Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1993-94 - Whether where assessee had surrendered his concealed income during course of search but did not file return in time and deposit tax on surrendered income immediately after surrender, assessee could not be given benefit of Explanation 5 to section 271(1)(c) - Held, yes FACTS The search and seizure operation was carried out at the residential and business premises of the assessee on 26-3-1993. During the course of search, large number of books of account, cash, jewellery and other incriminating documents were found and seized. The assessee, in the statement recorded under section 132(4), offered to surrender Rs. 10 lakhs as undisclosed income. Thereafter, the assessee filed its return belatedly on 19-1-1995 for the assessment year 1993-94 and declared certain sum, which included the surrendered income. As the assessee had concealed particulars of his income and it was only as a result of the search and seizure operation carried out at his residential and business premises, that the assessee came forward to disclose his concealed income to the tune of Rs. 10 lakhs, which might not be even to the extent of his concealed income, a notice under section 271(1)(c) was issued for levy of penalty on account of concealment of income. After considering the explanation furnished by the assessee and also his reliance upon Explanation 5 to section 271(1)(c), the Assessing Officer held that the assessee did not fulfil the mandatory conditions as laid down in Explanation 5 to section 271(1)(c) and levied penalty under section 271(1)(c). On appeal, the Commissioner (Appeals) and the Tribunal, both, upheld the order of the Assessing Officer rejecting the assessee's plea that he did not have sufficient funds to pay the tax. On appeal : HELD It was not in dispute that certain undisclosed assets were found from the premises of the assessee at the time of search and besides that certain books of account and other documents were also found from which it was evident that the assessee had earned undisclosed income as well. In the statement made under section 132(4) on the date…

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