TMI Blog2016 (5) TMI 1547X X X X Extracts X X X X X X X X Extracts X X X X ..... - - Dated:- 4-5-2016 - H. S. Sidhu (Judicial Member) And Prashant Maharishi (Accountant Member) For the Appellant : R. S. Negi, Senior Departmental Representative For the Respondent: Surendra Kumar, FCA ORDER H. S. Sidhu (Judicial Member) 1. The Revenue has filed the present appeal against the impugned order dated July 5, 2013, passed by the learned Commissioner of Income-tax (Appeals-I), New Delhi, on the following grounds : 1. The order of the learned Commissioner of Income-tax (Appeals) is not correct in law and facts. 2. On the facts and in the circumstances of the case the learned Commissioner of Income-tax (Appeals) has erred in deleting the penalty imposed by the Assessing Officer under section 271AAA of the Income-tax Act amounting to ₹ 2 crores on the surrender of ₹ 20 crores, as the assessee had not sustained the manner in which the undisclosed income was derived with any corroborative evidence. 3. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. 2. The facts in brief are that a search and seizure action under section 132 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be sustained. 6. On the contrary, during the hearing, the learned authorised representative of the assessee stated that the learned Commissioner of Income-tax (Appeals) had deleted the penalty in dispute by following the various Income-tax Appellate Tribunal orders and also following his own order dated December 17, 2012, passed in the case of Sh. Neeraj Singal (for the assessment year 2010-11 Appeal No. 51/2013), who belongs to the same group of cases, i.e., Bhushan Steel group of cases. He drew our attention towards paragraphs 3.1 to 3.5 of the impugned order at pages 2 to 14. He further stated that the issue in dispute is also covered by the various decisions rendered by the Income-tax Appellate Tribunal as mentioned in the learned Commissioner of Income-tax (Appeals)'s order in sub-paragraph 17 of paragraph 3.1 of the impugned order and requested that the order of the learned Commissioner of Income-tax (Appeals) may be upheld and the Revenue's appeal may be dismissed. 7. We have heard the both parties and perused and considered the relevant records available with us especially the impugned order passed by the learned Commissioner of Income-tax (Appeals). We fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total disclosure of ₹ 20,00,00,000) but she has not fulfilled the second condition, i.e., the assessee has not substantiated the manner in which the undisclosed income was derived with any corroborative evidence. (b) The assessee has not fulfilled the first part of the first condition and the second condition so as to get immunity from penalty under section 271AAA in so far as the disclosure of ₹ 4,00,00,000 (out of the total disclosure of ₹ 20,00,00,000) is concerned, she has not disclosed it during statement recorded under section 132(4) but has disclosed ₹ 4,00,00,000 only after the search, i.e, during the post-search proceedings. Also she has not substantiated the manner in which the undisclosed income was derived with any corroborative evidence. In view of the above discussion, I am satisfied that the asses see is liable for penalty under section 271AAA at 10 per cent. for the undisclosed income of ₹ 20,00,00,000 for the assessment year 2010- 11. Hence, a penalty of ₹ 2,00,00,000 is hereby imposed. In this connection, the following submissions are being made for and on behalf of the appellant : '(1) A search under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lalit Singh 6,00,00,000 2. Sh. Mam Chand 5,00,00,000 3. Sh. Prithwi Singh 5,00,00,000 Total 16,00,00,000 The above amounts were advanced to the above persons in the financial year 2009-10. Question 6 What is the source of the above advance of ₹ 16 crores. Answer The above amount of ₹ 16 crores is my unaccounted income for the financial year 2009-10 relevant for assessment year 2010-11. I accept the above mentioned amount of ₹ 16 crores as my undisclosed income for the assessment year 2010-11 and on which tax is due will be paid in due course of time. The surrender is being made subject to no penal action under section 271(1)(c).' (5) The matter relating to specifying the source of such additional income and the manner in which it was earned was also raised in the Investigation proceedings before the learned Assistant Director of Income-tax (Inv) Unit VI(3) and before the learned Assistant Commissioner of Income-tax, Central Circle-13, New Delhi, during the assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintained in the normal course relating to such previous year ; or (B) otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of search ; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in 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. (9) The above section, inserted into the Income-tax Act, 1961, by the Finance Act, 2007, provides that, in a case where search has been initiated under section 132 on or after 1st day of June, 2007, the appellant shall be liable to pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent. of the undisclosed income of the specified previous year. However, the said penalty is not leviable, if an appellant in a statement recorded during the course of search under section 132 of the Income-tax Act, 1961. admits the undisclosed income ; specifies and substantiates the manner in which it has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned gets settled in the appellant's favour. It would be relevant to mention here that given the fact that it is a search case, the question of specifying and substantiating the manner in which the undisclosed income