullion, jewellery or other valuable article or thing . These very expressions have been engrafted in the Explanation 5 to section 271(1)(c) in which the reference to documents is conspicuous by its absence. Therefore the inevitable conclusion is that it is only in respect of such assets enumerated in Explanation 5 to section 271 (l)(c) [which are in pari materia with those in section 132(I)(c)j, as are found in the ownership of the assessee but not recorded in the books of account that the assessee is deemed to have concealed his income. Thus, the documents of title which represent the right to immovable property, which right itself is an immovable property, is outside the purview of Explanation 5 to section 271(1)(c). We are re-inforced in this conclusion on the interpretation placed in Bhagwandas Narayandas v. CIT [1975} 98ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, we hold that in the present case Explanation 5 is not applicable. 6. In the instant case, in relation to the assessment year under consideration, the assessee was found to be the owner of 'construction on agriculture land (Rs.12,54,780/-) and membership of VLCC (Rs.1,95,220/-) during search. The impugned investments were duly shown by the assessee in her return of income for the assessment year 2007-08. As discussed above, the ownership of the assessee in construction of agriculture land could not be termed as ownership of 'any money, bullion, jewellery or other valuable article or thing' as envisaged under Explanation 5 in view of the judgements of Cochin Bench Therefore, so far as investment in 'construction on agriculture land' was concerned, the Explanation 5 to Sec.271(1)(c) was not applicable in the assessee's case and accordingly, penalty to that extent was not leviable. The learned C.I.T.(A). wrongly took the contradictory stand. On the one hand he held that the assessee was not entitled for immunity provided under Explanation 5(2) because the undisclosed income consisted of investment in construction on agriculture land and therefore, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquired by him by utilizing (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 the said year has not been furnished before the said date, or where such return had been furnished before the said date such income has not been declared therein, 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 purpose of imposition of a penalty under sub-section (1)(c) be deemed to have concealed the particulars of his income or furnished inaccurate particulars of income. Significantly, such concealed income could be for any previous years, and could be required to be disclosed in such particular previous years. It is to this language of Explanation 5, that two exceptions are carved out, by using the word unless N. Sub-clause (2) provides that it would not be treated as undisclosed or concealed income, if the assessee, in the course of the search, makes a statement under section 132(4), that any asset found in his possession or under his control has been acquired out of his income, which has not been disclosed so far in his ret ..... X X X X Extracts X X X X X X X X Extracts X X X X
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