Income Tax Appellate Tribunal - Ahmedabad
Shri Rajendra A. Makhijani,, Godhra vs The Acit, Central Circle-1,, Baroda on 30 July, 2019
-आयकर अपील य अ धकरण, अहमदाबाद यायपीठ - अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD - BENCH 'A'
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND
SHRI PRADIPKUMAR KEDIA, ACCOUNTANT MEMBER
आयकर अपील सं./ IT(SS)A No.251 to 255/Ahd/2014
[Asstt.Years: 2005-06 to 2009-10]
Rajendra A. Makhijani Vs. ACIT, Cent.Cir.1
7,8,9 Vardhman Society Baroda.
Nr. Shukla Society
Police Chowki No.8
Prabha Road
Godhra 389 001.
PAN : ACLPM 1246 P
(Applicant) (Respondent)
Assessee by : Smt.Urvashi Sodhar, AR
Revenue by : Shri Apoorva Bharadwaj, Sr.DR
सन
ु वाई क% तार ख/Date of Hearing : 12/07/2019
घोषणा क% तार ख /Date of Pronouncement: 30/07/2019
आदे श/O R D E R
PER RAJPAL YADAV, JUDICIAL MEMBER:
Present five appeals are directed at the instance of the assessee against common orders of the ld.CIT(A)-IV, Ahmedabad dated 2.4.2014 passed for the Asstt.Years 2005-06 to 2009-10.
2. Sole grievance of the assessee is that the ld.CIT(A) has erred in confirming penalty under section 271(1)(c) of the Income Tax Act, 1961 amounting to -
Asstt.Year Penalty Levied
IT(SS)A No.251 to 255/Ahd/2014
2
2005-06 Rs.21,38,580/-
2006-07 Rs.15,88,782/-
2007-08 Rs. 5,69,912/-
2008-09 Rs.28,38,934/-
2009-10 Rs. 3,50,415/-
3. Facts on all vital points are common therefore, for the facility of reference, we take the facts mainly from the assessment year 2005-06.
4. Brief facts of the case are that a search under section 132 of the Act was carried out in the R.K. Construction group of cases including the case of the assessee on 9.4.2010. In order to give logical end to the proceedings a notice under section 153A was issued on 27.1.2011 and in compliance thereof the assessee has filed his return of income. The ld.CIT(A) has tabulated income returned by the assessee under section 139(1) as well as under
section 153A. Such details read as under:
AY Income u/s 139(1) Income u/s 153A Additional income 2005-06 4,98,613/- 68,11,981/- 62,84,168/-
2006-07 38,700/- 48,44,421/- 48,05,721/-
2007-08 6,02,468/- 22,51,650/- 16,49,182/-
2008-09 3,26,393/- 86,61,572/- 83,35,179/-
2009-10 4,43,440/- 14,65,768/- 10,22,328
5. Assessments were finalized under section 153A r.w. section 143(3) on 28.2.2013 vide which the ld.AO has accepted the returned income. He initiated penalty proceedings under section 271(1)(c) with the help of Explanation 5A. After hearing the IT(SS)A No.251 to 255/Ahd/2014 3 assessee, he imposed penalty as noticed above. Appeal to the CIT(A) did not bring any relief to the assessee.
6. The ld.counsel for the assessee at the very outset contended that identical issue was considered by the Tribunal in the case of Arvindbhai V. Bhansusali Vs. ACIT, IT(SS)A.No.271 to 273/Ahd/2013. The Tribunal has decided the appeal of that assessee on 6.4.2017. According to the ld.counsel for the assessee, in this order, order of the Tribunal in the case of Shri Mansukhbhai R. Sorathai and Others Vs. JCIT, Rajkot in IT(SS)A.No.46/RJT/2012 has been relied upon. [The undersigned is the author of both these orders]. On the strength of these orders, she contended that penalty under section 271(1)(c) with help of Explanation 5A can be imposed upon the assessee, if additional income declared in response to the notice under section 153A was represented/ supported by any material unearthed during the course of search. If this additional income is based only on the statement given under section 132(4) then penalty under section 271(1)(c) r.w.s Explanation 5A would not be imposable. She further contended that in the case of Shri Ashok Arjandas Makhijani, who is one of the assessees in the group concern, penalty has been deleted by the Tribunal. She placed on record copy of the Tribunal's order dated 25.6.2019 passed in IT(SS)A.No.310 to 314/Ahd/2014. On strength of these orders she contended that penalty is not imposable in the case of the assessee because during the course of search no incriminating material was found on the basis of which it could be alleged that additional income was declared by the assessee.
