TMI Blog2017 (7) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... cided against revenue - TAX APPEAL NO. 434 of 2017 - - - Dated:- 24-7-2017 - MR. AKIL KURESHI AND MR. BIREN VAISHNAV, JJ. For The Appellant : Mrs Mauna M Bhatt, Advocate ORAL ORDER ( PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 21.11.2016 raising following question for our consideration: Whether the Appellate Tribunal erred in law and on facts in deleting the penalty of ₹ 30,54,750/- u/s. 271 AAA of the Act levied by the Assessing Officer? 2. Brief facts are as under: A search action under section 132 of the Income Tax Act ['the Act' for short] was carried out in the group cases of the respondent-assessee on 08.12.2009. During such search, the assessee had made disclosure of ₹ 3,05,47,400/- as undisclosed income. Subsequently, the return of income was filed in response to notice under section 153A of the Act declaring total income of ₹ 3,11,74,590/-. The assessee had also offered the income admitting the statement recorded under section 132(4) of the Act for taxation in the return filed for the assessment year 2010-11 and tax along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 5A w.e.f 01.06.2007. Under this Explanation 5, prevailing at the relevant time, an assessee could avoid payment of penalty on the assessee being found to be the owner of any money, bullion, jewellery or other valuable article or thing acquired by undisclosed income, if in the course of search, the assessee made a statement under sub section (4) of section 132 admitting acquisition of such asset out of his income not disclosed in the return and also specifies in the statement the manner, in which, such income has been derived and pays the tax together with interest in respect of such income. 7. To avoid penalty, with the aid of Explanation 5 therefore, the assessee had to make a statement under sub-section (4) of section 132 admitting such undisclosed income and specify in such statement the manner, in which, such income was derived and to pay tax tax, if any, on such income. 8. This provision came-up for consideration before Allahabad High Court in case of Commissioner of Income Tax vs. Radha Kishan Goel reported in 278 ITR 454. The Revenue was in appeal before the High Court challenging judgement of the Income Tax Appellate Tribunal. Grievance of the Revenue was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved by making the statement admitting the non-disclosure of money bullion, jewellery etc. Thus, we are of the opinion 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 the absence of anything to the contrary. Therefore, mere nonstatement of manner in which such income was derived would not make the Explanation 5 (2) inapplicable. 9. Similar situation arose before this Court. Division Bench in case of Commissioner of Income Tax vs. Mahendra C Shah reported in 299 ITR 305 adopted the same logic as that of the Allahabad High Court and observed as under: 15. In so far as the alleged failure on the part of the assessee to specify in the statement under Section 132(4) of the Act regarding the manner in which such income has been derived, suffice it to state that when the statement is being recorded by the authorized officer it is incumbent upon the authorized officer to explain the provisions of Explanation 5 in entirety to the assessee concerned and the authorized officer cannot stop short at a particular stage so as to permit the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions enabling the assessee to avoid such a penalty are entirely different as compared to Explanation 5 to section 271. 12. Sub section (1) of section 271AAA provides for a penalty in addition to tax at the rate of ten percent of the undisclosed income in case where the search has been initiated under section 132 of the Act on or after 1st day of June 2007 but before 1st day of July 2012. Such penalty may, however, be avoided if the conditions specified under sub section (2) are satisfied which are as under: ( 2) Nothing contained in sub section (1) shall apply if the assessee- ( i) in the course of the search, in a statement under sub section (4) of section 132 admits the undisclosed income and specifies the manner in which such income has been derived; ( ii) substantiates the manner in which the undisclosed income was derived; and ( iii) pays the tax, together with interest, if any, in respect of the undisclosed income. 13. Sub section (2) of Section 271AAA thus while retaining the other requirements of avoiding penalty as provided in clause (ii) of Explanation 5 has now introduced an additional requirement of the assessee having to substa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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