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2016 (7) TMI 938 - GUJARAT HIGH COURT

2016 (7) TMI 938 - GUJARAT HIGH COURT - [2016] 387 ITR 177 - Penalty levied u/s.271(1)(c) - additional income disclosed in furtherance to section 153A notice - Held that:- In terms of explanation 5A, thus even in a case where during the search, the assessee is found to be the owner of any income based on any entry in the books of account or other documents or transactions, the penalty would attach, provided other requirements are fulfilled. This clause was not there in original explanation 5 whi .....

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have been levied. Looked from this angle, we do not find any error in the view of the Tribunal. For the reasons somewhat different from those recorded by the Tribunal, therefore, this tax appeal is dismissed. - Decided in favour of assessee. - TAX APPEAL NO. 976 of 2015 - Dated:- 18-7-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE APPELLANT : MR KM PARIKH, ADVOCATE FOR THE OPPONENT : MR TUSHAR P HEMANI, ADVOCATE, MS VAIBHAVI K PARIKH, ADVOCATE ORAL ORDER (PER : HONOURABLE MR.JUSTICE A .....

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penalty u/s.271(1)(c) of the Act? 2. Brief facts are that for the assessment year 2005-2006, the respondent assessee was subjected to search operation under section 132 of the Income Tax Act( the Act for short). Based on such investigation, proceedings under section 153A were initiated. Notice was issued on 30.11.2007 in compliance to which the assessee filed the return declaring total income of ₹ 2.13 crores (rounded off) as against the return of 6.93 lacs filed in the original return und .....

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d the penalty making the following observations : 6. We have heard both sides and gone through the case file. Relevant facts stand narrated hereinabove. The authorities below treat assessee's additional income declared of ₹ 2,06,48,692/- as a case of concealment and furnishing of inaccurate particulars of income u/s.271(1)(c) of the Act. The assessee reiterates the same in its grounds of appeal. The Revenue strongly supports the CIT(A)'s order. We find that the hon'ble jurisdic .....

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tion of ₹ 27,750/- ( supra). Therefore, we follow the jurisdictional High Court and delete the impugned penalty. Coming to the aforesaid residual addition, the case file reveals that the assessee had already disclosed its all necessary details so as to qualify for immunity u/s.271(1)(c) Explanation 5. The assessee's grounds challenging imposition of the impugned penalty succeed. 3. Learned counsel Shri Parikh for the department contended that in terms of explanation 5 of section 271(1) .....

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e Tax [Tax Appeal No.1181/2010 decided on 3.12.2014]. He further submitted that in any case the additional income pertained to the assessee's onmoney receipts and would not be covered by explanation 5. When explanation 5 itself did not apply, the question of granting immunity upon fulfillment of conditions contained therein would not arise. 5. Explanation 5 to section 271(1)(c) reads as under : [Explanation 5. Where in the course of a search under section 132 before the 1st day of June, 2007 .....

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come has not been declared therein; or (b) for any previous year which is end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of subsection (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, [unless,- (1) such income is, or the trans .....

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) 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.] 6. This section applies .....

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income furnished after the date of the search, the assessee would be liable to penalty, unless upon fulfillment of conditions contained in clauses (1) and (2) of the said explanation, the assessee can claim immunity. This explanation nowhere refers to any income based on any entry in any books of account or other documents or transactions. In other words, therefore, unless during the search, the assessee is found to be owner of any money, bullion, jewellery or other valuable article or thing, e .....

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m by utilising (wholly or in part) his income for any previous year; or (b) any income based on any entry in any books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and, (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous year has exp .....

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