TMI Blog2015 (7) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... he case. It may be argued that the Revenue has not invoked the said Explanation. The same is not required to be separately invoked when the assessee is show-caused on section 271(1)(c) (CIT v. Prabhu Dayal Lallu Ram [2005 (1) TMI 39 - PUNJAB AND HARYANA High Court]; CIT v. K.P. Madhusudanan [2000 (1) TMI 15 - KERALA High Court]. The law, through Explanation 1, shifts the onus of the explanation for not returning/disclosing the impugned income on the assessee, so that the penalty follows the non-discharge of that onus. In the present case, the assessee seeks shelter of Explanation 5 to the provision, which we have, for the reasons afore-stated, found as not applicable. No further burden lies on the Revenue; it restricting itself to the assessee’s case as advanced before it, i.e., entitlement to the benefit of Explanation 5 to the provision.There is, further, no plea of the disclosure per the return as made to purchase peace of mind and/or avoid litigation. The plea would even otherwise be inconsistent with the facts of the case; wholly unsubstantiated and, accordingly, not maintainable either on facts or in law. We confirm the levy of penalty imposed at the minimum sum thereof, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h disclosure had been made u/s. 132(4), so as to attract the protection of Explanation 5 to section 271(1)(c). The same stood confirmed in appeal on the finding of the terms of the said Explanation being not satisfied, relying on the decision in the case of Ajit B. Zota v. Asst. CIT [2010] 40 SOT 543 (Mum). Aggrieved, the assessee is in second appeal. 3. Before us, like submissions were made, with each side relying on case law, as under: Assessee: (a) CIT v. Mahendra C. Shah [2008] 299 ITR 305 (Guj) (b) CIT v. E.V. Valashanmugham [2006] 286 ITR 626 (Mad) (c) CIT v. Radha Kishan Goel [2005] 278 ITR 454 (All). Revenue: Shreej Traders v. Dy. CIT [2012] 136 ITD 249 (Mum), which, in turn, relies on several case law. 4. We have heard the parties, and perused the material on record. 4.1 The primary facts of the case are undisputed, nay, admitted. The only issue, therefore, arising is whether the saving of Explanation 5 to section 271(1)(c) is attracted in the facts and circumstances of the case, which would prima facie apply inasmuch as the impugned jewellery was found during the course of search. The said provision reads as under:- Failure to furnish retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such income. 4.2 As apparent, it (Explanation 5 to s. 271(1)(c)) provides for deeming concealment of particulars of income or furnishing inaccurate particulars of income under the condition of the assessee claiming the assets, of which it is found to be the owner of during the course of search, to represent a utilization of its income for any previous year: (a) which has ended before the date of search, return for which has not been filed (up to the date of search), or where the return of income stands filed, the relevant income has not been declared therein; (b) which is to end on or after the date of search, notwithstanding that the assessee returns the said income on or subsequent to the date of search. The deeming as to concealment or, furnishing inaccurate, particulars of income has two exceptions to it, per the provision itself, listed as clauses (1) and (2) thereof. Clause (1) stipulates that the assessee shows of having recorded the relevant income in the books of account maintained for any source of income, or otherwise disclosed prior to the date of detection. Exception (2), which is independent of clause (1), provides for immunity where the assessee discl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of the impugned jewellery. In fact, the same represents only a part of the total jewellery found, so that the assessee was, as a matter of fact, able to explain the jewellery found in her possession during search in part, being unable to substantiate the same for the entire jewellery. This, then, constitutes our second principal objection to the invocation of Explanation 5 to s. 271(1)(c). True, the assessee returns the value of the unexplained jewellery per her return of income for the relevant year. However, that by itself would not operate to attract the said Explanation; its ingredients being not satisfied. The jewellery was found from her locker/residence. To the extent explained as to the source of its acquisition, the same stands excluded. The balance, of which she is found to be the owner, becomes part of her undisclosed income for the relevant previous year, i.e., in which it is so found by the Revenue, in view of section 69/69A of the Act, which provisions are rules of evidence based on the fundamental principles of jurisprudence as enshrined in the Evidence Act (refer: Chuharmal v. CIT [1988] 172 ITR 250 (SC)). That explains her returning the value of such exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of a search and findings thereat, i.e., detection and, in fact, seizure of the relevant assets. Case law on what constitutes a voluntary action on the part of the assessee in returning income, is legion. We may, for reference, advert to CIT v. Mohd. Mohtram Farooqui [2003] 259 ITR 132 (Raj); Addl. CIT v. Radhey Shyam [1980] 123 ITR 125 (All)). The said returning would, thus, be again of no assistance to the assessee. Both Explanation (1A) and (1B) to section 271(1)(c) shall, resultantly, apply in the facts of the case. It may be argued that the Revenue has not invoked the said Explanation. The same is not required to be separately invoked when the assessee is show-caused on section 271(1)(c) (CIT v. Prabhu Dayal Lallu Ram [2005] 274 ITR 233 (P H); CIT v. K.P. Madhusudanan [2000] 246 ITR 218 (Ker)). The law, through Explanation 1, shifts the onus of the explanation for not returning/disclosing the impugned income on the assessee, so that the penalty follows the non-discharge of that onus. In the present case, the assessee seeks shelter of Explanation 5 to the provision, which we have, for the reasons afore-stated, found as not applicable. No further burden lies on the Revenue; ..... X X X X Extracts X X X X X X X X Extracts X X X X
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