Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2018 (3) TMI 950

of search as well as assessment proceedings - CIT-A deleted the addition - Held that:- fails to rebut the CIT(A)ís clinching finding that no such query of manner of deriving the impugned undisclosed income had been put to the assessee by the authorized officer whilst recording the search statement in question. We notice in this backdrop that in recent judgment in PCIT vs. Mukeshbhai Ramanlal Prajapati [2017 (7) TMI 966 - GUJARAT HIGH COURT] holds that it is incumbent for the authorized officer to question the assessee about the relevant manner of having derived the undisclosed income in question and then only the onus shifts on the tax payer to substantiate the same. - The field even in the context of sub-section (2) of section 271AAA of the Act. It is only when the officer of the raiding party recording the statement of the assessee under section 132(4) of the Act elicits a response from the assessee's this requirement, the assessee's responsibility to substantiate the manner of deriving such income would commence. When the base requirement itself fails, the question of denying the benefit of no penalty would not arise. - Decided against revenue - ITA No. 1552/Ahd/2016 - Dated .....

X X X X X X X

Full Text of the Document

X X X X X X X

/s 132(4) of the Act. The assessee has argued that in the absence of specific opportunity/questions by the authorized officer during recording of his statement u/s 132(4) of the Act, either to specify the manner in which the declared unaccounted income was derived or to substantiate the same, the assessee cannot be penalized, holding that he had failed to comply with the provisions of section 271AAA(2)(i) and 271AAA(2)(ii) of the Act. I have perused assessee's statement u/s 132(4) and have also perused the assessment records of the assessee for the relevant A.Y. and have noted that no specific questions were ever asked by the Authorised Officer during the recording of assessee's statement u/s 132(4) of the Act, requiring the assessee to specify the manner in which the declared unaccounted income was derived or to substantiate the same. Even the Assessing Officer has failed to provide any specific opportunity to the assessee requiring him to comply with the provisions of sub clauses (i) and (ii) of section 271AAA(2) of the Act. 5.5 The provisions of section 271 AAA read as under- [Penalty where search has been initiated. 271AAA. (1) The Assessing Officer may, notwithstanding .....

X X X X X X X

Full Text of the Document

X X X X X X X

ate of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted.] 5.6 Hon'ble ITAT, Ahmedabad has, in the case of DCIT vs Rajendra Prasad Dokania (2012) 32 CCH 0260 AhdTrib, held that in a case where the assessee was neither asked by the Authorised Officer nor by the Assessing Officer at the stage of either recording of statement u/s 132(4) or at the time of assessment proceedings, to substantiate the manner in which the undisclosed income was derived, the assessee will be deemed to have discharged his onus of substantiating the manner in which the undisclosed income was derived and it cannot be said during penalty proceedings that the assessee had not fulfilled this condition. 5.7 Hon'ble ITAT, Chandigarh has, in the case of Sunil Kumar Bansal vs DCIT [2015] 62 taxmann.com 78 (Chandigarh-Trib), held that where no question was asked during statement recorded u/s 132(4), in respect of manner of earning income surrendered, assessee could not be expected to substantiate the same later on and penalty could not be levied u/s 271AAA. Similarly, Hon'ble Delhi ITAT has, in the case of Neerat .....

X X X X X X X

Full Text of the Document

X X X X X X X

ing derived the undisclosed income in question and then only the onus shifts on the tax payer to substantiate the same. Their lordships operative portion reads as under: 5. From the perusal of the orders on record, it becomes clear that the assessee had admitted the undisclosed income in his statement recorded under section132(4) of the Act during the survey. The assessee had owned up to such income in the return filed and had also paid tax and interest on such sum. The Assessing Officer imposed a penalty on the ground that the assessee failed to substantiate the manner of earning the income. However, CIT (Appeals), as noted, concluded that no question was asked by the departmental representatives (in the course of recording the statement under section 132(4) of the Act) regarding the manner of earning such income. It was, on this basis, that the CIT (Appeals) as well as the Tribunal found that the Assessing Officer committed an error in imposing penalty. 6. As is well known, section 271, providing for penalty for concealment of income etc., contained an Explanation 5 inserted w.e.f. 01.10.1984 and held the field till introduction of Explanation 5A w.e.f 01.06.2007. Under this Expl .....

X X X X X X X

Full Text of the Document

X X X X X X X

ce are blocked. During the course of search person is so tortured, harassed and put to a mental agony that he looses its normal mental state of mind and at that stage it can not be expected from a person pre-empt the statement required to be given in law as a part of his defence. 12. In these circumstances, we are of the view that under Section 132(4) of the Act unless authorised officer puts a specific question with regard to the manner in which income has been derived, it is not expected from the person to make a statement in this regard and in case if in the statement the manner in which income has been derived has not been stated but has been stated subsequently, amounts to the compliance of Explanation 5(2) of the Act. We are also of the opinion that in case if there is nothing to the contrary in the statement recorded under Section 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 source. The object of the provision is achieved by making the statement admitting the non-disclosure of money bullio .....

X X X X X X X

Full Text of the Document

X X X X X X X

ecording of the statement under section 132(4) of the Act in the context of the requirement of the assessee to disclose the manner in which the undisclosed income was derived in order to avoid penalty. The High Court in case of Commissioner of Income Tax vs. Mahendra C.Shah , in particular, observed that considering the social environment, it is not possible to expect from an assessee to be specific and to the point regarding the conditions stipulated by exception No.2 while making statement under section 132(4) of the Act. The Court went on to observe that if the income is declared and tax is paid thereon, there would be substantial compliance. 11. It is this principle which the CIT (Appeals) and the Tribunal have applied in the present case. As noted, CIT (Appeals) was specific that no question was put to the assessee while recording statement under section 132 regarding the manner of deriving the undisclosed income. Counsel for the Revenue, however, vehemently contended that in the present case, the penalty was being imposed under section 271AAA of the Act and the statutory provisions enabling the assessee to avoid such a penalty are entirely different as compared to Explanation .....

X X X X X X X

Full Text of the Document

X X X X X X X

claim would arise. If, as in the present case, the Revenue failed to question the assessee while recording his statement under section 132 (4) of the Act as regards the manner of deriving such income, the Revenue cannot jump to the consequential or later requirement of substantiating the manner of deriving the income. In the context of the requirement of the assessee specifying the manner of deriving the income the decision of this Court in case of Commissioner of Income Tax vs. Mahendra C. Shah (supra) would hold the field even in the context of sub-section (2) of section 271AAA of the Act. It is only when the officer of the raiding party recording the statement of the assessee under section 132(4) of the Act elicits a response from the assesse's this requirement, the assessee's responsibility to substantiate the manner of deriving such income would commence. When the base requirement itself fails, the question of denying the benefit of no penalty would not arise. We therefore conclude that CIT(A) has rightly deleted the impugned penalty. Revenue s sole substantive ground as well as its main appeals fails. 4. This Revenue s appeal is dismissed. [Pronounced in the open Cour .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||