TMI Blog2016 (5) TMI 1526X X X X Extracts X X X X X X X X Extracts X X X X ..... statement recorded under section 132(4) of the Income Tax Act. We have perused the assessment order. AO has nowhere made a mention of any seized material. Thus, on facts there is no disparity. Therefore, all the appeals of the assessee are allowed and delete the impugned penalty for the respective assessment years. - IT(SS)A.No.16 to 20/RJT/2013 - - - Dated:- 6-5-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER For the Assessee : Shri M.J. Ranpura, CA For the Revenue : Shri Yogesh Pandey, CIT-DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: The present five appeals are directed at the instance of the assessee against the common order of the ld.CIT(A)-IV, Ahmedabad dated 18.7.2013 passed in the Asstt.Years 2004-05 to 2008-09. 2. Solitary grievance of the assessee is that the ld.CIT(A) has erred in confirming the following penalties for the respective assessment years: Asstt.Year Penalty levied 2004-05 ₹ 2,36,405/- 2005-06 ₹ 79,560/- 2006-07 ₹ 1,29,196/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brief note which reads as under: 2. The issue under consideration is imposition of penalty u/s 271(l)(c) of the I.T.Act when assessee has filed a return of income in response to notice u/s 153 A where the total income declared includes voluntarily disclosed income which was not included in the regular return filed earlier u/s 139 of the I.T.Act. The other facts are that such disclosure was made after the search was conducted u/s 132 of the I.T.Act in the premises of the assessee and the assessment order or the penalty order do not specifically relate the disclosure to any asset or document seized during the search. Hon'ble ITAT-Rajkot Bench has allowed an appeal against the imposition of penalty u/s 271(l)(c) of the I.T.Act under similar circumstances in case of Shri Mansukhbhai R. Sorathia vs. JCIT IT(SS)- 46/Rjt/2012 in the decision dated 04-11-2015. The finding of this decision is as under: To our mind inference of availability of money, bullion or assets embedded in the entries cannot be drawn from the statement of the assessee . They should have been found in physical form and pertaining to these years, only then, deeming fiction of concealment would trigger. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of imposition of penalty under the main section of 271(l)(c) when a return with higher income is filed after the search in comparison to the original return. These decisions show that such situation does not warrant invoking of Explanation 5A or 5 to section 271(l)(c) at all. Hon'ble ITAT Rajkot has only decided the issue of non triggering of Explanation 5A to section 271(l)(c) in a particular situation. Hon'ble ITAT Rajkot did not decide the issue whether the penalty can be levied under the main section 271(l)(c) itself when the original return is inaccurate and it concealed income. Therefore, it is submitted that the decision of Hon'ble ITAT-Rajkot in case of Shri Mansukhbhai R. Sorathia vs. JCIT IT(SS)- 46/Rjt/2012 is incomplete and incorrect. Therefore the above mentioned decisions and the decisions mentioned in the order of CIT(A) should be followed. 8. With the assistance of the ld.representatives, we have gone through the record carefully. The sole issue requires to be adjudicated by us is whether the additional income disclosed in the return filed in response to the notice under section 153A of the Act was a voluntary disclosure of income with a view to bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the 85[Principal Chief Commissioner or] Chief Commissioner or 85[Principal Commissioner or] Commissioner before the said date ; or (2) he, in the course of the search, makes a statement under sub-section (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub-section (1) of section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income. 7. The ld. Counsel for the assessee relied upon the judgment of the Hon ble Gujarat High Court in Income Tax Appeal No.1181 to 1185 of 2010 in the case of Kirit Dayabhai Patel Vs. ACIT. Copy of this decision has been placed on the record. The Hon ble Court while construing the meaning of Explanation 5 has put reliance upon the decision of the Hon ble Supreme Court in the case of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A and Section 271AAA read 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 assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . 8. 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 before us are the Asstt.Years 2008-09 and 2009-10, the due date for filing of the return for the Asstt.Year 2009-10 was expired before the search acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the notice under section 153A, the assessee disclosed some additional income voluntarily, would he be deemed to have concealed the income for visiting him with penalty under section 271(1)(c) of the Act ? The ld.Revenue authorities had drawn inference that since the assessee has not disclosed additional income in the original returns, meaning thereby, it is to be assumed that they have disclosed this amount only when some incriminating material was found. To our mind this assumption ought to be supported with reference of that incriminating material. Let us see the finding in the assessment order. 