9911796707
Advanced Search 
TMI Blog2015 (12) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... ly issue involved in all these appeals is that whether the assessee is entitled for immunity from levy of penalty on account of Explanation 5 to Section 271(1)(c ) of the Act in respect of income offered after the search but in the return filed u/s 153A of the Act. Since identical issue is involved in all the appeals, they are taken up together and disposed off by this common order for the sake of convenience. 4. The brief facts of this issue is that a search and seizure operation was conducted on 27.7.2006 u/s 132 of the Act in the Thacker group of cases. The assessee is one of the individuals belonging to this group. In the course of search, the assessee was found to be in possession of undisclosed income and accordingly the assessee gave disclosure statement u/s 132(4) of the Act offering substantial income as below:- Assessment Year Disclosure amount Assessment Year Disclosure amount 2001-02 Nil 2002-03 Nil 2003-04 12,00,000 2004-05 10,14,333 2005-06 2,21,000 2006-07 54,63,857 2007-08 1,70,810 80,70,000 The appeals before us are only in respect of Asst Years 2001-02 to 2005-06 and hence the disclosure u/s 132(4) of the Act by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings. Accordingly, he held that the assesse had not cumulatively satisfied the conditions stipulated in Clause 2 of Explanation 5 to Section 271(1)( c) of the Act and hence is not entitled for immunity from levy of penalty. Against this order, the assesee had preferred appeals before us for the Asst Years 2001-02 ; 2002-03 & 2003- 04 and the same are numbered separately as mentioned hereinabove. Later the assessee found that the Learned CIT(A) had factually erred in recording the finding that taxes have not been paid by the assessee for the Asst Years 2001-02 to 2003-04, for which a rectification petition was preferred before the Learned CIT(A) and assessee adduced evidences for payment of taxes. The Learned CIT(A) after obtaining confirmation from the Learned AO with regard to the payment of taxes thereon, sough to rectify the appellate order passed by his predecessor on 16.7.2009 and gave a finding that the assessee had indeed paid all the taxes and had cumulatively satisfied the conditions stipulated in Clause 2 of Explanation 5 to Section 271(1)( c) of the Act and hence is entitled for immunity from levy of penalty. Against this order, the revenue had preferred appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee by the decision of the Hon'ble Calcutta High Court in CIT vs Amardeep Singh Dhanjal in ITA No. 39 of 2010 dated 11.1.2013. He further argued that the expression 'to be furnished before the expiry of time specified in subsection (1) of section 139' used in Clause 2 of Explanation 5 to section 271(1)(c ) of the Act might create some difficulty for claiming immunity and he argued that this very question has been answered in favour of the assessee by the Jurisdictional Calcutta High Court in the case of CIT vs Brijendra Gupta in ITA No. 330 of 2009 dated 8.6.2015 and took us to the relevant operative portion of the said judgement. 8. We have heard the rival submissions and perused the materials available on record including the detailed paper book filed by the Learned AR containing the various orders passed by the lower authorities, disclosure petition u/s 132(4) of the Act , evidence for payment of taxes, copies of panchanamas, and written submissions filed before the lowe authorities. We also find that the Learned AR had filed some more paper books containing compilation of case laws on the impugned issue. 8.1. At the outset, we find that the appeals filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub-section (1) of section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income.] 8.3. We find that the Learned CITA had stated that search and seizure operation was started on 27.7.2006, the disclosure petition was filed by the assessee u/s 132(4) of the Act, the notices u/s 153A were issued on 10.8.2007, returns were filed on 28.11.2007 and the assessment of the cases were completed on 1.7.2008. At the time of filing of the disclosure statement, as well as in course of the assessment proceedings, detailed cash flow charts and explanations were filed substantiating the disclosure made pursuant to search. The Assessing Officer did not independently work out the quantum of undisclosed income which was different from or in excess of what was promised in the statement given u/s 132(4) of the Act. 8.4. We find lot of force in the arguments of the Learned AR that the additional disclosure of Rs. 2,50,000/- and Rs. 4,72,603/- for the Asst Years 2001-02 & 2002-03 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther concealment of income has to be seen with reference to additional income brought to tax over and above