TMI Blog2013 (6) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... s 271AAA of the Act. - Decided in favour of assessee - IT APPEAL NO. 337 (DELHI) OF 2013 - - - Dated:- 24-6-2013 - G. D. AGRAWAL (VICE-PRESIDENT) and I. C. SUDHIR (JUDICIAL MEMBER) Ashwani Kumarfor the Appellant. A. K. Mishrafor the Respondent. ORDER I.C. Sudhir, Judicial Member The assessee has impugned first appellate order whereby the Ld. CIT(A) has upheld the action of the Ld. Asstt. Commissioner of Income Tax in imposing penalty of ₹ 12,50,00,000/- u/s 271AAA of the Income Tax Act 1961. 2. We have heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon. 3. The relevant facts are that search operation u/s 132 of the Act was carried out at the premises of the assessee on 3.3.2010. On the basis of certain documents found and seized, the assessee had surrendered a sum of ₹ 125 crore as an undisclosed income which was also declared in his return of income for the assessment year 2010-11. Due taxes thereon was also paid before the filing of the return and the same has been accepted. In his statement u/s 132 (4) the assessee had stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that no further doubt or question arose in the minds of the authorities at any stage to question further the manner in which the income had been earned/derived and the need for any further clarification or enquires in this regard. 5. Ld. AR submitted that section 271AAA inserted into the Income Tax Act 1961 by the Finance Act, 2007 provides that in a case where search has been initiated u/s 132 on or after 1.6.2007, the assessee shall be liable to pay by way of penalty, in addition to tax, if any payable by him, a sum computed @10% of the undisclosed income of the specified period. However the said penalty is not leviable, if an assessee in a statement recorded during the course of search admits the undisclosed income,specified and substantiated the manner in which it has been derived and pays the taxes together with interest thereon. He submitted that the question of specifying the manner in which the income has been derived is duly answered which refers to the fact that the same is relatable to undisclosed forward/speculative transactions and property transactions carried out by him. Insofaras the question of substantiating i.e. providing facts to support the surrender m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxmann.com 651 (Cuttak-Trib) (viii) Dy. CIT v. Inderchand Surajmal Bros. IT Appeal No. 139/Pune/2010. 6. Ld. DR on the other hand tried to justify orders of the authorities below. He submitted that provisions u/s 271AA and u/s 271(1)(c) are substantially different since the provision laid down u/s 271AAA are applicable in the case of search only. U/s 271AAA (2) onus lies on the assessee to specify and substantiate the manner in which undisclosed income was derived whereas no such requirement is there under the provisions of section 271(1)(c) of the Act. He submitted that during the course of statement recorded u/s 132(4) of the Act the assessee accepted the unaccounted income but did not reply its source. In this regard, he referred contents of question Nos. 4,5 and 6 raised to the assessee while recording his statement u/s 132(4) of the Act and his answer thereto. He submitted further that the decisions relied upon by the Ld. AR having distinguishable facts and these are not helpful to the assessee. 7. In the rejoinder Ld. AR referred contents of para No. 6 of the penalty order wherein the submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) undisclosed income means (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search u/s 132, which has (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished 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, then the assessee for such income will not be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income to attract the penalty therein. Similarly under the provisions of section 271AAA of the Act penalty is not leviable where search has been initiated u/s 132 on or after 1.6.2007 but before 1.7.2012, and the assessee in the course of search, in a statement under the sub-section 4 of section 132,(i), admits the undisclosed income (ii) specifies and substantiates the manner in which such income has been derived, and (iiii) pays the tax together with interest, if any, in respect of the undisclosed income. From the reading of both these penal provisions we find that one requirement is common for non attraction of the penal provisions under both the sections i.e. if the assessee in his statements recorded u/s 132(4) of the Act admits the undisclosed income and specifies in the statement the manner in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilure to pay tax thereon was the mere reason relied upon by the department to deny to the assessee the benefit of immunity under clause (2) of Explanation 5 to section 271(1)(c) of the Act. According to the department the assessee had complied with all the conditions of clause 2 of Explanation 5 except payment of tax in time. Hon'ble Supreme Court pleased to hold that no time limit has been prescribed for payment of tax under clause 2 of Explanation 5 and the assessee