TMI Blog2006 (8) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 of 2005 : The appellant (hereinafter described as "the assessee"), has approached this court, by filing the present appeal, challenging order dated April 12, 2005, passed by the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (for short "the Tribunal"), in I. T. A. No. 79/ASR/2004 for the assessment year 1993-94, raising the following substantial question of law: "Whether under the facts and circumstances of the case, the Tribunal was justified in upholding the levy of penalty under section 271(1)(c) to the extent of Rs. 4,42,928 while interpreting Explanation 5 to section 271(1)(c) for the assessment year 1993-94?" Briefly, the facts of the case are that search and seizure operation was carried out at the residential and business premises of the assessee, who was in the business of property dealing, on March 26, 1993. During the course of search, a large number of books of account and other incriminating documents were found from the business as well as residential premise. Undisclosed cash and jewellery were also found and seized. The statement of the assessee under section 132(4) of the Income-tax Act, 1961 (for short "the Act"), was also recorded wherein the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dictional Income-tax Appellate Tribunal but the same being not before the Assessing Officer the claim of the appellant is not adjudicated. In the written submissions, the appellant has mentioned that the total tax worked out by the Department was Rs. 4,21,498 but the said fact is factually incorrect because total tax along with the interest payable which was worked out as a result of the section 143(1)(a) order stood at a sum of Rs. 6,94,558 and after considering the self-assessment tax of Rs. 2,70,000 and even for the time being after treating the seized cash of Rs. 1,90,000 as advance tax the appellant defaulted in clearing the tax along with interest on the amount so surrendered. One of the basic conditions of Explanation 5 having not been complied with, therefore, I find merit in the order of the Assessing Officer and the penalty worked out at a sum of Rs. 4,42,928 is confirmed." Before the Tribunal to explain the non-payment of tax and interest along with the return, the only plea raised by the assessee was that he did not have sufficient funds to pay the tax. The Tribunal also dismissed the appeal of the assessee by recording the following observations: "We have considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n furnished before the said date or, where such return has been furnished before the said date, such income has not been declared therein; or (b) for any previous year which is to 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 transactions resulting in such income are recorded, (i) in a case falling under clause (a), before the date of the search; and (ii) in a case falling under clause (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Chief Commissioner or Commissioner before the said date; or (2) he, in the course of the search, makes a statement under subsection (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2,50,000 before the due date for filing of the return, in addition to Rs. 3,060 as tax deducted at source and requested for adjustment of Rs. 1,90,000 in the seized amount against the advance tax, making a total of Rs. 4,43,060. The rest of the amount was paid by the assessee later on, i.e., Rs. 1,20,000 on November 17, 1994, and Rs. 84,000 on January 31, 1996. Another sum of Rs. 50,000 was paid on March 29, 1996, after the assessment having been framed on March 26, 1996. Further amount was paid thereafter in February, 2000 and January, 2003. Section 271(1)(c) of the Act provides for levy of penalty, inter alia, for concealment of particulars of income, which could be up to three times the amount of tax sought to be evaded. By adding Explanation 5 to section 271(1)(c) of the Act, a concession is sought to be given to an assessee, who during the course of search and seizure operation, is found to have concealed particulars of his income, in case he surrenders such income by making a statement during the course of search that such undisclosed money, bullion, jewellery or other valuable article or thing found at the time of search has been acquired by him out of his undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he High Court was that the amount of tax was paid before completion of assessment which should be held to be sufficient for invoking Explanation 5, supra. To support his argument, he relied upon a judgment of the Delhi High Court in Chhabra Emporium case [2003] 264 ITR 249 which was different on the facts. The High Court accepted the plea of the assessee by recording the following observations: "There is no dispute on the facts that search was contin,ued till August 1, 1987, and on August 1, 1987, in the statement, the assessee has disclosed a particular concealed income and surrendered it for the tax and tax has been paid along with interest. In these circumstances, the Tribunal has committed error in restoring the penalty order of the Assessing Officer." We respectfully do not subscribe to the view taken by the Rajasthan High Court for two reasons, namely, the facts in that case are distinguishable and secondly, there is no discussion on the issue. In our view, if immunity from penalty is to be availed of by the assessee by invoking the provisions of Explanation 5 to section 271(1)(c) of the Act, tax on the surrendered income along with interest, if any, is required to be pai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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