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TMI Blog2016 (3) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 260A of the Income Tax Act, 1961 (in short "the Act") against the order dated 31.8.2004 (Annexure A-1) passed by the Income Tax Appellate Tribunal, Chandigarh Bench "A", Chandigarh (hereinafter referred to as "the Tribunal") in ITA No. 494/CHD/2001 for the assessment year 1994-95. All the appeals were admitted by this Court vide order dated 9.5.2006 for consideration of the following substantial questions of law:- (i) Whether, the decision of ITAT and authorities below is perverse in view of the facts and circumstances of the case being that the seized assets were far more in value as compared to the tax liability due on returned income and the appellant had offered adjustment of those assets against his taxes due vide a note appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 132(4) of the Act. However, regarding the payment of taxes due thereon, a note was appended to the computation (Annexure P-3) to the effect that "to be adjusted against seized liquid assets and also out of liquidation of other assets with my assistance." The taxes on the returned income as per the assessee's own computation were:- Assessment Years 1993-94 1994-95 Shri Surinder Pal Rs. 1,71,498/- Rs. 2,05,837/- Shri Raj Kumar Rs. 1,71,498/- Rs. 2,05,837/- Shri Dipti Lal Rs. 83,278/- Rs. 1,31,884/- The seizure of the assets was worth Rs. 26,01,584/- as against the taxes due amounting to Rs. 9,69,841/- on the basis of returns of income filed by all the family members. The assessment was finali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to be made in respect of applicability of Explanation 5 to Section 271(1)(c) of the Act in respect of return filed under Section 139(1) of the Act and Section 139(4) of the Act. On that premises, it was submitted that the Tribunal had failed to grant benefit under Explanation 5 to Section 271(1)(c) of the Act to the assessee and deleted the penalty levied under Section 271(1)(c) of the Act. Relying upon the judgment of the Apex Court in Assistant Commissioner of Income Tax v. Gebilal Kanhaialal, HUF, (2012) 348 ITR 561 (SC), learned counsel contended that the assessee could deposit the tax along with interest at any time when no time limit for payment was fixed. It was urged that since the assets were seized by the revenue on 10.9.1993 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come, unless, - (2) he, in the course of the search, makes a statement under sub-section (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in subsection (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. Explanation 5 to Section 271(1)(c) of the Act creates a deeming fiction. The Apex Court in Gebilal Kanhaialal's case (supra) while interpreting the aforesaid explanation h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Such statement was made by the Karta during the search which concluded on August 1, 1987. It is not in dispute that condition No.1 was fulfilled. The second condition for availing of the immunity from penalty under Section 271(1)(c) was that the assessee should specify, in his statement under Section 132(4), the manner in which such income stood derived. Admittedly, the second condition, in the present case also stood satisfied. According to the Department, the assessee was not entitled to immunity under clause (2) as he did not satisfy the third condition for availing the benefit of waiver of penalty under Section 271(1)(c) as the assessee failed to file his return of income on 31st July, 1987 and pay tax thereon particularly when the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expiry of time specified in Section 139(1). (ii) that the assessee should specify, in his statement under Section 132(4), the manner in which such income stood derived. (iii) that the assessee had to pay the tax together with interest, if any, in respect of such undisclosed income. However, no time limit for payment of such tax stood prescribed under clause (2). The only requirement stipulated in the third condition was for the assessee to "pay tax together with interest". 10. Delving into the controversy raised herein, it would be expedient to notice that the assessee filed his income tax return for the assessment year 1994-95 on 23.5.1994 declaring the income at Rs. 4,70,000/- inclusive of surrender under Section 132(4) of the Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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