- (1.) THESE two appeals seek to challenge the order of the Tribunal dt. 30th Oct., 2001, deciding two appeals of the assessee, for the asst. yrs. 1987 -88 and 1988 -89, and thereby setting aside the penalty imposed by the assessing authority, and upheld by the CIT(A), which was imposed under Section 271(1)(c).
(2.) THESE appeals were admitted on different dates. However, the question framed in Appeal No. 40 of 2003 is as under: Whether in the facts and circumstances of the case, keeping in view that the assessee in his statement under Section 132 has agreed to surrender undisclosed income of Rs. 3,50,000 for asst. yr. 1987 -88, the Tribunal was right in holding that the assessee was entitled to claim the benefit of immunity from levy of penalty under Exeeption -V of Section 271(1)(c) notwithstanding that the assessee has not surrendered his undisclosed income for the asst. yr. 1987 -88 but has spread over the same for 5 years. While the Appeal No. 42 of 2003 was admitted on 15th Sept., 2003, by framing the following substantial question of law: Whether on the facts and in the circumstances of the case the Tribunal was correct in its interpretation of Expln. 5 to Section 271(1)(c) so as to hold that penalty under Section 271(1)(c) was not leviable in the case, contrary to the findings given by CIT(A)? In our view, the precise question that emerges is, about interpretation of the Expln. 5 to Section 271(1)(c), as to whether on the face of the statement given by the assessee under Section 132(4), any liability of penalty is attracted, on account of the assessee filing revised returns for the asst. yrs. 1984 - 85 to 1988 -89, showing the income disclosed under Section 132(4) by spreading it over the aforesaid assessment years. The assessing authority, accepting the revised returns, has made the assessment, though by changing the figures. For the present purposes, it would suffice to say, that out of the amount of Rs. 3,50,000 disclosed under Section 132(4), income of Rs. 1,05,000 has been assessed for the asst. yr. 1987 - 88, and another sum of Rs. 1,25.000 has been assessed for the asst. yr. 1988 -89, and the remaining amount of Rs. 1,20,000 has been assessed in the other three assessment years. The matter of other three assessment years is not in question. The assessing authority initiated penalty proceedings after show -cause notice under Section 274 r/w Section 271(1)(c), calling upon the assessee, as to why penalty should not be imposed under Section 271(1)(c). It was found by the assessing authority, that even though the Department had accepted the spreading over of the income in the given assessment years, but then, the assessee has resiled from his earlier stand, [taken in the statement given under Section 132(4)] only with a view to reduce the tax liability, inasmuch as, in the statement under Section 132(4), he had offered the entire income of Rs. 3,50,000 for taxation in the asst. yr. 1987 -88, and thus, it was found, that if was a case of concealment, made out under Section 271(1)(c), and three times the amount of tax, being the maximum imposable penalty, has been imposed, for each of the two assessment years.
(3.) IN appeal, the learned CIT found, that the immunity from the penalty under Section 271(1)(c) is available, if the four conditions mentioned in para 7 of the order are satisfied, being firstly, if during the course of search, the assessee gives a statement under Section 132(4) admitting that the available funds were acquired out of his undisclosed income, second being that the return of income under Section 139(1) will be furnished, third being the manner in which the income has been derived will be stated, and last being that the tax and interest on the income disclosed is paid. With enumerating these conditions, it was found, that in the statement under Section 132(4) he had admitted, that certain assets were acquired by undisclosed income, relating to the asst. yr. 1987 -88, but then, the amount was spread over for 5 years, to avoid higher rate of tax, which would have been applicable, if the entire surrendered amount was taxed in the year 1987 -88. Thus, the assessee has not stuck to the statement given under Section 132(4), and consequently, the penalty order was upheld. Then in further appeal, the learned Tribunal found, that the assessee had submitted revised returns for the asst. yrs. 1984 -85 to 1988 -89, on the basis, that such income [as disclosed under Section 132(4)] did pertain to the said years, and that, this stand of the assessee was accepted by the AO, in view of the fact, that the documents found during the course of search indicated, that the assessee is carrying on business from asst. yr. 1984 -85, and the quantum of the income declared by the; assessee in each year was varied by him, on estimate basis, and thus, it was clear, that as a matter of fact, the concealed income of Rs. 3,50,000 was earned during the 5 years, which was accepted by the Department, and that being the position, it cannot be said, that assessee did not stick to the statement given under Section 132(4). The learned Tribunal also relied upon a judgment of Allahabad Bench of the Tribunal, in the case of Shyam Biri Works (P) Ltd. v. Asstt. CIT (2001) 70 TTJ (All) 880. wherein also the assessee had disclosed large amount of undisclosed income in the statement under Section 132(4), and later on filed revised returns for two years, declaring additional income, which formed part of undisclosed income, and on these facts, the Tribunal held, that the assessee was still entitled to immunity under Clause (2) of Expln. 5 to Section 271(1)(c), in respect of such additional income. With this, it was held, that the learned CIT(A) was not justified in holding, that the assessee lost the immunity available under Clause (2) of Expln. 5 to Section 271(1)(c), and thus, the penalty order was set aside.;