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Commissioner of Income Tax Versus Nem Kumar Jain

[2006] 202 CTR 328 - IT Ref. No. 84 of 1998 - Dated:- 10-5-2005 - R. K. Agrawal And Rajes Kumar, JJ. JUDGMENT The Tribunal, New Delhi, has referred to following two questions of law under s. 256(2) of the IT Act, 1961 (hereinafter referred to as 'the Act') for opinion of this Court : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the condition in cl. (2) of Expln. 5 to s. 271(1)(c) of the IT Act, 1961 regarding speci .....

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llows : Assessee-respondent (hereinafter referred to as "assessee") is assessed to tax in the status of individual. On 16th July, 1987, the business and residential premises were searched by the income-tax officials under s. 132 of the Act. In the statement recorded under s. 132(4) of the Act during the course of search, the assessee surrendered a sum of ₹ 35 lakhs as an undisclosed income. On 28th April, 1989, assessee filed his return disclosing an income of ₹ 6,75,379 pl .....

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not accepted. Penalty proceedings under s. 271(1)(c) of the Act were initiated. Assessee filed reply, which did not favour to the assessing authority. A sum of ₹ 2,50,000 was levied towards penalty. Before the assessing authority assessee claimed that in the statement under s. 132(4) of the Act the amount was surrendered, therefore, in view of the Expln. 5(2) to s. 271(1)(c) of the Act, penalty could not be levied. Assessing authority has not accepted the plea on the ground that assessee s .....

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t the manner in which the income has been derived has not been stated. Being aggrieved by the order of CIT(A), assessee filed second appeal before the Tribunal. Tribunal allowed the appeal and quashed the penalty. Tribunal held as follows : "We find force in the contention raised on behalf of the assessee in this regard. There is no gain saying the fact that an amount of ₹ 36 lakhs was disclosed. It is also on record that the assessment for the year under consideration stood fully cov .....

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h April, 1995 and order in ITA No. 750/All/1992, dt. 17th April, 1995 as also the copy of the order in ITA Nos. 699 and 700/All/1999 for asst. yrs. 1984-85 and 1988-89 dt. 28th April, 1995 were filed in which under similar circumstances penalty levied under s. 271(1)(c) has been cancelled. Circumstances remaining the same, we hold in this case also that ingredients of s. 271(1)(c) were not satisfied in this case and the penalty levied by the Departmental authorities stands cancelled." 3. He .....

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and, hence, Tribunal erred in deleting the penalty. 5. We do not agree with the submission of learned standing counsel. Clause (2) of Expln. 5 to s. 271(1)(c) of the Act came up for consideration before the Division Bench of this Court in IT Ref. No. 111 of 1993, CIT vs. Radha Kishan Goel decided on 21st April, 2005 [reported at (2006) 200 CTR (All) 300'Ed.]. This Court held as follows : "From a perusal of Expln. 5 it is evident that in circumstances which otherwise did not attract the .....

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ncome to be furnished before the expiry of time specified in s. 139 of the Act 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. The exception appears to be to provide an opportunity to the assessee to make a clean and fair confession and to surrender his income and also to deposit the tax and interest thereon which may result in an agreed assessment. The paramount intention appears to .....

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fore, it is for the authorised officer to record the statement in his own way. Therefore, it is not expected from the person to state those things, which are not asked by the authorised officer. It is a matter of common knowledge, which cannot be ignored that the search is being conducted with the complete team of the officers consisting of several officers with the police force. Usually telephone and all other connections are disconnected and all ingress and egress are blocked. During the cours .....

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