The above captioned two tax appeals preferred by the Revenue arise from common order dated 10th December 2010 of the Income Tax Appellate Tribunal Ahmedabad Bench 'D' in ITA No. 1395/Ahd/2007 and ITA No.1396/Ahd/2007 for Assessment Year 199394 and 199495 respectively. 2.0 In both the appeals, following common question has been raised by the appellant, proposing it as substantial question of law.
“Whether the Appellate Tribunal is right in law and on facts in deleting the penalty of Rs.10,13,376/ levied by the Assessing Officer u/s.271(1)(c) of the IT Act?”
3.0 In the below stated background of facts, the issue was that whether Explanation 5 to Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for sake of brevity) applies in the facts of the case so as to entitle the assessee to enjoy immunity from levy of penalty.
3.1 The assessee, dealing in share trading and brokerage was found to be maintaining umpteen numbers of bank accounts in different names, from which he used to apply in several public issues of shares, thereby routing money through different Benami savings accounts. This was detected in a search by the income tax authorities at the business and residential premises of the assessss conducted on 28th March 1995. In course of statement under Section 132(4) of the Act, he admitted about operating the Benami bank accounts. The assessee initially declared the income of Rs.65 lacs in his statement during the search, which was subsequently revised to Rs.70 lacs by writing a letter and ultimately reduced the figure of undisclosed income to Rs.52,35,000/ stating that it comprised total income for Assessment Years 199394 to 199596. He then filed revised returns of income for the Assessment Year 199394 and 199495, whereas for Assessment Year 199596, he showed the additional income.
3.2 As per the disclosure made by the assessee for the Assessment Year 199394, an additional income of Rs.2,21,000/ was declared, and for the Assessment Year 199495, additional income of Rs.23,32,000/ was offered by filing revised returns. The Assessing Officer computed the income under Section 143(3) red with Section 147 of the Act and made additions of the additional income offered as per revised returns as peak credit in the Benami Bank accounts. The CIT(A) in the appeal proceedings restricted the additions made by the Assessing Officer. The relevant figurewise details are tabularized as under:
3.3 The additional income declared by the respondent assessee in his revised returns for two assessment years filed subsequent to the search, were accepted by Appellate Commissioner and the additions made by the Assessing Officer to the revised returns were deleted. The Assessing Officer had already initiated the penalty proceedings under Section 271(1)(c) of the Act at the time of assessment. After receipt of the order of the Appellate Commissioner, those proceedings were taken up, and the Assessing Officer treated the additional income declared in the revised returns by the assessee as concealed income and levied the penalty of Rs.86,632/ in respect of Assessment Year 199394 and Rs.10,13,376/ in respect of Assessment Year 199495.
3.4 Assessee's appeal before the CIT(A) against the said order of penalty failed and the Appellate Commissioner by order dated 3rd October 2006 held that the Assessing Officer was justified in treating the additional income of Rs.2,21,000/ and Rs.23,32,000/ offered for Assessment Years 199394 and 199495 respectively as concealed income and further held that the penalty amount as aforesaid levied under Section 271(1)(c) of the Act for the said two Assessment Years was also justified.
4.0 The aforementioned order of the Appellate Commissioner came to be set aside by the Appellate Tribunal by the impugned order. Tribunal relied on its own decision in the matter of ACIT Ahmedabad3 vs. Jayendra K. Doshi in ITA No.26 and 1543 of 2006 which was having the similar facts. The Tribunal also relied on the decision of the Supreme Court in CIT vs. Sureshchandra Mittal [251 ITR 9] wherein the facts were that the assessee had filed revised return after the search under Section 132 showing the higher income which was accepted in the assessment. The Supreme Court deleted the levy of penalty under Section 271(1)(c) on the ground that the department had not proved concealment and had simply rested its conclusion on the act of voluntarily disclosure in good faith by the assessee.
4.1 Learned senior standing counsel Mr. M. R. Bhatt assisted by learned advocate Mrs. Mauna Bhatt for the appellant fairly stated that the decision in case of Jayendra K. Doshi was considered by this Court in Tax Appeal No.952 of 2010 preferred by the Revenue and the same was dismissed.
4.2 It was correctly noticed by the Tribunal that facts of the case of Jayendra K. Doshi (supra) was similar to the facts involved in the present case. In that case, the search action was taken on 8th August 1990 and the statement of assessee was recorded subsequently under Section 132(4) of the Act and the assessee has declared his undisclosed income. The assessee in such set of facts is entitled to immunity from penalty by virtue of Explanation 5 to Section 271(1)(c) of the Act.
4.3 Explanation 5 in question reads 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 subsection (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 subsection (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.”
5.0 In the case of Commissioner of Income Tax vs. Jayendra K. Doshi in Tax Appeal No.952 of 2010 where the facts were similar as that of present case, this Court dismissed the appeal of the Revenue by order dated 6th September 2011 and held as under:
“....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”
6.0 In light of above, the appeals are meritless. No substantial question of law arises for consideration of this Court in these tax appeals. The impugned order of the Tribunal was eminently justified.
7.0 Accordingly both appeals stand dismissed.
[V. M. SAHAI, J.] Amit [N. V. ANJARIA, J.]