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2016 (3) TMI 149 - PUNJAB AND HARYANA HIGH COURT

2016 (3) TMI 149 - PUNJAB AND HARYANA HIGH COURT - TMI - Penalty u/s 271 - Amount disclosed under Section 132(4) - Held that:- A perusal of the order of the Tribunal shows that the order passed by the Tribunal in the factual matrix involved herein requires to be re-adjudicated in the light of the interpretation given by the Apex Court in Gebilal Kanhaialal's case (2012 (9) TMI 297 - SUPREME COURT ) to clause (2) of Explanation 5 to Section 271(1)(c) of the Act as the Tribunal is the final fact f .....

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. Urvashi Dhugga, Advocate AJAY KUMAR MITTAL, J. 1. This order shall dispose of a bunch of three appeals bearing ITA Nos. 386 of 2004, 47 and 104 of 2005 as according to learned counsel for the parties, the identical questions of law and facts are involved therein. For brevity, the facts are being extracted from ITA No. 47 of 2005. 2. This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short the Act ) against the order dated 31.8.2004 (Annexure A-1) .....

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he tax liability due on returned income and the appellant had offered adjustment of those assets against his taxes due vide a note appended to return of income, thus the appellant cannot be penalized on the ground of non payment of taxes? (ii) Whether, the decision of ITAT and authorities below is perverse in holding that the return of income has not been furnished in time while in fact it has been furnished on 23.5.1994 for the A.Y. 1994-95? (iii) Whether, on the facts and circumstances of the .....

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e and cash, jewellery, FDR/IVPs and promissory notes were seized. During the course of search, a disclosure of ₹ 3 lacs was made under Section 132(4) of the Act. The said amount was surrendered subject to no penalty under Section 271(1)(c) of the Act. A further disclosure of ₹ 6 lacs was made in the hands of Shri Dipti Lal, Shri Raj Kumar, Dipti Lal and Sons besides ₹ 3 lacs in the case of Shri Surinder Pal (the appellant herein) for the assessment year 1994-95. The income tax .....

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ent Years 1993-94 1994-95 Shri Surinder Pal ₹ 1,71,498/- ₹ 2,05,837/- Shri Raj Kumar ₹ 1,71,498/- Rs. 2,05,837/- Shri Dipti Lal ₹ 83,278/- ₹ 1,31,884/- The seizure of the assets was worth ₹ 26,01,584/- as against the taxes due amounting to ₹ 9,69,841/- on the basis of returns of income filed by all the family members. The assessment was finalized vide order dated 27.12.1996 at a total income of ₹ 11,13,739/- by presuming the business of jewellery a .....

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on 271(1)(c) of the Act for the assessment year 1994-95 on the amount disclosed under Section 132(4) read with Explanation 5 to Section 271(1)(c) of the Act. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who vide order dated 27.3.2001 (Annexure A-5) dismissed the appeal. Against the order, Annexure A-5, the assessee filed an appeal before the Tribunal. The Tribunal vide order dated 31.8.2004 (Annexure A-1) upheld the order of the CIT(A) and dismissed the appeal. Hence, the pr .....

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f 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 alo .....

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ntageous to quote below Explanation 5 to Section 271(1)(c) of the Act which at the relevant time existed 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 utilizing (wholly or in part) his income,- (a) For any previous year which has ended bef .....

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sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, 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 s .....

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f search under Section 132, the assessee is found to be the owner of unaccounted assets and the assessee claims that such assets have been acquired by him by utilizing, wholly or partly, his income for any previous year which has ended before the date of search or which is to end on or after the date of search, then, in such a situation, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed the p .....

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)(c). The first condition was that the assessee must make a statement under Section 132(4) in the course of search stating that the unaccounted assets and incriminating documents found from his possession during the search have been acquired out of his income, which has not been disclosed in the return of income to be furnished before expiry of time specified in Section 139(1). Such statement was made by the Karta during the search which concluded on August 1, 1987. It is not in dispute that con .....

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ion 271(1)(c) as the assessee failed to file his return of income on 31st July, 1987 and pay tax thereon particularly when the assessee conceded on August 1, 1987 that there was concealment of income. The third condition under clause (2) was 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 a .....

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should pay tax on income disclosed in the statement under Section 132 (4). 9. The Supreme Court in the above noted pronouncement had held that the following circumstances are required to be fulfilled by the assessee to claim benefit under Clause (2) of Explanation 5 to Section 271(1)(c) of the Act and seek immunity therefrom:- (i) the assessee must make a statement under Section 132(4) in the course of search stating that the unaccounted assets and incriminating documents found from his possess .....

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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 ₹ 4,70,000/- inclusive of surrender under Section 132(4) of the Act. The Assessing Officer vide order dated 31.1.2000 (Annexure A-2) framed the assessment accepting the return .....

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