Vildirect: IncomeTax-caselaws-1995-VIL-190-ITAT-BLR

1995-VIL-190-ITAT-BLR

Equivalent Citation: ITD 055, 296,

Income Tax Appellate Tribunal BANGALORE

Date: 04.07.1995

INCOME-TAX OFFICER.

NURUL HUDA G. ABOOBKAR.

BENCH

Member(s) : A. V. BALASUBRAMANYAM., S. BANDYOPADHYAY.

JUDGMENT

Per Bandyopadhyay, AM --- The appeal has been filed by the department against cancellation of penalty of Rs. 60,000 levied under section 271(1)(c).

2. The facts of the case are that a sum of Rs. 1 lakh was seized from the assessee by the Directorate of Revenue Intelligence on 5-7-1986, in a hotel room at Bombay. The amount was later on requisitioned by the IT Department under the provisions of section 132A on 25-11-1986. The assessee filed his return of income in response to notice under section 139(2) in which he included this amount of Rs. 1 lakh as his income under section 69A. The ITO levied penalty under section 271(1)(c) on the ground that the assessee had stated before the Directorate of Revenue Intelligence that he had received the amount of Rs. 1 lakh in the course of his business in motor cycle and also from various sources. During the course of the proceedings under section 132(5) also, the assessee tried to contest that the amount did not constitute his income by stating that he had received the amount from his various relations. The explanations submitted during the course of the said proceedings under section 132(5) were found to be false. The ITO thus came to the opinion that although, the assessee might have later on declared the amount as his income under section 69A, since he had refused to do so at the first instance, penalty under section 271(1)(c) for concealment was attracted to his case. Accordingly, the ITO imposed penalty of Rs. 60,000 on the assessee.

3. At the first appellate stage, the CIT(A) accepted that plea of the assessee that inasmuch as the assessee had included the amount in his return of income, there was no question of making any concealment of income and also that the Explanations (3) and (5) to section 271(1)(c) are not applicable to the present case. Accordingly, the CIT(A) cancelled the penalty.

4. Before us, the learned DR strongly argued that the original act of the assessee in denying the ownership of the amount before the Revenue Intelligence authorities and also during the course of the proceedings under section 132(5) clearly tantamounted to the concealment of income. The learned DR has also argued that the provisions of Explanation 5 to section 271(1)(c) should be applicable to the present case and the assessee should be held to be liable to imposition of penalty under section 271(1)(c).

5. There is no doubt about the fact that concealment of income, if any, is to be rather with reference to the returned income filed by the assessee. In this case, the assessee himself offered the amount as his income and no further addition was made in the assessment. Hence, concealment as such, cannot be considered to have taken place. Let us now come to the question of whether Explanation 5 to section 271(1)(c) would be applicable to the present case. Section 132 alone relates to search and seizure proceeding conducted by the IT department. On the other hand, section 132A relates to books of account and other assets seized during the course of search proceedings conducted by other departments. The heading of section 132A is " Powers to requisition books of account, etc.,". It is, therefore, clear that this particular section although, may be analogous to the provisions of section 132 dealing with search and seizure proceedings taken recourse to by other departments, again at the same time cannot be considered to convey the idea that in the case of requisition of books, assets, etc., by the department in accordance with the provisions of section 132A also, it is the IT department which has conducted the search and seizure proceedings. Explanation 5 to section 271(1)(c) starts with the following clause 'where in the course of a search under section 132 ". This particular Explanation cannot, therefore, be considered to apply to a case where proceedings under section 132A only have been taken recourse to. It is correct that the provisions of sub-sections (4A) to (14) (both inclusive) of section 132 shall, so far as may be, apply to proceedings under section 132A also, as if such books of account, other documents or assets had been seized under section 132(1) by the Requisitioning Officer. This deeming provision cannot, however, apply to another deeming provision contained in Explanation 5 to section 271(1)(c). Furthermore, inasmuch as the provisions of sub-section (4) of section 132 does not apply to a proceeding under section 132A, the assessee, in the case of a proceeding under section 132A is not entitled to the opportunity of making a disclosure under such sub-section (4) of section 132. If in such a case, the provisions of Explanation 5 to section 271(1)(c) applies, it will be a case of beating a person with his hands and feet bound without any opportunity to come out of the mischief of the aforesaid Explanation 5 by making the disclosure under section 132(4), to which opportunity an assessee in whose case proper search under section 132(1) has been conducted, is entitled. Taking into consideration all these facts, therefore, we are of the opinion that Explanation 5 to section 271(1)(c) does not apply to a case of requisitioning of assets under the provisions of section 132A. The instant case also, therefore, would not fall within the mischief of the said Explanation. Hence, we agree with the decision of the CIT(A) that penalty under section 271(1)(c) is not exigible in the present case. We uphold the cancellation of the penalty.

6. In the result, the departmental appeal is dismissed.

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