has been derived can be somewhat general and omnibus and no precise calculations or computations can be done with reference thereto. (12) An overview of the provisions of section 271AAA of the Act will make it clear that no penalty is leviable in case an appellant discloses and substantiates the manner in which the undisclosed income was earned and pays the taxes due thereon with interest. In the instant case the appellant had disclosed the manner in which the income has been earned and the same has also got substantiated with reference to the documents seized during the course of search and accordingly the question of levy of penalty under section 271AAA of the Income-tax Act, 1961, gets answered in the negative. (13) It would also be worthwhile to mention here that the question of specifying and substantiating the manner in which the income has been earned also gets emphatically answered in the affirmative upon a review of the entire assessment records a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from water tanker supply business. In the return of income filed under section 153A, the assessee declared the total income consisting additional income of ₹ 10,00,000 declared under section 132(4), of the Act. The Assessing Officer has assessed the total income of the asses see for the assessment year by accepting the income returned without making any addition. The Assessing Officer has levied the penalty stating that the assessee cannot be given benefit of Explanation 5 to section 271(1)(c) of the Act as the clause (ii) of Explanation 5 below section 271(1)(c) exempts only that part of the income from the penal provision, which is covered by statement under section 132(4), where the assets have been acquired by the assessee out of his income which is not disclosed in the return of income to be furnished before the expiry of the time prescribed in section 139(1) and specified in the statement in the manner in which such income has been derived. We thus find that the Assessing Officer has levied the penalty mainly with this allegation that the assessee has not specified in its statement under section 132(4) the manner in which such income had been derived. We do not find su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the hon'ble Income-tax Appellate Tribunal are topical and relevant : 'We have heard the rival contentions and perused the material available on record. On consideration of the facts and circumstances of the case, we are inclined to hold that no definition could be given to the specified manner insofar as the very statement on oath under section 132(4) specifies the manner on which the assessee is prepared to pay tax thereon. The inscribing in the books of account was taken care of by the assessee when he filed the returns in pursuance of notice under section 153A accounting the assets. Therefore, the case law cited at the bar clearly indicate that the penalty is not automatic if one of the purported condition is not fulfilled although all the conditions have been agreed to of having fulfilled by the Assessing Officer in so far as the tax and interest has been recovered. Penalty has been levied after the tax has been recovered, therefore, answers the queries raised by the learned Departmental representative for that the said provisions become redundant was not the intention of the legislation. The manner, during the search operation, is noted by the search party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I in the return filed, pays tax and interest thereon. Nil Nil Nil Admits UDI under section 134(4). Specifies the manner, includes UDI in the return filed. Pays tax and interest thereon. Penalty of 10 per cent. on income sought to be evaded under section 271AAB(1)(a) Penalty of 10 per cent. on income sought to be evaded under section 271AAA Nil Does not admit UDI under section 134(4), includes UDI in the return filed, pays tax and interest thereon. Penalty of 20 per cent. on income sought to be evaded under section 271AAB(1)(b) Penalty of 10 per cent. on income sought to be evaded under section 271AAA 100 per cent. to 300 per cent. of the tax sought to be evaded under section 271(1)(c) Cases other than those specified above Penalty of 30 per cent. 90 per cent. on income sought to be evaded under section 271AAB(1)(c) 100 per cent. to 300 per cent. of the tax sought to be evaded under section 271(1)(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it is my unaccounted income for the current financial year generated from the undisclosed sources . This state ment of the appellant cannot be said to have fulfilled the condition in section 271AAA(2)(ii) so as to provide evidence to support or prove the truth of the claim made by the appellant. The amount of ₹ 35 crores does not appear in the statement given by the appellant under section 132(4). It is to be noted that a cardinal principle of law in India is that no person can be forced to give evidence against himself. Therefore, both the legality and the efficacy of this clause are questionable. However, the law is to be implemented as it exists and passed by Parliament in its wisdom. As rightly held by the Assessing Officer, all the conditionalities imposed under section 271AAA, which are inclusive and not exclusive of each other, are not fulfilled in the case. Accordingly, I hold that the Assessing Officer was correct in imposing the penalty under section 271AAA of 10 per cent. of the income sought to be evaded of ₹ 125 crores. The appeal of the appellant is accordingly dismissed.' 3.4 However, the learned authorised representative now points out that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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