TMI Blog2010 (10) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... n response to noticed issued u/s.153A the assessee filed the returns of income on 17.1.2007, declaring income as under:- Amount in Rs. Sr. No. ITA No. Assessment Year Return of income u/s.153A Amount of income declared/disclosed 1. 615/M/10 2001-02 36,91,180 35,20,500 2. 616/M/10 2002-03 14,68,640 13,22,840 3. 617/M/10 2003-04 25,12,140 23,55,668 4. 619/M/10 2004-05 68,23,160 66,31,100 4. During the course of search seizure operation, the assessee s statement was recorded u/s.132(4) on 20.4.2006 and in the statement the assessee offered aggregate undisclosed income of ₹ 1,46,80,608/- for the A.Ys. 2000-01 to 2006-07 that was in respect of unaccounte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01-02 is concerned, the A.O. also considered the addition of ₹ 60,000/- made u/s.68 of the Act. During the course of the search action, one undisclosed bank account of the assessee was found. The assessee was confronted with cash deposits made in the said bank account, which was of Cosmos Co-op. Bank Ltd. being A/c.No.991144. The assessee admitted in the statement recorded u/s.132(4) that the cash deposits made in the said bank account No.991144 with the Cosmos Co-op. Bank Ltd., Vile Parle (E) Mumbai Branch was his undisclosed income, which was never offered for tax earlier. The assessee also offered income of ₹ 1,46,80,608/- as a net income to be assessed as undisclosed income. The questions pertaining to the undisclosed income admitted and offered are question nos.32 and 43 in the statement u/s.132(4) dated 20.04.2006, which are reproduced for sake of convenience as under:- A.32 Earlier in your statement you had stated that the business is handed over to your brother from 01.04.2003. In the Assessment year 2005-06, you have still carried on catering business of M/s. Varsha Caterers. In view of this and also in view of your earlier Q.No.25 above, it is clear that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht. ( ₹ 1,46,80,608). This is net income and there are not any expenses which are to be debited against this undisclosed income. This disclosures has been given by the voluntarily without any use of force, threat, coercion or undue influence. Q. 43: Do you want to say anything else? Ans: I reconfirm that ₹ 1,46,80,608/- as computed and stated by me in reply to G. No. 33 above, as my undisclosed income, on which I will be paying the necessary taxes thereon at the earliest. In view of my voluntary offering of the undisclosed income of ₹ 1,46,80,608/- it is requested to the Dept. that I may be granted immunity from levying any penalty and prosecution against me. 6. The assessee challenged the penalty orders before the Ld. CIT (A). Before the Ld. CIT (A) the assessee pleaded that he has offered the income in respect of the cash deposits found in the bank account on clear understanding that immunity would be available from penalty on the said declaration. The assessee also paid the taxes thereon along with the interest and the income declared by the assessee in the statement recorded u/s.132(4) was fully declared in the returns filed in consequence of noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled for the immunity from levy of the penalty and hence, there is no justification on the part of the A.O. to levy the penalty in respect of the income surrendered/offered in the course of search and seizer operation. The Ld. D.R. relied on the decision of the ITAT (Ahmedabad) in the case of ACIT vs. Kirit Dahyabhia Patel (2009) 121 ITD 159 (TM). In the said case, there was difference of opinion on the issue of the applicability of Explanation 5 to section 271(1)(c) of the Act and hence the issue was referred to Third Member. In the said case, in the majority opinion, it is held that immunity conferred by the Explanation 5(2) to section 271(1)(c) is confined to the return for the year in respect of which the previous year is yet to end or though ended, the time for filing the return u/s.139(1) is to expire from the date of search. The operative part of the decision (Third Member) agreeing with the Ld. Accountant Member is as under:- 11. I have considered the arguments. Since the learned counsel for the assessee has not disputed the position that section 271(1)(c) is applicable to an assessment made under section 153A, it is not necessary for me to examine that position. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in the case of Rupesh Bholidas Patel (supra). Since a view has already been taken as to the availability of the immunity under Explanation 5(2) to section 271(1)(c) by an order of the Ahmedabad Bench, that too in a case belonging to the same group and after referring to the judgment of the Madras High Court in S.D.V. Chandru s case (supra), judicial discipline requires that I should not deviate from that view. I accordingly, uphold the view of the learned AM that the immunity under the above Explanation is not available to the present assessees. 12. The statement of objects and reasons to the Taxation Laws (Amendment and Miscellaneous Provisions) Bill, 1986 (161 ITR St.63), and the Circular No.469 (162 ITR St.21) to which my attention was drawn do not advance the case of the assessees. The statement of objects and reasons says that the amendment was being made to remove an anomaly in the existing provisions in respect of cases where penalty is imposable for concealment of income even if the taxpayer has no intention to fabricate evidence or to conceal his undisclosed income after search and seizure . The anomaly and the remedial amendment made are explained by the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y expired and the assessee also filed the original returns for those four assessment years u/s.139(1).. The Ld. Counsel placed his heavy reliance on the following decisions:- i) CIT vs. Kanhaiyalal -299 ITR 19 (Raj.); ii) Shyam Biri Works (P.) Ltd vs. ACIT -17 TTJ 880 (All.); iii) CIT vs. S.D.V. Chandru -266 ITR 175 (Mad.); iv) Dy. CIT vs Avinash Gupta -ITA nos.414 415/Kol/09 Order dated 30.6.2010(unreported) v) ACIT vs. Ms. Anu Projects Consultants Engineering Pvt. Ltd. -ITA 634 to 636/M/2009 Order dated 10.2.2010(unreported) 11. It is now well settled proposition that issue decided by the Third Member Bench can be equated with the decision of Special Bench. Moreover, in the case of Kirit Dahyabhia Patel (supra), the Tribunal has already considered the decisions of the Hon ble High Court of Rajasthan in the case of Kanhaiyalal (supra) and Hon ble Madras High Court in the case of S.D.V. Chandru (supra). In our humble opinion, the principles laid down in the case of Kirit Dahyabhia Patel have to applied, on the scope of the immunity to be given to the assessee, as per Explanation 5(2) to section 271(1)(c). We, therefore, hold that as per the facts on record, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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