income returned by assessee in response to notice issued under section 153A and, therefore, once returned income under section 153A is accepted by Assessing Officer, it can neither be a case of concealment of income nor furnishing of inaccurate particulars of such income - Held, yes - Search was conducted on 22-11-2006 and cash was found from possession of assessee - Assessee had drawn cash flow statement for entire period of six years in order to determine undisclosed income based on seized material for each of six assessment years - Whether penalty under section 271(1)(c ) cannot be imposed by invoking Explanation 5 in assessment year 2004-05 in respect of cash found in previous year relevant to assessment year 2007-08 , merely on presumption that assessee might have been in possession of cash throughout period covered by search assessments - Held, yes [ in favour of assessee] 8.4.2. We find that this decision of Delhi Tribunal has been followed by this Tribunal in the case of DCWT vs Vivek Kr. Kathotia in WTA Nos. 02 to 08 / Kol / 2013 dated 15.5.2015, wherein it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be found out. Generally it is with reference to the return of income and at that time it is to be seen whether there was concealment of income from or furnishing of inaccurate particulars thereof in the return of income chargeable to tax. But there may be cases, where an income is not declared in the return or the particulars of income shown inaccurately in the return but assessee on realization of mistake, omission or misdeed rectifies that and correct himself and cleans his breast, can he still be accused of concealment though in the return there has been the omission? By the time the Assessing Officer takes up the issue and comes across the information in his possession, if the assessee makes up the deficiency and offers the income or furnishes accurate particulars he, in our opinion, cannot be held guilty of concealment of income or furnishing of inaccurate particulars of his income. Any action rectified relates back to original act and to the date and time of filing the return. When the Assessing Officer starts scrutiny of the return and initiate assessment proceedings there is nothing concealed and the inaccuracy, if any, disappeared. Therefore the assessee cannot be he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f tax thereon. Apart from the surrender there was nothing more on record to hold the assessee guilty of offering the said amount on detection of the concealment. Even in assessment order there is nothing of that sort. In the assessment proceedings the Assessing Officer has raised some specific question not based upon information in the possession of the revenue. These are : "Sr.No. 4 - Bank statement of all bank accounts maintained by you individually or Jointly with any other person during the financial year along with narration of each debit / credit entry. Sr.No. 9 - Cash flow statement for the financial year under consideration. Sr.No.10-Had you taken / given any loan / gift during the financial year under consideration ? If yes, please furnish details." 23. On a perusal of the questionnaire, it is evident is general in nature without specifying the names of the donor or any other such details on the basis which it could be presumed that the Assessing Officer had information to call for specific information. The query "Had you taken / given any loan / gift during the financial year under consideration ?" itself suggests that the revenue was not sure enough whether any gift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22,603/- (Rs. 2,50,000/- in F.Y. 2000-2001 and Rs. 4,72,603/- in F.Y. 2001-2002). Now, not intending to be drawn into unnecessary long drawn litigations with the department and to demonstrate my cooperative attitude as well as to buy peace of mind, I am further offering to tax suo moto , the amounts of Rs. 2,50,000/- in F.Y. 2000-2001 and Rs. 4,72,603/- in F.Y. 2001-2002 as an inflow in relevant years to taxation. I am enclosing herewith the revised computations of my total income for AY 2001-2002 and AY 2002-2003. I shall make the necessary payment of tax in due course of time. I understand that for this act of mine I shall not be penalized in any manner." We find that the additional offer of income was made supra clearly goes to prove that the offer was made before any detection by the department. Hence it could safely be concluded that the assessee sought to rectify the bonafide error or omission in the original disclosure made u/s 132(4) of the Act followed by filing of returns u/s 153A of the Act. Hence in these circumstances, this additional offer has to be construed only as a revision of original disclosure u/s 132(4) followed by filing of returns u/s 153A of the Act and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en complied with. We are, in