having paid tax unto the date of payment in respect of the undisclosed income surrendered by it in the course of search, all the three conditions laid down in clause 2 of Explanation 5 to section 271(1)(c) stood fulfilled and therefore the assessee is entitled to immunity under clause (2) of Explanation 5 to section 271(1)(c) of the Act. In the case of Radha Kishan Goel (supra) before the Hon'ble Allahabad High Court the issue raised was as to whether mere non-statement of manner in which undisclosed income was derived would make Explanation 5 (2) to section 271(1)(c) inapplicable. The further question raised was as to whether in a case manner in which income has been derived has not been stated in the stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inable. The penalty was accordingly deleted. In the case of Pramod Kumar Jain (supra) before the Cutter Bench of the Tribunal, the assessee had disclosed the unaccounted income but had failed to specify the manner in which such income had been derived. The department accordingly levied penalty u/s 271AAA of the Act. The same was upheld by the first appellate authority. The Tribunal has however deleted the penalty on the basis that there is no prescribed method to indicate the manner in which income was generated where the definition of undisclosed income has been defined in the Act itself when no income of the specified previous year represented either wholly or partly which onus lay upon the assessee stood discharged. The Delhi Bench of the Tribunal in its recent decision in the case of Mother Pride Education Personna (P.) Ltd (supra) while placing reliance on its earlier decision in the case of Raj Rani Gupta (supra) and following the ratio of the decision of Hon'ble High Courts in the case of Radha Kishan Goel (supra) (All) and Mahendra C. Shah (supra) (Guj) has deleted the penalty. The Hon'ble Allahabad High Court in the case of Radha Kishan Goel (supra) has been pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the illiterate, to be specific and to the point regarding the conditions stipulated by exception No.2 while making statement u/s 132(4) of the Income tax Act, 1961. The view taken by the Tribunal as well as the Allahabad High Court to the effect that even if the statement does not specify the manner in which the income is derived, if the income is declared and tax thereon paid, there would be substantial compliance not warranting any further denial of the benefit under exception No.2 in Explanation 5 is commendable. 13. In the present case before us during the course of search at the residential premises of the assessee on 4.3.2010 certain documents relating to the transactions in properties undertaken by the assessee were found and seized as per page Nos. 4 5 of Annexure A3 in SR4. As per such papers the assessee had an outstanding sum of ₹ 3 crore and ₹ 6 crore from various person which was duly disclosed as additional income for asstt. year 2010-11 while making statement u/s 132(4) of the Act. In addition, as per page No. 6 of Annexure A3 in SR4 the assessee had paid in cash a sum of ₹ 17,86,57,781/- for purchase of land by Bhushan Steel Limited (h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the contents of this paper are written by me only. The notings on this paper depicts the fact that I have advanced certain amounts to some person on different dates. The details of which is furnished below: List of advances outstanding on 31.01.2010 Atma Ram 11.0 Cr Shiv Prakash 15.0 Cr Devender Kumar 17.0 Cr Prem Singh 6.0 Cr Kundan Singh Negi 9.5 Cr Prembir Singh 5.5 Cr Sureinder Singh 5 Cr 69.0 Cr This is the amount given by me to the above persons during the current financial year outstanding as on 31.01.2010. Q.6 What is the source of this amount of ₹ 69 Crores? Ans. The above amount of ₹ 69 crores is my unaccounted income for the current financial year generated from undisclosed sources. By means of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land by M/s Bhushan Steel Limited however, at the time of statement recorded it was inadvertently mentioned as M/s Bhushan Energy Ltd., which was also declared as additional income for A.Y 2010-2011 while making a statement u/s 132(4) of the Income-tax-Act, 1961. (2) As per the statement recorded during the course of search the Assessee himself had admitted that he had entered into various forward/speculative transactions and also transactions related to properties during the period from 1/4/2009 to 4/3/2010 i.e. Financial Year 2009-2010 relevant to Assessment Year 2010-2011. The said transactions were carried out in an unorganized manner and neither any accounting records nor any documentary evidence/support in respect of transactions/activities carried out were maintained. The only documentary evidence in respect of the said transaction was as per the page Nos. 4, 5 6 of Annexure-A-3 in SR-4 and no other detailed record of transactions were either maintained or preserved. Keeping in view the situation mentioned above, the income of ₹ 125,00,000/- arising out of the said transactions was declared in the statement re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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