Gujarat High Court Case Information System
Print
TAXAP/952/2010 5/ 5 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 952 of 2010
=========================================================
COMMISSIONER
OF INCOME TAX - I - Appellant(s)
Versus
JAYENDRA
K DOSHI - Opponent(s)
=========================================================
Appearance
:
MRS
MAUNA M BHATT for
Appellant(s) : 1,
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 06/09/2011
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
Revenue is in appeal against the judgment of the Tribunal dated
7.8.09 raising following question for our consideration :
“Whether
the Appellate Tribunal is right in law and on facts in confirming
the order passed by CIT(A) in cancelling the penalty of
RS.56,97,551/- levied u/s.271(1)(c) of the Act ?”
Issue
pertains to penalty under section 271(1)(c) of the Income Tax Act.
The assessee was subject to search and seizure operations on
8.8.1990. Statement of the assessee was recorded on 20.8.1990 under
section 132. Statement of the assessee under section 132(4) of the
Act was recorded on 11.10.1990 in which he disclosed undisclosed
income of Rs.103.75 lacs. The Assessing Officer, in addition to
framing assessment, also initiated penalty proceedings and
eventually subjected the assessee to penalty under section 271(1)(c)
of the Act. The Assessee carried the issue in appeal. CIT (Appeals)
deleted the penalty. Upon the Revenue approaching the Tribunal, the
Tribunal by the impugned judgment rejected the Revenue’s appeal
though on grounds different than those recorded by the CIT
(Appeals). The Tribunal was of the opinion that the assessing
having made the declaration in his statement under section 132(4) of
the Act and also having paid the tax was entitled to immunity
provided by clause (2) of explanation 5 to section 271(1)(c) of the
Act.
Before
us, counsel for the Revenue assailed the orders passed by the CIT
(Appeals) as well as the Tribunal. It was contended that
previously, no return was filed by the assessee and even in the
returns filed, the undisclosed income unearthed during search
operations was not shown in such returns.
We
are, however, of the opinion that the orders of the CIT (Appeals) as
well as the Tribunal require no interference. As already noted,
though for entirely different reasons, both the CIT (Appeals) as
well as the Tribunal were of the opinion that penalty cannot be
sustained. We may note that explanation 5 to section 271(1)(c)
provides as under:
“Explanation
5: Where in the course of a search under section 132 before the 1st
day of June 2007, the assessee is found to be the owner of 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,—
(a) for
any previous year which has ended before the date of the search, but
the return of income for such year has not been furnished before the
said date or, where such return has been furnished before the said
date, such income has not been declared therein; or
(b) for
any previous year which is to end on or after the date of the
search,
then,
notwithstanding that such income is declared by him in any return of
income furnished on or after the date of the search, he shall, for
the purposes of imposition of a penalty under clause (c) of
sub-section (1) of this section, be deemed to have concealed the
particulars of his income or furnished inaccurate particulars of
such income, [unless,–
(1) such
income is, or the transactions resulting in such income are
recorded,–
(i) in
a case falling under clause (a), before the date of the search, and
(ii) in
a case falling under clause (b), on or before such date,
in
the books of account, if any, maintained by him for any source of
income or such income is otherwise disclosed to the [Chief
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.”
From
the said provision, it can be seen that in the situations described
in the explanation, an assessee for the purpose of section
271(1)(c) of the Act would be deemed to have concealed particulars
of his income or furnish inaccurate particulars. However, there
are two exclusion clauses to said explanation 5. Clause 2 of said
exclusion provides that such deeming fiction will not arise if the
assessee in course of search makes such statement under section
132(4) of the Act with respect to money, bullion, jewelery or other
valuable article or thing found in his possession or under his
control that the same has been acquired out of is income which has
not been disclosed so far and also specifies in the statement the
manner in which such income has been acquired and pays tax together
with interest, if any, in respect of such income. The Tribunal gave
benefit of the said provision finding that the assessee had made
necessary statement under section 132(4) of the Act. It is not the
case of the Revenue that the assessee did not either pay tax or
interest on such disclosed income or that had not disclosed the
source of income. This being the position, the Tribunal was
justified in holding that the ingredients of exclusion clause 2 to
explanation 5 to section 271(1)(c) were satisfied.
No
question of law arises. Tax Appeal is therefore, dismissed.
(Akil
Kureshi J.)
(Ms.Sonia
Gokani, J.)
(vjn)
Top