IT(SS)A No.251 to 255/Ahd/2014 4
7. The ld.Sr.DR, on the other hand, has placed on record copy of the return. He invited our attention towards note no.3 appended with income-tax return filed by the assessee. He emphasised that a perusal of this note would indicate that the assessee has admitted discovery of incriminating seized papers on the basis of which declaration was made and the income was quantified. This is the basic difference of facts between the ratio of law laid down by earlier orders of the Tribunal vis-à-vis the assessee. The ld.counsel for the assessee was unable to controvert this submission made by the ld.Sr.DR.
8. We have duly considered rival submissions and gone through the record carefully. The scope of Explanation 5A has been considered by us elaborately in the case of Shri Mansukhbhai R. Sorathai and Others (supra). The discussion made by the Tribunal reads as under:
"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 ACIT Vs. Gebilal Kanbhaialal (HUF), 348 ITR 561 (SC). According to this decision, the Explanation 5 is deeming provision. It provides where in the course of search under section 132, the assessee is found to be owner of unaccounted asset and he claims that such assets have been acquired by him by utilizing whole or part of his income from any previous year, which has ended before the date of search or which is to end on or after the date of search, then in such a situation, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed the particulars of his income for the purpose of imposition of penalty under section 271(1)(c) IT(SS)A No.251 to 255/Ahd/2014 5 of the Act. The Hon'ble Court, thereafter, propounded that sub- clause (1) and (2) Explanation 5 provides exceptions for deeming the concealment of particulars of income. In that case, the Hon'ble Court was dealing in sub-clause (2) of Explanation-5 and observed that in order to claim immunity as per sub-clause (2), three conditions have to be satisfied by the assessee. These three conditions are (a) that the assessee himself makes a statement under section 132(4) of the Act in the course of search stating that the unaccounted assets and incriminating documents found from his possession during the search have been acquired out of his income which has not been disclosed in the returns of income to be furnished before the expiry of time specified in section 139(1); (b) that the assessee should specify in his statement under section 132(4) of the Act, the manner in which the income stood derived, and (c) the assessee has to pay tax together with interest, if any, in response to such undisclosed income. According to the assessees present before us, they have made voluntary disclosure, filed returns and paid taxes. Their explanation for availing the benefit of judgment of the Hon'ble Gujarat High Court in the case of Kirit Dahyabhai Patel (supra) has been rejected by the ld.First Appellate Authority on the ground that the Explanation 5 is applicable on the cases where the search was initiated on or before the 1st June, 2007.
After 1st July, 2007, the Explanation 5A to sub-section (1) of Section 271(1)(c) has been inserted vide Finance Act, 2007. Along with this Explanation, Section 271AAA has also been inserted by Finance Act, 2007. The Explanation 5A 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,--
IT(SS)A No.251 to 255/Ahd/2014 6
(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 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.
271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132on or after the 1st day of June, 2007 but before the 1st day of July, 2012, the assessee shall 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.
(2) Nothing contained in sub-section (1) shall apply if the assessee,--
(i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived;
(ii) substantiates the manner in which the undisclosed income was derived; and
(iii) pays the tax, together with interest, if any, in respect of the undisclosed income.
(3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1).
(4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section.