this case, concerned with Clause (ii). One of the conditions is that the assessee makes a statement under section 132(4) that the assets unearthed have been acquired out of his income which has not been dislosed so far in his returns of income already filed. The difficulty arises by the use of the expression "to be furnished before the expiry of time specified in sub-section (1) of section 139". A confusion is likely to arise as to whether the departure has been sought to be made by the legislature only for those cases where the statement as regards undisclosed income was made pertaining to a previous year for which time to file return under section 139 had not expired. But that was not the intention because the expression "unless" appears after Clauses (a) and (b) of Explanation which provides for imposition of penalty. Therefore, "unless" has to apply to the provision for imposition of penalty. Therefore, the aforesaid expression "to be furnished" has to be interpreted as "required to be furnished". Only in that case the section will make a meaning otherwise the section does not make any meaning. We are supported in our view by the Judgement of the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and difficulties in working out the undisclosed income. It is further recorded that the voluntary action on the part of the assessee to settle the tax issues for peace of mind appears from the conduct of the assessee. While recording the aforesaid fact, the Learned Tribunal ultimately relied on a decision of the Tribunal rendered in the case of Additional CIT vs Prem Chand Garg. Mr. Sinha, however, is unable to say whether the earlier decision of the Tribunal in the case of Prem Chand Garg has been challenged or not. Moreover, the learned Tribunal has also relied on a large number of decisions of the various court on the same point. Hence when the point is covered, we do not find any merit in this appeal for admission. Accordingly, the same is dismissed. 8.7. We would like to place reliance on the following decisions on the impugned issue before us :- A) Jurisdictional High Court in the case of CIT vs Shri Samit Roy in ITA 354 of 2009 dated 3.9.2015, wherein the questions raised before their Lordships and their decision rendered thereon is as below:- "(a) WHETHER on the facts and in the circumstances of the case the Income Tax Appellate Tribunal erred in law in upholding the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available only for period where due date for filing the return under section 139(1) of the Act had not expired ?" 13. Considering the facts and circumstances of the case and also considering the decisions relied upon by learned Senior Advocate for the appellant, we are of the considered opinion that the view taken by the Tribunal is erroneous. The CIT(A) rightly held that it is not relevant whether any return of income was filed by the assessee prior to the date of search and whether any income was undisclosed in that return of income. In view of specific provision of Section 153A of the I.T.Act, the return of income filed in response to notice under section 153A of the I.T.A Act is to be considered as return filed under section 139 of the Act, as the Assessing Officer has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under section 271(1)(c ) of the I.T.Act and the penalty is to be levied on the income assessed over and above the income returned under section 153A, if any. 14. Further, in the present case, it appears from the record that the assesses had satisfied all the conditions which are required for claiming immu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial precedents relied upon hereinabove including that of the Jurisdictional High Court and other High Courts, we are of the considered opinion that : - the assessee has cumulatively satisfied all the conditions stipulated in Clause 2 of Explanation 5 to Section 271(1)( c) of the Act and hence entitled for immunity from levy of penalty for all the assessment years under appeal; - the assessee had made voluntary disclosure of Rs. 2,50,000/- and Rs. 4,72,603/- for the Asst Years 2001-02 & 2002-03 during the course of search assessment proceedings after filing the return u/s 153A of the Act but before any detection by the department and the same is considered only as a revision of the disclosure made u/s 132(4) followed by filing of returns u/s 153A of the Act; - the expression 'to be furnished' mentioned in Clause 2 of Explanation 5 to Section 271(1)(c ) has to be construed as 'required to be furnished u/s 153A of the Act' Accordingly, the grounds raised by the revenue for all the assessment years are dismissed. 9. To sum up, the outcome of the aforesaid appeals are tabulated below:- Appeal Number Assessment Year Appeal by Result Appeal Number Assessment Year Appeal by Resu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
