- (1.) Heard learned counsel on both sides. This civil appeal filed by the Department concerns asst. yr. 1987-88.
(2.) Assessee is an HUF, represented by the Karta, Shri Kalyanmal Karva. During the period 29th July, 1987 to 1st Aug., 1987, search and seizure operations were carried out at the residential/business premises of the assessee. Assets worth Rs. 42,32,000 besides incriminating documents were seized. On the last date of the search, i.e., 1st Aug., 1987, the said Karta while surrendering the amount, made a statement under Section 132(4) of the IT Act, 1961 (for short, 'the Act). On 2nd Dec., 1988 and 18th Dec, 1988 notices were sent under Section 142(1)(ii) to the Karta calling upon him to furnish in writing and verified in the prescribed manner information (including a statement of all assets and liabilities whether included in the accounts or not). Such statement containing the relevant information was made by the Karta on 16th Feb., 1990. In the said statement the said Karta reiterated his earlier statement regarding concealment of income. One date needs to be mentioned. As stated, in this civil appeal, we are concerned with the asst. yr. 1987-88. For the accounting year ending 31st March, 1987, assessee was required to file his return of income under Section 139(1) on or before 31st July, 1987. Such return of income was not filed. It is important to note that although on 1st Aug., 1987 the said Karta made a statement under Section 132(4) surrendering an amount of Rs. 42,32,000, the assessee chose not to file its return of income on due date, i.e., 31st July, 1987. Failure to file such return of income on 31st July, 1987 and failure to pay tax thereon is the main reason relied upon by the Department to deny to the assessee the benefit of immunity under Clause (2) of Expln. 5 to Section 271(1)(c). The Karta also later on retracted his statement dt. 1st Aug., 1987. However, according to the Department, the assessee had complied with all the conditions of Clause (2) of Expln. 5 except payment of tax in time (see p. "G" of the paper book).
(3.) A limited question which arises for determination is, whether the assessee was entitled to immunity in terms of Clause (2) of Expln. 5 to Section 271(1)(c) of the Act;