Explanation.--For the purposes of this section,--
(a) "undisclosed income" means--
(i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has--
IT(SS)A No.251 to 255/Ahd/2014 7 (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the 87[Principal Chief Commissioner or] Chief Commissioner or 87[Principal 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;
(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 action. Thus, both these years do not fall within the ambit of "specified years". Since the period of these two assessment years does not fall within the expression "specified year" provided in Section 271AAA, therefore, we do not deem it necessary to construe and explain the meaning of Explanation 5A within the scope of Section 271AAA. The assessees as such cannot claim immunity akin to one available in sub-clause (1) and (2) of the Explanation 5, more particularly, on the strength of the judgment of Hon'ble Gujarat High Court in the case of Kirit Dahyabhai Patel (supra). The ld.First Appellate Authority has dealt with these situation in an analytical manner and in right perspective. As far as the IT(SS)A No.251 to 255/Ahd/2014 8 construction of meaning of Explanation 5A to section 271AAA by the ld.First Appellate Authority is concerned, we do not find any error.
9. At the cost of repetition, we would like to observe that as per Explanation 5A, if in the course of search initiated under section 132 on or after the 1st June, 2007, the assessee is found to be owner of any money, bullion, jewellery or other valuable article or things and the assessee claims such assets have been acquired by him by utilsing the whole or partly of his income from any previous year or any income based on any entry in any books of account or other documents or transactions found during the course of search, and the assessee claims that such entry in the books of account or other documents or transactions represents his income from any previous year, which has ended before the date of search, then, notwithstanding such income is declared by him in any return of income furnished on or after the date of search, he shall for the purpose of imposition of penalty under clause (c) of sub-section (1) of this Section be deemed to have been concealed particulars of income or furnished inaccurate particulars. The moot question for attracting this explanation is that in the course of search money, bullion, jewellery or income based on any entry in the books of accounts or other documents ought to have been found. In a given situation, no money or bullion or jewellery or income might have found from the assessees for the assessment years which were not part of "specified previous year" contemplated in section 271AAA or immunity available to the assessees under sub-clause
(a) and (b) of Explanation 5A, then also, if in response 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 IT(SS)A No.251 to 255/Ahd/2014 9 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, remuneration and interest from partnership firms etc. Copies of P&L account, capital account and balance sheet, was filed with the return. Various issues were discussed at length.
2.1 It is seen that the assessee had made disclosure unaccounted income of Rs 22,00,000/- which was not disclosed in the return filed u/s. 139(1). This being concealed income, penalty proceedings u/s. 271(l)(c) of the I T Act is being initiated.
3. After verification, the total income is determined as under:-
Total income as per return of income Rs 28,45,960/-
Total assessed income Rs 28,45,960/-
Agricultural income for rate purpose Rs.6,14,131/-
4. Assessed u/s. 153A of the I T Act, 1961. Charge tax.
Charge interest u/s. 234A, 234B and 234C of the I T Act, if any. Give credit for prepaid taxes after due verification. Demand notice and challan issued accordingly. Issue notice u/s. 271(1)(c)of the IT Act."
11. We have perused the penalty order also. There are only three paragraphs i.e. para-4, 6 and 7, where the AO has made some observation at his own, otherwise, in rest of the paragraphs he reproduced the submissions or the head-notes of the case laws. The observation of the AO in these paras read as under:
"4.I have carefully considered the submissions made by the assesses. The contention of the assessee is not acceptable because, the additional income offered by the assesses only surfaced due to the search action carried by the department. Had there been no search, the portion of additional income would have remained concealed eternally. If in a regular IT(SS)A No.251 to 255/Ahd/2014 10 case, on detection of concealment, penalty u/s. 271(1)(c) is leviable, how much more penalty becomes true and potent in a case where the concealment has been detected on account of proactive search action initiated by the department. In the case of the assessee, the assessee has not recorded details of his income and the same was worked out only during search and that too on the basis of the seized materials. In fact, it is an established judicial decision that 'documents seized during the search cannot be said the books of accounts maintained for any source of income, for the purposes of Explanation 5 (CIT Vs Glamour Restaurant (2003) 80 TTJ (Mum) 763. Diaries found and 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 possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act.
IT(SS)A No.251 to 255/Ahd/2014 11 Explanation.- For the removal of doubts, it is hereby declared that the examination of any person under this sub- section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act."
