TMI Blog1995 (8) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Belite Founders and the balance cash of Rs. 3,63,850 was claimed as belonging to M/s. Amrut Sales India of Rakhial, Ahmedabad. The assessee however agreed to surrender the said amount as income and also submitted that tax thereon will be paid. A letter dated 21-6-1986 was sent by the assessee to the ADI. It was, inter alia, submitted in this letter that a sum of Rs. 12,13,850 may be treated as income from other sources for the current financial year 1986-87, relevant to assessment year 1987-88 in which the assessee made the following prayers :--- " 1. The amount of Rs. 12,13,850 may be treated as income from other sources for the current financial year 1986-87, relevant to the assessment year 1987-88. 2. Any action on levy of penalty or initiation of prosecution may kindly be waived. 3. No action may be taken against me in respect of past years or future years in keeping with the assurances given by the Ministry of Finance in connection with the Voluntary Disclosure Scheme. 4. I am ready and willing to submit an estimate of advance tax for the assessment year 1987-88 immediately including therein the aforesaid amount of Rs. 12,13,850 as income of the current financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the assessee's reply dated 22-4-1989 imposed penalty under section 271(1)(c) amounting to Rs. 6,00,810 in respect of the aforesaid undisclosed income of Rs. 12,13,850 being the amount of aforesaid un-explained cash. 6. The CIT(Appeals) confirmed the said penalty. 7. The learned counsel for the assessee submitted that the Assessing Officer has himself accepted in para 4 at page 6 of the penalty order that Explanation 5 to section 271(1)(c) applies to statement recorded under section 132(4) and proceedings under section 132 of the Act only. In this case the proceedings were carried out under section 132A of the Act in relation to which such provision is not applicable. The CIT (Appeals) has similarly observed at page 7 of the order passed by him that this case is not covered by provisions to Explanation 5 of section 271(1)(c) r.w.s. 132(3) of IT Act. These findings given by the Assessing Officer and the CIT (Appeals) by itself would justify cancellation of penalty levied under section 271(1)(c) by resort to Explanation 5 of that section which contains a presumption as to deemed concealment in respect of income represented by money, jewellery or other valuable article foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the car on 18-6-1986. This was requisitioned by the IT department from Enforcement authorities in the month of June 1986. The provisions contained in Explanation 5 to section 271(1)(c), as it existed prior to its amendment by the Taxation Laws (Amendment and Misc. Provisions) Act, 1986 with effect from 10-9-1986 provides for levy of penalty for concealment of income or for furnishing of inaccurate particulars of income in respect of assets found in the course of a search which has not been accounted for in the books of accounts or which have not been disclosed to the Commissioner of Income-tax prior to such detection. It did not provide for any immunity from penalty under Explanation 5 to section 271(1)(c) prior to its amendment with effect from 10-9-1986 on the assessee agreeing to pay tax on such undisclosed income in the statement recorded under section 132(4) and on the fulfilment of other conditions mentioned in Explanation 5, as amended with effect from 10-9-1986. He, thus, vehemently argued that the penalty has rightly been imposed by the Assessing Officer and the same has also been validly confirmed by the CIT(A). He also placed reliance on the elaborate reasons mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income unless such income is recorded on or before such date in the books of accounts, if any, maintained by him or such income is otherwise disclosed to the Commissioner before the said date. 12. The aforesaid Explanation 5 thus provided that if at the time of search, assets which are not recorded in the books of accounts are found, a tax payer is liable to penalty for concealment even if he declares the full value of those assets as his income in the return filed after the search. 13. The aforesaid Explanation 5 to section 271(1)(c) was amended by the TLA [Taxation Laws (Amendment) Act], 1986 with ef fect from 10-9-1986. By the said Amending Act, it has been provided that if an assessee in such cases makes a statement during the course of the search admitting that the assets found at his premises or under his control have been acquired out of his income which has not been disclosed so far in his return of income and specifies in the statement the manner in which such income has been derived and pays the taxes that are due thereon, no penalty shall be leviable. 14. A plain r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been in the possession of the person who had committed a default by not disclosing the same for the purposes of IT Act. It followed that lawful seizure could not be effected if the money etc. to be seized had already been seized by, and was in possession and control of, another Government authority, such as the Police Department or Excise Department. Such a view is clearly supported by the judgment of Hon'ble Supreme Court in the case of Tarsem Kumar. That is why perhaps section 132A was introduced in the IT Act by the aforesaid Amending Act. 15. The provisions of Explanation 5 to section 271(1)(c) cannot be made applicable in relation to asset requisitioned under section 132A merely because section 132A(3) provides that the provisions of section 132(4A) to (14) shall, so far as may be, applied as if such assets or books of accounts had been seized by the Requisitioning Officer from the custody of the persons referred to in that section. Some of these provisions contained in section 132 have been incorporated only for the purposes of clarifying that those assets shall be dealt with in accordance with the provisions provided for in those sub-sections of section 132. But this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 5 to section 271(1)(c) is held to be in applicable on the facts and circumstances of the present case, no penalty can be levied under section 271(1)(c) under any of the other provisions contained in that section. It is well settled law that an attempt to conceal or a planning made for concealment of income by itself would not attract levy of penalty under section 271(1)(c) unless the actual offence of concealment is committed. The Act of concealment or furnishing of inaccurate particulars of income takes place only when a return of income is filed and the income in question is not disclosed in such return of income. The default of furnishing of inaccurate particulars of income or the act of concealment of income can take place only when the disputed amount of income has not been disclosed in the return. In the present case, it is an undisputed fact that the assessee duly paid advance tax on the amount in question, the said amount of income represented by cash found was also included as assessee's income in the return of income submitted by the assessee. Such a view is clearly supported by the judgment of Hon'ble Supreme Court in the case of Brij Mohan v. CIT [1979] 120 ITR 1. ..... 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