- (1.) THIS appeal was admitted in terms of following questions : '(i) Whether, in the facts and circumstances of the case, the Tribunal was justified in restoring the penalty levied under Section 271(1)(c) of the Act in respect of income which was offered to be surrendered for asst. yr. 1987 -88 during the examination of its Karta under Section 132(4) of the Act, when search was being conducted on its premises? (ii) Whether the time -lag between making the offer to surrender during statement under Section 132(4) and filing of return for offering surrendered amount for taxation has any effect on the operation of Expln. 5 to Section 271(1)(c)? (iii) Whether there is any requirement of the time when tax and interest on the income surrendered during statement made under Section 132(4) is to be paid for availing the benefit of Expln. 5 of Section 271(1)(c); and whether the length of period between the statement under Section 132(4) and the payment of tax and interest on income so surrendered has any effect on operation of Explanation to Section 271(1)? (iv) In case the particulars of the income earned by the assessee and to be surrendered by virtue of his statement under Section 132 are liable to be investigated and if so, if such particulars are found to be incorrect, what are the consequences?'
(2.) A search was carried out at the residential and business premises of the assessee on 29th July, 1987. During the course of search, assessee has surrendered a sum of Rs. 22,32,000 against the investment made in pawning business for various years as per slip found attached with the pawned ornaments and a sum of Rs. 20,00,000 (Rs. 9,00,000 for the asst. yr. 1987 -88 and Rs. 11,00,000 for the asst. yr. 1988 -89). On the basis of surrender, the assessment order under Section 143(3) of the IT Act has been passed and the AO taxed that. The AO has also initiated penalty proceedings under Section 271(1)(c) of the Act and imposed the penalty of Rs. 10,71,320 vide order dt. 31st Aug., 1995. In appeal before the CIT(A), CIT(A) has cancelled the penalty vide his order dt. 18th Dec., 1995. In appeal before the Tribunal, the Tribunal restored the penalty imposed by the AO.
(3.) THE case of the assessee is that during the course of search, assessee has surrendered Rs. 22,32,000, on that amount there should be no penalty in view of the Expln. 5 of Section 271(1)(c) of the Act. The penalty has been imposed on the ground that as tax has not been paid along with interest in time, the benefit of Expln. 5 of Section 271(1)(c) of the Act cannot be extended to the assessee.;