TMI Blog2005 (4) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(2) - 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. - Therefore, mere non-statement of the manner in which such income was derived would not make Explanation 5(2) inapplicable. - Held that there is no error in the order of the Tribunal and the same is upheld. - - - - - Dated:- 21-4-2005 - Judge(s) : R. K. AGRAWAL., RAJES KUMAR. JUDGMENT The judgment of the court was delivered by Rajes Kumar J.- The Tribunal has referred the following question under section 256(1) of the Income-tax Act, 1961, for the opinion of this court relating to the assessment year 1989-90: "Whether, on the facts and circumstances of the case, the Income-tax Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case as all the ingredients of Explanation 5(2) were not fulfilled and consequently a penalty of Rs. 12,63,100 was imposed. The said penalty order was also confirmed by the Commissioner of Income-tax (Appeals) in an appeal filed by the assessee. The assessee filed the second appeal before the Tribunal. The Tribunal allowed the appeal and deleted the penalty. The Tribunal held that the provisions of Explanation 5(2) to section 271(1)(c) of the Act were fully attracted on the facts and circumstances of the case. Heard Sri A.N. Mahajan, learned standing counsel for the Revenue and Sri Shakeel Ahmad learned counsel for the assessee. Learned standing counsel submitted that Explanation 5 stood added under section 271(1)(c) of the Act by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee submitted that Explanation 5(2) should be read in totality and in the context of the object for which Explanation 5 has been added. He submitted that the object of Explanation 5 is not to allow opportunity to the assessee to disclose the money, bullion and other valuable articles or things found in his possession during the course of search in the return which is to be filed subsequently, however, by clause (2) of Explanation 5 immunity has been given in case, the assessee made the statement admitting that such money, bullion, jewellery or other valuable articles or thing acquired out of the income which is undisclosed to avoid further litigation and settle the issue on agreed basis. He submitted that in substance under Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income,- (a) for any previous year which has ended before the date of the search, but the return of income for such year has not been 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 incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Explanation.- For the removal of doubts, it is hereby declared that the examination of any person, under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act." From a perusal of Explanation 5 it is evident that in circumstances which otherwise did not attract the penalty provisions of section 271(1)(c) of the Act, now a deeming provision was introduced as to attract the penalty provisions to those cases as well. But an exception is provided in clause (2) of Explanation 5 where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 course of search person is so tortured harassed and put to a mental agony that he loses his normal mental state of mind and at that stage it cannot be expected from a person to pre-empt the statement required to be given in law as a part of his defence. In these circumstances, we are of the view that under section 132(4) of the Act unless the authorised officer puts a specific question with regard to the manner in which income has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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