13. A bare perusal of section would reveal that it empowers the authorized officer to examine during the course of search or seizure any person on oath. The disclosure made during the statement recorded under this section will be admitted in the evidence and can be used against the assessee in the proceeding.
14. No doubt, the disclosure or admission made under section 132(4) of the Act during the course of search proceedings is an admissible evidence but not conclusive one. This presumption of admissibility of evidence is a rebuttable one, and if an assessee is able to demonstrate with the help of some material that such admission was either mistaken, untrue or based on misconception of facts, then solely on the basis of such admission no addition is required to be made. It is true that admission being declaration against an interest are good evidence, but they are not conclusive, and a party is always at liberty to withdraw the admission by demonstrating that they are either mistaken or untrue. In law, the retracted confession even may form the legal basis of admission, if the AO is satisfied that it was true and was voluntarily made. But the basing the addition on a retracted declaration solely would not be safe. It is not a strict rule of law, but only rule of prudence. As a general rule, it is unsafe to rely upon a retracted confession without corroborative evidence. Due to this grey situation, CBDT has issued Circular No.286/2/2003 prohibiting the departmental officials from taking confession in the search. The board is of the view that often the officials used to obtain confessions from the assessee and stop further recovery of the material. 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 IT(SS)A No.251 to 255/Ahd/2014 12 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 Rs.7 lakhs. Later on, in January, 1989, the assessee retracted from the disclosure and stated the disclosure of Rs.50,000/- was acceptable to him. The ld.AO made an addition of Rs.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 Rs.7 lakhs to his income. The Tribunal has also confirmed the addition by observing that there was nothing on record which indicated that the disclosure was taken from the assessee under duress, pressure or coercion. The retraction after lapse of two months from the date of disclosure by the assessee was considered as after-thought. The issue travelled before the Hon'ble High Court. The Hon'ble High Court has deleted the addition by observing that merely on the basis of disclosure, addition cannot be made. There should be some corroborative material. The following observations in para-26 of the judgement of Hon'ble Court are worth to note. It reads as under:
"26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence there is no reason not to disbelieve the retraction made by the Assessing Officer and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by the Assessing Officer under IT(SS)A No.251 to 255/Ahd/2014 13 section 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee.
27. In the above view of the matter, addition of Rs. 1 lakh made on account of unaccounted cash is confirmed and the addition of Rs. 6 lakhs is hereby deleted."
16. This decision has been followed by the Hon'ble High Court in the case of CIT Vs. Chandrakumar Jethmal Kochar, 55 taxmann.com 292 (Guj). The Hon'ble High Court has reproduced the discussion made by the Tribunal, and thereafter, concurred with the conclusions of the Tribunal by observing as under:
"6. In view of the above discussion and considering the principal laid down in the case of Kailashben Manharlal Chokshi (supra),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 course of search, the AO ought to have immediately referred the documents, entries or any asset found which is relevant to these assessment years in the penalty proceedings. He should have rejected the explanation of the assessee by IT(SS)A No.251 to 255/Ahd/2014 14 demonstrating it as factually incorrect. Rather, the authorities have proceeded on the assumption that had there been no money, bullion, jewellery or income based on entries was not found, the assessee would have not made voluntary disclosure of the income in these returns. They failed to note the question no.25 also, where the assessees claimed immunity from penalty, and peace from litigation. To our mind inference of availability of money, bullion or assets embedded in the entries cannot be drawn from the statement of the assessee (extracted supra). They should have been found in physical form and pertaining to these years, only then, deeming fiction of concealment would trigger. Thus, the Revenue authorities have not referred any documentary evidences demonstrating the fact that voluntary income offered by assessees in these two years actually unearthed during the course of search. Therefore, to our mind, the assessees do not deserve to be visited with penalties. We allow all the appeals of the assessees and delete penalties."
9. Similarly, we would like to take note of finding of the Co- ordinate Bench in the case of Ashok Arjandas Makhijani (supra). The Tribunal after reproducing the Explanation 5 has recorded the following finding:
"The above provision reveals that the penalty under Explanation 5A to section 271 (l)(c), the of the Act can be attracted if the assessee was found to be the owner of any money, bullion, jewellery or other valuable article or thing or any income based on any entry in any books of account or other documents or transactions.