10. We have perused the assessment order of Shri Mansukhbhai R. Sorathia in the Asstt.Year 2008-09. All other assessment orders are also similarly worded. It is a very brief assessment orders running one-and-half pages. In the first page, the ld.AO has narrated procedural aspect about the search action, issuance of notice and filing of the return, service of notice under section 143(2) etc. In the next page finding of the AO read as under: 2. The assessee is engaged in the business of fabrication and engineering job work and also derives income from Agricultural activities, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized during course of search cannot be considered as books of account maintained by the assessee for the purpose of immunity to be granted to him under the provisions of Explanation 5 to section 271(1)(c) - Dr T P Kulkarni Vs CIT (2003) 86 ITD 696 (Mum). It has also been held that Only books of account maintained in the regular course can make the assessee eligible for grant of immunity from penalty and not just any of such books, which have not been maintained in regular course of business - Brij Lal Goyal Vs CIT (2004) 88 ITD 413 (Delhi). 12. In this background, if we appreciate the evidences available on the record, then it would reveal the whole case of the Revenue for visiting the assessee with penalty is based on the statement of Shri Jayantilal R. Sorathia recorded during the course of search. We have extracted the relevant part of the statement in the foregoing paragraphs of this order. The evidentiary value of such statement has been explained in various authoritative pronouncements. Let us first take note of section 132(4) of the Act. The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial. Such confessions have been retracted and then the addition could not withstand the scrutiny of the higher appellate authority, because no material was found supporting such addition. 15. An issue whether addition solely on the basis of statement u/s.132(4) can be made was considered by the Hon ble Jurisdictional High Court in the case of Kialashben Manharlal Chokshi Vs. CIT, 220 CTR (Guj) 138. In this case, search was conducted upon the assessee under section 132 of the Income Tax Act on 4.11.1988. The statement of the assessee was recorded under section 132(4) of the Act. He made disclosure of ₹ 7 lakhs. Later on, in January, 1989, the assessee retracted from the disclosure and stated the disclosure of ₹ 50,000/- was acceptable to him. The ld.AO made an addition of ₹ 7 lakhs on the basis of his statement and observed that the retraction was made after a lapse of 2 months. The assessee did not have any reason for retracting from the disclosure. The ld.First Appellate Authority concurred with the AO and confirmed the addition of ₹ 7 lakhs to his income. The Tribunal has also confirmed the addition by observing that there was nothing on record which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,we are of the considered opinion that the view taken by the Tribunal is just and proper. We are not convinced with the submissions made by Mr. Mehta, learned advocate for the appellant that the Tribunal has not given cogent reasons. Therefore, the answer to the first question would be against the Revenue and in favour of the assessee. The second question will also enure for the benefit of the assessee as from the record it is clear that other concerns were not Benami concerns of the assessee. 7. For the forging reasons, the present appeal is dismissed. Accordingly, both the questions which were referred to this Court are answered in favour of the assessee and against the revenue. 17. Had this statement been retracted by the assessee, and they have not offered this undisclosed income, forget to take action of levying the penalty, even additions would not have been sustained. The inference of ownership of any money, bullion, jewellery or other valuable articles, to our mind, ought not to be based on this statement. When the assessees have taken specific plea that no money, bullion or jewellery or income based on any entries for these two assessment years was found during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of existence of money, bullion, jewellery or valuable articles or entry. As far as second fold of submission raised by the ld.CIT(DR) in the written submissions is concerned, we find that the case of the assessee does not fall under the main provision. There is no addition to the income of the assessee. Returned income has been accepted as it is. Only by virtue of Explanation-5, this additional income declared by the assessee can be categorized under the deemed concealment. In the main provision, the case of the assessee cannot be brought. As far as facts in the present case are concerned, they are identical to the case of Shri Mansukhbhai R. Sorathia Vs. JCIT (OSD)(supra). The assessee has placed on record copy of the statement recorded under section 132(4) of the Income Tax Act. We have perused the assessment order. The AO has nowhere made a mention of any seized material. Thus, on facts there is no disparity. Therefore, respectfully following the order of the ITAT in the case of Shri Mansukhbhai R. Sorathia (supra), all the appeals of the assessee are allowed and delete the impugned penalty for the respective assessment years. 10. In the result, all the appeals of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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