TMI Blog2016 (9) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... has held that where the entire tax and interest has been duly paid well within the time-limit for payment of notice of demand u/s 156 and well before the penalty proceedings were concluded, the assessee could not be denied immunity u/s 271AAA(2) only because the entire tax, along with interest, was not paid before filing of income tax return or, for that purpose, before concluding the assessment proceedings. We, thus, set aside the order of the ld. CIT (Appeals) and direct the AO to delete the penalty - Decided in favour of assessee. - ITA No. 1057/Del/2013 - - - Dated:- 5-8-2016 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Assessee : Sh. K. Sampath, Adv., Sh. Raja Kumar, Adv., Sh. K.C. Jain, Adv. For The Revenue : Sh. Ravi Jain, CIT DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: This appeal has been preferred by the assessee against the order dated 22/01/2013 passed by the ld. Commissioner of Income Tax(Appeals), Central, Gurgaon for AY 09-10, wherein the ld. Commissioner of Income Tax (Appeals) has confirmed the penalty of ₹ 5,804,925/- imposed u/s 271AAA of the Income Tax Act, 1961 (in brief T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to fulfill the conditions specified in sub-clause (ii) of sub-section (2) of section 271AAA of the Act which refers to the substantiation of the manner in which the undisclosed income has been derived. The AO was of the opinion that the assessee had not been able to produce any proof/documentary evidence with respect to any of the disclosure made by him under any head either during the assessment proceedings or during the penalty proceedings so as to prove that the undisclosed income could be corroborated with the evidence and that in absence of any such evidence/proof the assessee could not have immunity u/s 271AAA of the Act. Accordingly, the AO proceeded to impose a penalty of ₹ 45.50 lacs being 10% of the undisclosed income of ₹ 4.55 crores pertaining to advances given to various persons. On similar footing, the AO also held that the assessee had not been able to prove the source of making unexplained investments in the share capital amounting to ₹ 12,549,250/- and accordingly, imposed a penalty @ 10% on amounting to ₹ 1,254,925/- on this amount also. 2.4 Aggrieved the assessee preferred an appeal before the ld. CIT (Appeals). The ld. CIT(Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arily surrender the aforesaid amount as my income in good faith and I will pay the entire taxes subject to the condition that no penalty or prosecution proceedings be initiated against me. The surrender has been made in terms of section 271AAA of the Act. Question No. 24: I am showing you annexure A2 pages 7,9,11, 12, 14 and 16 which shows certain advances given to certain individuals on certain dates. Please state in whose hand these entries have been written and also explain the nature of these entries. Answer: These entries are in my hand writing and total of these entries is ₹ 4,55,00,000/-. This is the amount given by me as advance to various persons for the purchase of land/properties. Since I may not be able to explain the nature of these advances I hereby surrender in my name the aforesaid amount of ₹ 4,55,00,000/- as my additional income for the current year i.e. Financial Year 2008-09. This income has earned by me as commission out of dealing in land and properties. I promise to pay the taxes on additional income subject to the condition that no penalty or prosecution proceedings are initiated against me. The surrender has been made by me in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been accepted with a minor variation only which also is due to arithmetical error. 3.3 It was further submitted that in absence of any specific format/procedure described in the Act for specifying and substantiating the undisclosed income, the fact that the same had been accepted without any variation by the AO is by itself enough evidence that the assessee has substantiated the manner in which the undisclosed income has been derived. 4. The ld. DR submitted that u/s 271AAA(2) of the Act, the onus lies on the assessee to specify and substantiate the manner in which undisclosed income was derived. 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 substantiate its source. The ld. DR relied heavily on the findings recorded by the ld. CIT (Appeals) and submitted that the penalty has been rightly confirmed. 5. We have heard the rival submissions and perused the material on record. We find that the ITAT Delhi E Bench has discussed an identical issue before it at length in ITA No. 337/Del/2013 for AY 2010-11. In its decision dated 24th June, 2013, the coordinate Bench, in Paras 11 12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 was initiated before 1.6.2007 whereas u/s 271 AAA, the provisions therein are applicable in a case where search u/s 132 of the Act has been initiated on or after 1.6.2007 but before 1.7.2012. Thus the intention of the legislature is clear to this extent that in a case wherein search was initiated before 1.6.2007, provisions u/s 271(1) will be applicable and in search initiated after 1.6.2007 (but before 1.7.2012) provisions u/s 271 AAA of the Act will be applicable. These provisions are thus not applicable simultaneously but these are period specific. As discussed above, the only additional requirement for non attraction of penal provision u/s 271 AAA of the Act in comparison to this u/s 271(1) is that besides specifying the manner in which the admitted an undisclosed income has been derived, the assessee will also have to substantiate this manner. In view of this relative study of both the provisions when we go through the decisions relied upon by the Ld. AR, we find that in the case of ACIT vs. GEBILAL Kanhialal (HUF) (supra) before the Hon ble Supreme Court the Karta of the asseseee HUF had made a statement u/s 132 (4) admitting concealed income in the course of search and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pliance with Explanation 5 (2) to section 271(1) and no penalty would be leviable. Similarly in the case of CIT vs. Mahendra G. Shah before the Hon ble Gujarat High Court the basic requirement for immunity form the levy of penalty under Explanation 5 to section 271(1) of the Act has been discussed as per which the first requirement is disclosure in statement made u/s 132(4) and payment of tax before the assessment was completed. Following ratio laid down in this decision of Hon ble Gujarat High Court, Pune Bench of the Tribunal in the case of DCIT vs. Shri Inderchand Surajmal Bothra (supra) wherein penalty u/s 271(1) was levied held that it is not required to specify the manner in which the income was earned in respect of the amount offered to tax in the return of income filed to search action by paying taxes thereon for adopting immunity from penalty under Explanation 5 of section 271(A) (C) of the Act: The cuttak Bench of the Tribunal in the case of Shri Ashok Kumar Sharma (HUF) and others vs. DCIT (supra) wherein penalty u/s 271 AAA was levied the assesee had disclosed concealed income while giving statement u/s 132 of the Act during the course of search and had paid the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... othing to the contrary in the statement recorded u/s 132(4) of the Act in the absence of any specific statement about the manner in which such income has been derived, it can be inferred that such undisclosed income was derived from the business which he was carrying on or from other sources. The object of the provision is achieved by making the statement admitting the non-disclosure of money, bullion, jewellery etc. It was thus held that much importance should not be attached to the statement about the manner in which such income has been derived. It can be inferred on the facts and circumstances of the case, in absence of anything to the contrary. Therefore, mere non statement of the manner in which such income was derived would not make Explanation 5 (2) inapplicable, held the Hon ble High Court. 12. The Hon ble Gujarat High Court in the case of CIT vs. Mahendra C. Shah has been pleased to held as under: In so far as the alleged failure on the part of the assessee to specify in the statement u/s 132(4) of the Income Tax Act 1961 regarding the manner in which such income has been derived, suffice it to state that when the statement is being recorded by the authorize ..... X X X X Extracts X X X X X X X X Extracts X X X X
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