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2019 (4) TMI 615

y, bullion, jewellery during the search representing undisclosed income - HELD THAT:- AO has not made reference to any material found during the course of search which can suggest that additional incomes declared by the assessee are representing any money, bullion, jewellery or impounded any diary. It cannot be construed that some assets were found during the course of search representing that income which has been declared by the appellants. - Revenue cannot assume existence of seized material by holding that had the search not carried out, assessee would have not disclosed this income in response to section 153A notice. In respect of this assumption, there should be recovery of some assets, such money, bullion, jewellery or diary. No such things have been referred in these cases. Therefore, we allow all these appeals and deleted all the penalties impugned in these appeals. - Decided in favour of assessee. - ITA No. 2662 /Ahd/2017, ITA No. 2669, 2670 and 2671/Ahd/2017, ITA No. 2663 to 2668/Ahd/2017 - 8-4-2019 - Shri Rajpal Yadav, Judicial Member And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri A.L. Thakkar, AR For the Revenue : Shri O.P. Pathak,Sr.DR ORDER PER .....

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ssistance of the ld.representatives, we have gone through the record carefully. Explanation 5A and section 271AAA of the Act has a direct bearing on the controversy. Therefore, it is pertinent to take note of this clause, which reads as under: Explanation 5A.- Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of- (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and,- (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous year has expired but the asses .....

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the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted; (b) "specified previous year" means the previous year- (i) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date 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 . 6. A perusal of both these sections together would indicate that the immunity akin to Explanation 5 is available to the assessee under Explanation-5A also, if he fulfills the conditions narrated in section 271AAA. The Explanation appended to Section 271AAA provides the definition of undisclosed income and specified previous year. A perusal of the expression specified previous year would indicate that the year of search and immediately earlier year, if due date of filing of the return has not expired and income-tax return for such year has not been filed. Since the assessment years involved .....

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osed this amount only when some incriminating material was found. To our mind this assumption ought to be supported with reference of that incriminating material. 8. We have perused the assessment order. The AO has not made reference to any material found during the course of search which can suggest that additional incomes declared by the assessee are representing any money, bullion, jewellery or impounded any diary. In other words, it cannot be construed that some assets were found during the course of search representing that income which has been declared by the appellants. Somewhat similar and identical issue has been considered by the Hon ble Delhi High Court in the case of Pr.CIT Vs. Neeraj Jindal, 393 ITR 1. The following finding of Hon ble Delhi High Court is worth to note. It reads as under: 26. Now for the Revenue to invoke Explanation 5, it would have to prove that its requirements are clearly fulfilled in the present case. In order for Explanation 5 to apply, it is necessary that there must be certain assets (such as money, bullion etc.) found in the possession of the assessee during the search, and that the assessee must claim that such assets have been acquired by hi .....

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relevant assessment years i.e. AY 2005-06 and AY 2006- 07. xxxx xxxx xxxx 28. Basing its reasoning on this decision, the ITAT in the present case held that in the case of the assessee, the search was conducted on 11.01.2007 and cash of ₹ 5,26,530/- was recovered from the possession of the assessee; and so the cash was admittedly, not seized during the relevant assessment years in consideration before the Tribunal. In other words, while the assessee had surrendered undisclosed income, the cash was seized during search in A.Y 2007-2008, and not in the relevant assessment years. However, in the relevant assessment year under consideration in the instant case, the assessee made an addition of ₹ 21,65,932/- in the return filed pursuant to notice under section 153A. The ITAT held that Explanation 5 to section 271(1) of the Act could not be invoked in assessment years 2005-06 & 2006-07, which are under consideration in this case, merely on the presumption that the assessee might have been in possession of the seized cash throughout the period covered by the search assessments. The learned ITAT also held- "The income offered to tax u/s 153A for assessment years 2005- .....

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