7.4 But, in the case on hand, there was no such allegation made against the assessee either in the assessment or penalty or the CIT (A) order. Thus the issue arises whether the penalty can be levied under section 271 (1) (c) r.w. the explanation 5 A of the Act merely on the basis of the statement furnished under section 132(4) of the Act. In this regard, we are inclined to refer to the order of ITAT in the case of Ajay Traders Vs. DCIT reported in SI laxmann.com 463 wherein it was held as under:
IT(SS)A No.251 to 255/Ahd/2014 15 "The assessee disclosed an additional income on account of unaccounted sales. Based on said disclosures, the Assessing Officer imposed penalty order section 271(l)(c) by invoking Explanation 5A to said section.
Held that it was undisputed fact that during the came of search, no incriminating documents were found and seized. The assessee surrendered the additional income under section 132(4) at Rs.15 lacs and requested not lo oppose penalty under section 271(l)(c). The Assessing Officer imposed the penalty by invoking the Explanation 5A to section 271(l)(c). For imposing the penalty under Explanation 5A on the basis of statement recorded during the course of search, it is necessary to be found incriminating documents and is to be considered at the time of assessment framed under section 153A. As no incriminating documents were found during the course of search, therefore, Explanation 5A to section 271(1)(c) is not applicable. Accordingly, the penalty was to be deleted. "
From the above order, it is clear that there cannot be any penalty under explanation 5 A to section 271(1)C of the Act merely on the basis of the statement furnished under section 132(4) of the Act, until and unless it supported with the incriminating document. Accordingly, we hold that there cannot be any penalty under section 271(1)C of the Act in the given facts and circumstances. Hence the ground of appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed."
10. A perusal of both the orders would indicate that the Tribunal was unanimous in its approach in holding that if during the course of search any incriminating material; money, bullion or jewellery was not unearthed, then additional income declared by the assessee in response to notice under section 153A, the deeming fiction of concealment under Explanation 5A would not be IT(SS)A No.251 to 255/Ahd/2014 16 attracted. We do not have any hesitation in concurring with the above construction of Explanation 5A. But basic difference of applying it on the facts would arise as under in the present appeal. The assessee has appended the following note in the computation of income:
"Notes:
1. The Original Return of Income was filed on 31.12.2006 vide acknowledgement No.13089 with ITO, Wd-1, Godhra.
2. Search Proceedings u/s 132 were carried out at my residential premises and business premises on 9/4/2010.
3. During the course of search various loose papers, documents electronic data were found and seized. I had made disclosure before the authorised officers based on the loose papers, documents, electronic data found / seized. I have obtained zerox copies / copies of of sycg seized papers, documents, electronic data based on which I have included the income in the disclosure shown in my Computation above.
4. Me and my family members are associated in the family concerns as a Group. The income disclosed by me or my family members have been spent by me or by family members. These income have also been spent on acquisition / payments for capital assets/ investments in my name or in the name of my family members. However the disclosure has been made on income basis in the above Return of Income.
5.1 have included all the income as computed by me from the copies of loose papers, documents, electronic data etc. made available to us. In case any income is left out to be disclosed in the said computation through oversight the same may be included."
11. A perusal of Note No.3 would indicate that the assessee has admitted discovery of loose papers, documents/electronic data and whose basis he has prepared his return showing additional IT(SS)A No.251 to 255/Ahd/2014 17 income. In the face of the above discovery of evidence, it could not be said that Explanation 5A is not applicable. Therefore, the facts in the present appeal are quite distinguishable. Explanation 5A has been invoked on the basis of seized material admitted by the assessee persuading it to disclose additional income. Therefore, we do not find any merit in these appeals. They are dismissed.
12. In the result, appeals of the assessee are dismissed.
Order pronounced in the Court on 30th July, 2019.
Sd/- Sd/- (PRADIPKUMAR KEDIA) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 30/07/2019